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Re: License for selling software?

From: Alexander Terekhov
Subject: Re: License for selling software?
Date: Tue, 09 Jan 2007 15:17:33 +0100

Tim Smith wrote:
> In article <>,
>  Rui Miguel Silva Seabra <> wrote:
> > Have you considered "why not"? Red Hat doesn't seem to have much trouble
> > doing so.
> Red Hat sells a product for which people want a high level of support.

Red Hat sells only support ("services for each installed system", not a 

Red Hat has invented rather interesting "freedom 0"/"use freely" (for 
one thing it doesn't begin until a year later after contract end).

>From RHAT's 10Q:


Our subscription-based contract model may encounter customer resistance.

The subscription agreement used for many of our products, including
Enterprise Linux, requires customers to agree to a subscription for our
services for each installed system on which they deploy our
subscription based products. At the same time, the subscription
agreement places no restriction on the customer’s right to redistribute
the products. While we believe this practice complies with the
requirements of the GNU General Public License, and while we have
reviewed this practice with the Free Software Foundation, the
organization that maintains and provides interpretations of the GNU
General Public License, we may still encounter customer resistance to
this distribution model. To the extent we are unsuccessful in
promoting or defending this distribution model, our business and
operating results could be materially and adversely affected. 


Quoting Red Hat's Subscription Agreement:


The term "Installed Systems" means the number of Systems on which
Customer installs or executes the Software. The term "System" means any
hardware on which the Software is installed, which may be, without
limitation, a server, a work station, a virtual machine, a blade, a
partition or an engine, as applicable. The initial number of Installed
Systems is the number of copies of the Software that Customer purchases.


Note that "Software" is contractually defined term.

<quote> The term "Software" means the subscription </quote>

Now, since it's just impossible to install and execute on a computer a
*subscription* (a legal arrangement for providing software), they must
mean software (not Software) in the definition of "Installed Systems".

And here's the hammer:


If Customer wishes to increase the number of Installed System, then
Customer will purchase from Red Hat additional Services for each
additional Installed System. During the term of this Agreement and for
one (1) year thereafter, Customer expressly grants to Red Hat the right
to audit Customer's facilities and records from time to time in order to
verify Customer's compliance with the terms and conditions of this
Agreement. Any such audit shall only take place during Customer's normal
business hours and upon no less than ten (10) days prior written notice
from Red Hat. Red Hat shall conduct no more than one such audit in any
twelve-month period except for the express purpose of assuring compliance
by Customer where non-compliance has been established in a prior audit.
Red Hat shall give Customer written notice of any non-compliance, and if
a payment deficiency exists, then Customer shall have fifteen (15) days
from the date of such notice to make payment to Red Hat for any payment
deficiency. The amount of the payment deficiency will be determined by
multiplying the number of underreported Installed Systems or Services by
the annual fee for such item. If Customer is found to have underreported
the number of Installed Systems or amount of Services by more than five
percent (5%), Customer shall, in addition to the annual fee for such item,
pay liquidated damages equal to twenty percent (20%) of the underreported
fees for loss of income and administration costs suffered by Red Hat as a



"You see Free Software has been so successful because we have shown 
we can develop software without any money. Volunteers do it. We don't 
need to have money to develop powerful large programs. But we 
certainly need to have money if we're going to buy patent licences." 

                                                 -- Richard Stallman

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