UK Court decides that early stage open source software projects can generate goodwill

Introduction

A UK court has recently held¹ that a project leader co-ordinating an open source software project could accrue sufficient goodwill in respect of the project in order to invalidate a competitor’s registered trade mark of the same name as the project, even though the project leader:

• Had not issued a software product to end users or a software build to contributing developers (and might not itself later market and sell a software product arising out of that project).
• Instead had only provided co-ordination services in relation to the open source project.

Why is the case important for software development projects?

It is believed to be the first decision in the UK to address the question whether an open source software development project for a software product can generate goodwill with developers even before the resulting software product is launched.

Although the decision is not one made by a superior court (it was an appeal from a decision of the UK Trade Mark Registrar), it is nonetheless of significance to:

• Open source software project leaders, because it suggests that owners of early-stage development projects can quickly accrue rights in their project name and stop others from using it later on (i.e. before the name is registered as a trade mark and before a new product is released to developers).
• Independent developers contributing to such projects (who typically contribute on an unpaid basis), because the court made some observations about to whom (as between project leader and independent contributing developers) goodwill will accrue.
• Crowd sourced, crowd funded and other development projects perhaps more generally, as there is nothing in the judgment itself that suggests that its rationale is limited to open source software projects.

What did the project involve?

The dispute related to the name of a Google open source software development project. The project was for the development of a new rendering engine in Google’s Chrome browser - the part of the software that takes HTML code and translates it into the graphic representations on the webpage.

Google had previously used WebKit for its Chrome rendering engine, but wanted to reduce its technical complexity. It therefore decided to “fork” (or divide) the WebKit software into two projects: the existing WebKit project, continuing as normal; and a new project (known as “Blink”), with the aim of reducing complexity in the software.

Initially, therefore, the Blink code was the same as the WebKit code, but over time it was envisaged that the Blink code would diverge from the WebKit code with the contribution of new developments from independent open source developers (who would contribute code without being paid).

How did the dispute over the Blink name arise?

Twenty days after the launch of the Blink project by Google, an independent developer (who had been involved in the WebKit project previously) filed for registration of BLINK in trade mark class 9 (that is, “Browsers, namely, software, software components, operating systems …”). Google had not filed for a similar registration at this time.

At the time the trade mark filing was made, Google had advertised the Blink project, but it had not, of course, launched a resulting product or even issued a new product build to developers. Google applied to invalidate the trade mark registration, claiming that there was an infringement of the prior rights it had accrued in the name Blink. It also claimed that the application for registration had been made in bad faith (this briefing does not consider this latter aspect of the claim)².

What prior right did Google claim to have in the name?

The prior right that Google claimed to have was a property right in the goodwill generated in providing the Blink open source project. Under the common law in England and Wales, the accrual of goodwill is an unregistered right and it is a fundamental element in establishing the tort of passing off. (Traditionally, passing off can occur when product packaging of one manufacturer is copied by another manufacturer, and customers are misled into ordering the copy-cat product.)

As the Blink case concerned invalidation of a registered trade mark, Google was not asserting a claim of passing off per se against the developer. However, in order to establish grounds for invalidation of the trade mark, Google claimed that its property right (in goodwill) was infringed because the developer’s use of the Blink name was likely to deceive other developers into thinking that the developer’s project was Google’s, and thereby divert other independent developer contributions away from Google.

Who was the relevant public for the name ?

In order to decide whether goodwill can accrue, the relevant “public” (for example, traditionally customers who buy the relevant product) must be identified. In the case of Blink, although there would ultimately be end-user customers (licensees) who would use the software once it had been produced, the court observed that average end users simply would not know the names of the different browser components, such as Blink etc. End users were therefore not the relevant public.

The parties agreed that in this case the relevant public consisted of other independent developers who regularly contribute to open source software products, typically without payment, and who would have a number of such projects to choose from.

How was goodwill generated in relation to such a public? The Court considered that the structure of an open source project was analogous to a charity. A charity uses its goodwill to attract contributions from donors, and provides products or services to its end users separately. In the same way, open source projects needed to attract developers to make contributions without any direct payment. The court found that “open source projects can generate goodwill in relation to attracting the provision of software developer services to undertake coding.”

Must there be a software product for goodwill to accrue?

The court found that:

• The mere “forking” of the software product did not at that time create a new product and therefore goodwill would not accrue under the new Blink name – the relevant public (independent software developers) would know that the code was the same as before (at least until developments had been made to it) despite the change in project name.
• Advertising that had been undertaken by Google was not enough to establish goodwill in the product.

As those findings meant that there was no new product to which goodwill could attach at the time of the trade mark filing, Google’s claim would fail unless there was some other route by which goodwill could accrue to it.

Goodwill in the project itself

Google’s alternative case was that goodwill attached to the new open source project under the name Blink.

The court held that goodwill need not accrue in respect of a product. Rather, it could in principle accrue in relation to either (or both) a project and its related software product. Accordingly, it did not matter for the success of Google’s claim that it had not commenced distribution of a software product at the time the trade mark registration was filed (and may not in any event later distribute). It was enough that the project was up and running at the time of the filing.

To whom does the goodwill accrue?

While it was not necessary to determine the issue in the present case (as the independent developer did not develop for Blink), the court went on to consider whether goodwill in open source projects could also accrue to independent developers as well as the project leader. The judge considered that in some situations (where contributing developers may carry out project co-ordination tasks such as approving updates or new builds) that it was at least arguable that there may be some form of shared goodwill between project leaders and independent developers.

What are the implications?

Google’s claim was successful and the court held that the trade mark registration should be revoked (the court did not need to consider the claim of bad faith).

The case suggests a number of implications:

• Early stage projects: owners of early-stage open source software development projects may be able to protect rights in their project name and stop others from using it later on (i.e. before the name is registered as a trade mark and before a product is released).
• Intellectual property rights: because goodwill may also potentially accrue to independent developers in respect of their contributions, such project owners should require independent developers to assign intellectual property rights to them (including goodwill) in appropriate instances – (and any “public” contributions (creative or monetary) to development projects should be governed by terms and conditions).
• Application to other development projects?: might the rationale in the case perhaps apply to development projects more generally, not just open source developments? There is nothing in the judgment itself that suggests that its rationale is limited to open source software developments projects. The special feature of the case was that the open source context created an additional relevant public (of independent developers) even before a prototype had been developed or a product had been launched to end consumers. It is possible that some type of relevant public could be established even before product launch in relation to, say, crowd sourced, crowd funded or even conventional software development projects (and indeed potentially to any project whose focus is the development of an end product). Much will depend on the facts.
• Trade mark registrations: despite the comfort that the judgment might afford early-stage project owners, they should take steps to avoid such disputes by undertaking trade mark searches and registering the project name before launch.