Explaining 8 Legal Issues Arising in Software Development Utilizing Open Source Software (OSS)

Open Source Software (OSS) is an indispensable element in modern software development. While it brings benefits such as reducing development costs and accelerating development speed, there are various legal risks associated with using OSS.

In this article, we will explain the overview of eight laws related to the utilization of OSS in software development and discuss cases that may pose issues in relation to OSS.

Copyright Law: Injunction and Damages Claims for OSS License Violations in Japan

If you violate an Open Source Software (OSS) license, you may face injunctions and claims for damages from the copyright holder. This is particularly critical when incorporating OSS into commercial products, as a lack of understanding of the license terms can lead to significant legal risks.

Overview of Japanese Copyright Law

Japanese Copyright Law protects the rights (copyrights) that arise for the creator of a work. Copyrights are automatically granted without the need for registration or other procedures, which is a personalityistic feature of intellectual property law. Rights such as copyright and moral rights of authors are stipulated to protect creative works, and provisions are made for injunctions and claims for damages in case of infringement.

Cases of Concern in Relation to OSS

Programs are also protected as works under copyright law. OSS licenses permit users to use the software under certain conditions set forth by copyright law. If you use OSS in violation of its license terms, it may constitute copyright infringement.

For example, cases such as distributing software with the copyright notice or license documentation removed, or selling software developed using GPL-licensed software without making the source code available, could be considered violations. Because there is a possibility of receiving injunctions and claims for damages from copyright holders, meticulous attention is necessary.

Reference: Copyright Textbook | Agency for Cultural Affairs

Patent Law: Cases of Software Developed Using OSS Infringing on Third-Party Patents in Japan

There are cases in Japan where software developed using Open Source Software (OSS) infringes upon the patent rights of third parties. Overlooking this risk could lead to the cessation of business activities, so it is crucial to be vigilant.

Overview of Japanese Patent Law

Japanese Patent Law is designed to protect technical inventions that possess novelty and inventiveness. An invention that has been granted a patent has the exclusive right to be practiced by the patent holder for a certain period (typically 20 years from the application date). Infringing upon these rights can result in liability for damages and injunctions against use.

Cases of Concern in Relation to OSS

Some OSS licenses explicitly permit the use of patents (for example, the Apache License 2.0). However, using OSS could still potentially infringe on the patent rights of third parties. Furthermore, if a company releases software that includes its own patents as OSS, it must clearly define the scope of permissible use by others to prevent unauthorized exploitation of its patent rights.

Reference: Japanese Patent Law | e-Gov Law Search

Trademark Law: Heed OSS Trademark Guidelines

When utilizing Open Source Software (OSS), there is a risk of infringing on trademark rights, which could lead to injunctions and claims for damages. In such cases, the relevant law is the Trademark Law of Japan.

Overview of Japanese Trademark Law

Japanese Trademark Law is designed to protect the names and logos (trademarks) that distinguish goods and services from others, contributing to the maintenance of business credibility and the development of industry, as well as protecting consumer interests. It is one of the rights under intellectual property law, alongside copyright and patent laws. Trademark rights can also be subject to injunctions and claims for damages in the event of infringement.

Cases of Concern in Relation to OSS

When providing products or services that utilize OSS, unauthorized use of the original project’s name or logo may constitute trademark infringement. For example, Firefox has established trademark guidelines that detail the conditions of use. Therefore, when using OSS, it is necessary to be cautious not to violate these guidelines, and understanding the Trademark Law is essential for this purpose.

References:

Mozilla Trademark Guidelines｜Mozilla

Trademark Law｜e-Gov Law Search

The Civil Code: The Fundamental Law for Private Transactions in Japan

The legal nature of OSS licenses is commonly considered contractual, based on the Japanese Civil Code. The Civil Code is also crucial as the foundation for claims of contractual breaches and demands for damages in the use of OSS.

Overview of the Japanese Civil Code

The Civil Code is the basic law that governs legal relationships between private individuals in Japan, covering contracts, obligations, and torts. OSS licenses often constitute contracts that are established only upon acceptance of the terms presented by the copyright holder, and violations of these licenses can lead to liability under the Civil Code for breach of contract.

Common Issues Related to OSS

OSS licenses frequently contain disclaimers and limitations of liability, and it is necessary to determine whether these are valid under the Civil Code. Additionally, license terms may include legally ambiguous expressions, which should be reviewed and organized by the legal department in advance.

Furthermore, when OSS is developed in collaboration with external vendors, it is essential to prepare contracts that clearly define the obligations and responsibilities under the Civil Code. Not only in actual use but also in complex contractual structures such as outsourcing and subcontracting, the Civil Code functions as the foundational law.

Reference: Japanese Civil Code | e-Gov Law Search

Unfair Competition Prevention Act: Caution Required to Avoid Infringing Trade Secrets When Using OSS in Japan

When utilizing Open Source Software (OSS), one legal issue that may arise is related to the Unfair Competition Prevention Act in Japan.

Overview of the Unfair Competition Prevention Act

The Unfair Competition Prevention Act aims to ensure fair competition among businesses and contribute to the healthy development of the national economy by regulating unfair competitive practices. These include the improper acquisition and use of trade secrets, imitation of well-known products or business identifiers of other companies, and false indications of origin. When using OSS, there is a risk of unintentionally disclosing code containing trade secrets, which could lead to violations of the Unfair Competition Prevention Act. Particular attention should be paid to the mixing of internal development code with OSS.

Cases of Concern in Relation to OSS

There are precedents in Japan where software source code has been protected as a trade secret under the Unfair Competition Prevention Act (Osaka District Court, July 16, 2013 (Heisei 25)).

If trade secrets are unintentionally included in the source code when it is released as OSS, it may be considered an improper disclosure. Furthermore, if OSS obtained from outside the company contains trade secrets of another company, one cannot deny the possibility of being accused of violating the Unfair Competition Prevention Act without knowledge. It is necessary to pay attention not only to the license but also to the source of the code before use.

Reference: Unfair Competition Prevention Act | e-Gov Law Search

Antitrust Law: Cases Where Issues Arise for OSS Developers in Japan

In Japan, the law that becomes a concern mainly for OSS developers, especially when it comes to eliminating competition, is the Antitrust Law.

Overview of the Japanese Antitrust Law

The Japanese Antitrust Law is legislation designed to maintain fair market competition by prohibiting unfair trade restrictions and private monopolization. Similar systems exist not only in Japan but also in other countries (for example, the United States has the antitrust laws consisting of the Sherman Act, the Clayton Act, and the Federal Trade Commission Act).

Cases Where OSS Relations Become Problematic

Issues related to the Antitrust Law may arise if a specific OSS license severely restricts commercial use, or if a company effectively dominates an OSS community and excludes competitors. Actions that exercise patent rights to hinder the use of OSS can also be subject to regulation under the Antitrust Law.

In the case of “Linux,” an antitrust compliance policy has been established. Additionally, in Japan, there have been instances where businesses have lobbied to include requirements that make it difficult for operators using OSS-based CMS to participate in the competitive bidding for website creation services for municipalities and special wards. In response, the businesses were required to submit a compliance plan.

Product Liability Law (PL Law) in Japan: When Software Causes Damage

One legal issue that can arise when utilizing Open Source Software (OSS) is related to the Product Liability Law (PL Law).

Overview of the Product Liability Law

The Product Liability Law (PL Law) in Japan is a law that imposes liability for compensation on manufacturers for damages caused to consumers by defective products, even if the manufacturer is not at fault. It serves as a special law regarding the principles of compensation for damages as established by the Civil Code.

Cases of Concern in Relation to OSS

While the Product Liability Law primarily considers physical products, there is room for its application to software products as well. If an accident or damage occurs due to a defect in the OSS integrated into a product, the seller may be held responsible under the PL Law. Although OSS licenses often include disclaimers such as “as is,” the effectiveness of these disclaimers is limited under the PL Law, necessitating contracts and insurance measures that anticipate risks.

Reference: Product Liability Law | e-Gov Law Search

Foreign Exchange and Foreign Trade Act (FEFTA): In the Context of Cryptographic Technology

When disclosing cryptographic technology contained in OSS (Open Source Software) abroad, compliance with the Japanese Foreign Exchange and Foreign Trade Act (FEFTA) is essential.

Overview of the FEFTA

The Foreign Exchange and Foreign Trade Act (FEFTA) is a Japanese law that restricts the export of certain technologies and products to protect national security and international order. Violators are subject to administrative guidance and criminal penalties. The criminal penalties are severe, including fines of up to 20 million yen or five times the price of the goods or technology in question, or imprisonment for up to 10 years.

In addition, as an administrative disposition, the export of goods or provision of technology can be prohibited for up to three years, and the fact of the violation may be published by the Ministry of Economy, Trade and Industry. The risks associated with non-compliance are significant and can impact the continuity of business operations.

Cases of Concern in Relation to OSS

Under the FEFTA, cryptographic technology included in OSS may be subject to export controls when disclosed abroad, even if it is provided free of charge. Developers who publish source code on overseas services such as GitHub must check the guidelines provided by the Ministry of Economy, Trade and Industry in advance to avoid violating the FEFTA and, if necessary, submit the required notifications. Attention is also needed because the provision of technology, including programs, is subject to regulation.

Reference: Foreign Exchange and Foreign Trade Act | e-Gov Law Search

Furthermore, when using OSS made in the United States, compliance with the U.S. Export Administration Act (EAA) is also indispensable, so it is important to pay attention to both laws.

Conclusion: Consult a Lawyer Regarding Open Source Software (OSS) Laws

While Open Source Software (OSS) holds significant value in the modern software development landscape, failing to properly understand its legal relationships can lead to unexpected legal risks. Intellectual property laws such as copyright and patent laws, as well as complex and wide-ranging legislation like the Unfair Competition Prevention Act, Product Liability (PL) Law, and the Foreign Exchange and Foreign Trade Act, all come into play, and knowledge as an engineer is also necessary. We recommend consulting with a lawyer rather than making judgments on your own.

Related article: What is an OSS License Violation? Explaining the Risks and Measures Companies Should Know Based on Examples

Guidance on Measures by Our Firm

Monolith Law Office is a law firm with high expertise in both IT, particularly the internet, and legal matters. Violations of OSS licenses can lead to risks in business and legal terms. Our firm provides contract drafting and review services for a wide range of cases, from companies listed on the Tokyo Stock Exchange Prime Market to venture companies. If you are having trouble with a contract, please refer to the article below.

Areas of practice at Monolith Law Office: Contract Drafting & Review, etc.