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FSFE wants to better protect Free Software licenses from bankruptcy

on: 2012-07-30

When the companies or authors that license Free Software enter bankruptcy there is a risk that granted Free Software licenses will face legal challenges in some jurisdictions. FSFE is now trying to prevent this situation in Germany. The expert institution ifrOSS supported by FSFE suggests German Ministry of Justice to include a specific Free Software clause in the German Insolvency Code.

It is not entirely clear what can happen to the Free Software licenses that were granted by rights holders either before or after they went bankrupt. This lack of clear rules could greatly endanger functioning of the Free Software, which depends on the contributions from numerous rights holders.

Some time ago, German Ministry of Justice published an initiative to improve the regulation of licenses during the insolvency proceedings. As a response, ifrOSS (Institute for Legal Questions on Free and Open Source Software) supported by FSFE now prepared the suggestion of the Free Software clause that could effectively remove the problems specifically associated with the Free Software. The clause ensures that Free Software licensing model would not be negatively affected by a bankruptcy of a licensing rights holder. It makes it clear that any offer to grant Free Software license made before the licensor's bankruptcy can be accepted by anyone even after the bankruptcy proceedings started.

FSFE asks the German Ministry of Justice to consider this proposal favourably as it can greatly contribute to the legal certainty of the Free Software based industries, such as automotive, mechanical engineering and IT field.

ifrOSS together with FSFE asks the government to include the following clause in the newly proposed § 108a of the Insolvency Code (Insolvenzordnung, InsO):

Original version: "(4) Wenn der Schuldner durch Lizenzvertrag unentgeltlich ein einfaches Nutzungsrecht für jedermann einräumt, so findet die Regelung des § 103 InsO keine Anwendung. Das vom Schuldner vor des Insolvenzverfahrens abgegebene Angebot auf Abschluss eines solchen Lizenzvertrags, kann auch nach Eröffnung angenommen werden." English version: "(4) When the debtor grants somebody a non-exclusive right by means of a license agreement without consideration, the rule stipulated in § 103 Insolvency Code shall not apply. Debtor's offer to conclude such license agreement made before the initiation of the insolvency proceedings can be also accepted after the insolvency proceedings have been initiated."

Shall the Free Software face similar problems in other jurisdictions, we kindly invite you to contact us or take similar steps.

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