[Opensim-dev] Clarification on Licencing and Moving Forward as a Community

[Karen Palen]

On Tue, 2010-11-02 at 19:19 -0500, Mark Malewski wrote:
> Forming a "legal entity" (an LLC) creates LIABILITY.  You are giving
> LL a "legal entity" to sue.
> 
> 
> At this point, LL has no one to sue/fight/shut down.  By creating a
> "legal entity", you are giving LL (or whoever buys out LL in the
> future) a target to fight/sue (and an opportunity to shut down
> "OpenSim").
> 
> 
> "Deep pocket" Legal teams (i.e. LL) could go after OpenSim (if it were
> a "legal entity).  Litigation is extremely costly, and regardless of
> what the licensing is on the viewer (GPL, LGPL, etc.) there is still
> the legal issue of "reverse engineering".
> 
> 
> At this point, "OpenSim" is NOT a legal entity, and there is no real
> "head" to "target" or sue (or "shut down").  By forming a LEGAL
> entity, you open the whole project up to LIABILITY.  All it takes is
> one "cease and desist" letter, and the whole project (and "spawn"
> projects) could be put in danger (and could turn into a large and
> costly legal battle).
> 
> 
> 
> This would put EVERYONE (including all the businesses and other
> projects that are based upon OpenSim core) in danger.  As the outcome
> of that litigation would determine the future of ANY projects based on
> OpenSim.  Sometimes it's best to just leave things the way they are.
>  Some may feel that we are being "overly cautious" but there's good
> reason for it.  We don't have the deep pockets for litigation that LL
> has, and all it takes is a "cease and desist" letter (and threats of
> costly litigation) to put a project like this under.
> 
> 
> 
> If we are NOT a legal "entity" then we are nothing more than
> individual contributors to a "headless" open source project.  Other
> groups and other projects can SPAWN off of this one, and continue to
> evolve (i.e. RealXtend, ScienceSim, etc.).
> 
> 

This is simply not true! There is no such thing as a "headless" open
source project! 

How many criminal enterprises (drug cartels, etc) would use this to
avoid being shut down if it could be made to work? They certainly have
far more to spend on lawyers than any open source project that I know
of!

In legal terms the OpenSimulator project is presently a simple
partnership. 

One of the dangers of partnerships is the unlimited liability of EVERY
partner. The lawsuit would not even have to name all of the partners or
even a convenient subset of them - ANY single partner could be sued and
the judgment then extended to ALL partners in the venture without limit.

In other words, as things stand right now (apart from the protections
provided by the GPL/BSD licenses) EVERY single contributor could be held
liable for the ENTIRE liability!

The concept of a corporation of any kind is designed to LIMIT liability
to the "capital" contributed - in this case the code one contributes.
There is over 500 years of case law from countries all over the world
which support this! Christopher Columbus was funded by a corporation for
example.

It is worth noting though that these protections only apply to
"ordinary" or "tort" liability. As Bernie Madoff recently illustrated if
you deliberately break the law in a "significant" way then you simply
have no legal protections whatsoever. I can't imagine how it would
happen, but this exception would also apply to the protections provided
under GPL/BSD.

An "LLC" is a special kind of corporation which is intended as a legal
shield in specific circumstances. One of the objectives of an LLC is
that it be easy to form and manage for small and simple entities.

This distinction is not important if the project has little or no assets
and does not support a customer base, but can be very important once the
project starts to succeed!

I am not a lawyer, but I have founded and run several businesses and I
have seen these things first hand. Think of this as insurance  - when
you need it it is too late to buy it! 
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