The current Trademark License Agreement is unacceptable

[Paul W. Frields]

Hi Christoph,

Thanks for writing your thoughts about the trademark license
agreement.  Hopefully the following will clarify some of the legal
language on which you've commented.  Of course, I'm not a lawyer, nor
your lawyer, and this isn't legal advice, but it is my best
understanding of the agreement, which I've discussed many times with
actual, experienced Red Hat attorneys.

On Thu, Aug 27, 2009 at 04:25:17PM +0200, Christoph Wickert wrote:

> There are two reasons that make me think that nobody should sign the
> TLA in it's current version: §3 and §7.
>    
>> 3. Termination: Licensor or Licensee may (without prejudice to any
>> other right or remedy) terminate this Agreement (a) for any reason
>> at any time upon thirty (30) days prior notice in writing to the
>> other party; (b) at any time upon notice in writing to the other
>> party if the other party is in material breach of any obligation
>> hereunder and does not cure such breach within seven (7) days of
>> being requested in writing to do so; or (c) with no notice where
>> the Domain Name(s), Web Pages, or Licensee's use of the Trademarks
>> are the subject of a legal claim. The right to use the Licensor's
>> Trademarks will cease immediately upon the termination or
>> expiration of this Agreement and Licensee must immediately
>> discontinue use of the Licensor's Trademarks. On termination or
>> expiration of the License, the Licensee agrees that the ownership
>> of the Domain Name(s) automatically transfers to Licensor and
>> Licensee will take all steps necessary, including working with
>> domain name registrars and registries as necessary, to ensure that
>> the legal ownership and control of the Domain Name(s) is
>> expeditiously transferred to Licensor or a party of its
>> choosing. Licensee agrees to remove any Web Pages content
>> immediately if in Licensor's sole discretion such removal is
>> warranted.
>>      
> So even if the licensee follows all the terms of the TLA and the
> logo usage guidelines, Red Hat can terminate the agreement for (a)
> no reason and (c) even without notice at any time. If they do, they
> automatically become owner of the licensees domain. This is a legal
> way of hijacking the domain with all it's contents, all it's
> reputation and all the work that was put into it. This just isn't
> fair.
>
> I'm not even sure if the licensee is allowed to transfer the domain
> and it's content to Red Hat: Think of a community website with
> private data of the users. Here in Germany we have very strict law
> for data privacy protection. If the community members did not
> explicitly agree to giving their personal data to Red Hat or any
> entity outside of Germany, the licensee must not give this data to
> the licensor. If he does, he also violates the law. He is caught
> between the devil and the deep blue sea.

Section 3 only contemplates a transfer of the domain name.  There's no
implication for the content of the website (data), which remains the
property of the previous owner.  You can transfer a domain name
without transferring any data or content, but I suspect you knew that
already. ;-)

But to address your main objection, regarding the ability to terminate
the agreement.  Note that this ability is shared by both Red Hat and
the domain owner. Red Hat has an interest in protecting the trademarks
it owns, and in fact by law *must* protect them (not just in the US)
to retain their value. Without this section, it would be possible for
a domain owner to unilaterally transfer or sell the domain to any
third-party, who could then use the trademark in evil ways.  This
section effectively gives Red Hat a remedy in case someone goes
completely crazy, and decides to sell their domain to, for example,
"The Global Anti-Fedora Terror Brigade."

Of course, neither Red Hat nor I think this would happen.  Community
members have no reason to turn over their domains to evil people.  But
legal agreements are not written from the perspective of what we
assume.  They must be written from the perspective of mitigating
risks.  Therefore this language has been developed over many years
under the law, and has the unfortunate side-effect of looking very
ugly.  Less ugly language, customized by Red Hat, would probably not
provide the necessary safeguards under the law, so it would be
useless.  This language is there because a trademark owner must have
the right to protect their identity in a contract.  (If this contract
involved money, there probably wouldn't be a clause for termination
for convenience, but we're in a different situation here.)

But Red Hat isn't interested in using this section to unfairly deprive
community members of the ability to create community web sites.  If
that was the case, there'd be no reason to create an agreement in the
first place.  In fact, there'd have been no reason to update our
trademark guidelines at all to allow domain name use by the community!
The agreement gives Red Hat a way to be very liberal in permitting
community members to use the Fedora trademarks on personally owned
sites to help spread Fedora effectively worldwide.

Nevertheless, I've been talking with Red Hat Legal over a number of
months about this section.  Although this is very much standard
language for a trademark owner to have, Red Hat doesn't want
community members to get the mistaken impression that they want to
swoop in and seize domains willy-nilly.  Furthermore, there are far
too many different possible cases to be able to effectively separate
the trademark license issue from the domain ownership issue in a
single agreement.  So our legal counsel is planning to drop the
termination for convenience clause, 3(a).

It would be possible -- and counsel is willing -- to add some
additional language stating that Red Hat trusts the community to do
the right thing, and doesn't want to pre-emptively take over their
domains.  But since that wouldn't have any legal effect, I'm not
sure anyone really cares whether it's there.  In your opinion,
Christoph, would that make a big difference?

By the way, in the case where a domain owner wants to transfer or sell
the domain to someone, Red Hat would work with the first domain owner
to put a license agreement in place with the new owner.

  
> The second issue is the indemnification: 
>    
>> 7. Indemnification: The Licensee will indemnify and hold harmless
>> the Licensor and its directors, officers, employees and agents
>> (collectively, the “Indemnitees”) from and against any and all
>> damages, injuries, liabilities, costs and expenses, including but
>> not restricted to actual legal fees and costs charged to any of the
>> Indemnitees by their lawyers, that may be incurred by any of the
>> Indemnitees or claimed by any third parties against any of the
>> Indemnitees in connection with any wares, services or business of
>> the Licensee, any negligent or wrongful conduct of the Licensee,
>> and any breach of this Agreement by the Licensee or by any person
>> who is related to or affiliated with the Licensee. The foregoing
>> notwithstanding, Licensor will indemnify, defend and hold Licensee
>> harmless from any claim that the Licensee's use of the Trademarks
>> consistent with the terms of this agreement is an infringement of a
>> third party's trademark in those countries where Licensor has
>> registered the accused trademark.
>>      
> We all know how ridiculous high indemnifications under American law
> are, so no community person effectively can bear this risk. I agree
> there must be a form of indemnification, but it should be limited to
> a certain amount, otherwise a person could be bankrupt or the rest
> of his life even if he didn't damage Red Hat or Fedora in any way.

Now, as for Section 7, and your questions about indemnification.
Again, this is fairly standard language in US law.  The meaning of
this clause is that if you use the Fedora trademarks outside of what
the agreement and our guidelines allow, or if you advertise or
provide some sort of service or other business in connection with
the Fedora trademarks, and someone sues you over that, Red Hat can't
be held liable.

Let's say you had a business where you fixed people's Fedora systems
for a fee.  If you did a bad job, and a customer sued you, this clause
keeps Red Hat from being dragged into it just because you happen to
use the Fedora trademarks to advertise your business.  This doesn't
mean you would have to pay a big Red Hat Legal bill to handle Red
Hat's defense.  What typically happens is that the lawyer defending
you would simply handle everything at once, at no extra cost.  This
makes sense, because it's not fair to Red Hat to have to assume
liability for everything you do just because they happen to have given
you a license to use Fedora trademarks for specific purposes like
promoting Fedora.

By the same token, if you're simply using the trademarks as provided
in the agreement, and someone sues you over, say, a trademark
violation, Red Hat would indemnify you.  Red Hat has a huge interest
in making sure that our community members are protected from evil
people who might try to stop them from promoting Fedora, so that makes
sense too.
  
> So why is the TLA a adhesion contract? Please don't tell me that Red
> Hat as an American company needs to be that restrictive in order to
> protect their trademarks. I recently reviewed the Nimbus theme from
> OpenSolaris (#488174) and Rahul argued that we must not ship the
> OpenSolaris logo. I looked at their trademark FAQ [2] and their
> trademark policy [3] and I wasn't able to find anything that
> prevents us from shipping their logo.  They have a "fair use"
> guideline. You can basically do whatever you want, as long as you
> don't damage their trademark on purpose and as long as it's non
> commercial. Why can Sun be way more liberal than Red Hat although
> both are American companies?

Finally, a comment on your characterization of the OpenSolaris
trademark guidelines, which aren't nearly as liberal as you seem to
think.

http://www.opensolaris.org/os/trademark/
  
First, note their guidelines say: "Your proposed use of an OpenSolaris
Trademark will often be "fair use" or permitted by Sun if:..."  They
didn't say "are fair use and permitted," they say "will often be fair
use or permitted."  That's very precise language meaning they aren't
committing 100% to *anything* you see in those guidelines.  That's
very different from our guidelines in Fedora where we specifically
allow a broad range of usage without any wishy-washiness or dithering.

Next, note their guidelines include a *possible* permission if "there
is no commercial intent behind or impact from the use."  This is a
complete escape hatch, because Sun can argue at any time that just
about *ANY* use of the OpenSolaris trademark includes a commercial
impact.

Looking over the rest of the terms, and the mini-FAQ that precedes
them, I don't see any substantial differences with the kind of use
cases they claim to allow, except for the fact that, again, we clear
those usages categorically in our guidelines.

* * *

Now, having said all that, our Legal folks are very supportive of
community building, and I'm sure they would welcome a dialogue about
this subject.  We might want to take that dialogue to the
fedora-legal-list where it probably belongs, but I'm happy to
facilitate it if it helps people better understand this agreement.
I've learned a lot about this subject (but still only know a tiny
fraction of what our lawyers do) over the past 18 months, and it's
been enough to give me a very good appreciation for their hard work,
and dedication to both a strong Fedora brand and a strong community.

Paul