A couple of weeks ago, I wrote about a disturbing aspect of the European Commission's proposed Digital Single Market: the fact that "ICT standardisation requires a balanced IPR [intellectual property rights] policy, based on FRAND licensing terms." That's a problem, because FRAND (Fair, Reasonable, And Non-Discriminatory) licensing is inherently incompatible with open source.

As well as generating a fair amount of interest here at Ars, the article seems to have provoked some discussion in the wider open source community, and inside the European Commission too. Given that interest, and the absolutely key nature of this issue, I thought it would be worth exploring it a little more deeply, not least because there have been some important developments in the last two weeks, including a way for Ars readers to help stop open source being locked out of EU standards.

First, it's probably a good idea to summarise why FRAND, which stands for "fair, reasonable, and non-discriminatory," is a problem for open source. Put at its simplest, licensing terms can be totally fair, quite reasonable, and absolutely non-discriminatory and yet impossible to implement in free software.

For example, a patent-holder might think they are being super kind by requiring a per-copy licence payment of just €0.001. And for traditional software, that might indeed be generous. But consider what happens with open-source code, which by definition can be copied and shared freely as many times as you like. Since there is no way of knowing how many copies have been made, it's impossible to pay even that "reasonable" €0.001 per copy. The only licensing fee that works in this context is zero—and even then, it's not guaranteed that the licence will be compatible with free software. For example, there may be some other limitations on use, which aren't allowed for open source.

What is needed is not just "royalty-free" licensing, but "restriction-free."

It's worth mentioning a couple of cases that are sometimes brought up as proof that open source is, in fact, compatible with licences that require payment. One concerns Canonical, the company behind Ubuntu, which at one point was a licensee of the patent-encumbered H.264 codec. Since Ubuntu can be copied freely, that would suggest at first sight that it is possible to pay a licensing fee for open source code, which can then be copied indefinitely.

But as this article from 2010 explains, that is not the case. The H.264 codec licence doesn't come with Ubuntu, but with Ubuntu installed on a hardware system and sold by an OEM. In other words, it is tied to the hardware, and in that case, it's perfectly possible to track how many copies of the H.264 codec were sold. Equally, the licence for that particular machine does not allow the person buying the OEM system to share its patented, non-free code, and so the problem of paying licensing fees for all those copies does not arise.

The other case concerns the open source giant Red Hat, and how it settled a patent dispute with a company called Firestar. What is remarkable about this deal is that Red Hat not only acquired a licence for itself, it obtained it for everyone else in the open source community, upstream and downstream. In other words, it effectively took out a patent licence for the open source world.

Again, some have pointed to this as an example that proves that paying patent licences is perfectly compatible with open source; once more, that's not true. First, this solution was only possible because Firestar agreed to provide this blanket licence for the open-source community: the fact that it had never been done before shows how exceptional that was. For companies that offer FRAND licensing, there is no reason at all why they would have to follow Firestar's example.

And even if they did offer a one-off, community-wide licence as Firestar apparently did, the open-source world would still need to find somebody to pay for that—a kindly fairy godmother like Red Hat. That's because open source projects don't have any money to pay for such licences, however reasonable, and even companies that use open source, especially if they are small startups, may not be able to afford them. The solution worked with Firestar because Red Hat is one of the biggest companies based around open source, and had both the desire and the capability to pay a one-off licensing fee. Fairy godmother licences are not, therefore, a suitable solution to FRAND licensing, despite what some claim.

The reality of open standards

But maybe all these concerns are theoretical, and FRAND licences aren't really a problem in practice. That's what a group of researchers set out to study in a paper published in the International Journal of Standardization Research. It's entitled "On Implementation of Open Standards in Software: To What Extent Can ISO Standards be Implemented in Open Source Software?", and it explores a wide range of issues involved in software standards and open-source implementations thereof.

One of the most fascinating parts concerns what happened when the researchers tried to find out how easy it would be to implement some well-known standards. For two of them—the SVG (Scalable Vector Graphics) standard, and the PNG (Portable Network Graphics) standard—there was no problem at all. That's because the standards organisations involved, the W3C and the ISO, were not aware of any royalty-bearing patents that were required to implement the standards. As a result, there were several open-source examples of projects that had been able to do that.

Things were very different when it came to finding out what the licensing requirements for the ISO's JPEG 2000 standard might be, and whether it could be implemented in open source. The researchers used the ISO's patent database to find out who might need to give permission, and discovered 16 relevant organisations. Here's what happened when letters were sent off: "after reminders (sent more than one month later) we have received some responses from three organisations. In total, letters from five organisations have so far been returned since the contact information provided in the ISO patent database was incorrect or outdated (with the message 'recipient unknown')."

The replies of those three organisations were as follows: "one organisation responded that they were unwilling to grant a license for their patents that would allow implementation in software to be provided under the GPLv3 license (i.e. a license which is recognised by both Open Source Initiative and Free Software Foundation). Another organisation explicitly stated that they decline to respond, whereas another declined to provide us information concerning which patents they control."

Things were even worse when the researchers tried to find out about the licensing requirements for the ISO's TIFF/EP standard, for which 19 organisations were listed in the ISO patent database. Once more, the researchers sent out letters asking about licensing details, and of the 19 contacted, not a single one replied.

The sample size may be small, but the experiences of the researchers make clear the huge obstacles open-source projects face simply trying to find out what the licensing situation of standards is, never mind actually obtaining a licence that is compatible with their code.

How did we get here?

Given this fact that FRAND is simply not compatible with open source, how did it come to pass that the European Commission should put FRAND licensing at the very heart of its new ICT standardisation strategy?

After my article about the apparent decision by the European Commission to shut open source out in this way, I managed to talk to someone senior who had been involved in the process. It took me about half an hour to get across why exactly FRAND licensing was incompatible with open source, but in the end the person I was talking to recognised that there was in fact a serious problem.

I've also heard through other channels that people within the Commission were rather taken aback by my analysis, since they too were not aware of the huge problem the new Digital Single Market policy would represent for free software. They were under the impression that the references to supporting open source elsewhere in that policy was enough. This overlooks the fundamental role that licensing plays in open source, and naïvely assumes that things can somehow be tweaked to allow FRAND compatibility. But as I've described, that's simply not the case.