From The Register

my router runs busybox, and i seem to remember them getting in trouble over it too. the source code is now available on their website though, so i guess they complied eventually

pretty silly of this company not to do likewise really.

If they are in bankruptcy protection they probably no longer had the legal right to do that last minute compliance thing that companies like Linksys get away with. The problem is that they have modified the code, and until they have lost the court case that says these additions are not their legitimate IP, they may well have a duty to their creditors to try and get some financial value from its disclosure.

Yes but if there is no value because of the open license requirements they have actually wasted creditors money finding this out.

That's true in this particular case, but in the grand scheme of things little items like this make no difference. Whereas any change to bankruptcy laws that allowed the business managers to decide what was an asset and what should just be written of as an expense would be misused to a cumulative cost of many times as much as this. It would be very easy for a director to say "licensing issues make this software next to worthless, but I'll give you $10 for it" and basically plunder the company.

Bankruptcy really is irrelevant. A company actually benefits from writing off the value of the R&D put into the software because it is open source. It can write the entire costs off against that years profits and if they are substantial against future profits as well. In which case the balance sheet should show it as a zero value. A director might be able to say it is worthless and make a derisory offer but the source code will be out there and others can use it as well. So it would be hard for them to then profit from it. Though the same is true of you finding a series of open source programs and putting them together and selling it as a bundle.

Good for the GPL, I'm sure RMS is jumping for joy while wearing his tin hat and foil medallion .

They should have tried to find something licensed under the BSD licence, no need to redistribute the source, no need to commit changes back to the original source, etc.

The GPL is a horrid piece of work, forcing any derived work to take the same licence. Eric Raymond has spoken his mind on the GPL saying there is little need for such a controlling open source license.

That is a whole new matter though.

You gotta love that special sauce

Bankruptcy is never irrelevant, it places auditors in charge of you and applies strict rules of action that are routinely contrary to common sense but generally for a good reason (common sense assumes that people are generally honest, auditors are not at liberty to take such a view).

When they look at this software, they see the sort of thing an auditor sees when he looks at a business (which he does via their financial ledgers): a development cost, and a resulting product which should therefore have a value; and can therefore in principle be sold to return value to the creditors they represent. You need to understand that he has a strict legal obligation to see it in exactly those terms.

If you tell them the product has no monetary value because it is covered under a certain type of software license, he is obliged to verify this, you need to show him two things:
1. The relevant licence.
2. Legal confirmation that the licence is valid
Only then can he write the asset off without risk of going to jail.

The point of this story is that this is the very first time that the GPL has been tested in court, so prior to this, part 2 was impossible, it was just an opinion.

That's probably why the auditors did not appoint a lawyer to present their position in court, they weren't in it to get the money, what they needed was the legal clarification.


Prior to going bankrupt(ish), the company made a different error; they showed bad faith by developing the extension to the open source product and not distributing it in terms required in the license they had abused. They treated their software as a kind of property which it was not. This practice is widespread, with many companies failing to disclose until they get forced, thus delaying the write off to inflate their balance sheets, which only makes things worse later. Had they done the right thing at the right time, they wouldn't have put their auditors in such a bad position and money could have been saved.

First of all auditors do not do bankruptcy. Administrators do bankruptcy work. They may be the same people but they do different things and very different roles.

An auditor if they have done their job well would have written off the R&D on the license. It would then be on the books at a zero value but would still be a tradable asset. That would not stop the company selling it during normal business.

Auditors will look at the balance sheet and look at anything with any value. Many bits of machinery are un the books at a zero value but will still have some value to others. Same re the software. They could sell the software but the license terms would seriously reduce the sums offered. Also the asset would already have been written off in the books. So any value in the accounts would be part of the goodwill of the company. For example a company could be renting a warehouse manufacturing a product with old machines that are fully written off, the only assets it might have would be the components and finished goods. The administrator could sell the components and finished goods, they could also sell the machines that have no value in the accounts. The same could apply for the software where the software has zero value but could be bought for a sum, though license terms would still apply.

Administrators are not generally at risk of going to jail. They are appointed by the creditors, usually a bank, tax man or significant creditor. They get paid before any of the creditors. So it is in their interest to get as much as possible for the assets even if they were written off.