25 August 2006 - 14:34Open Source Trademarks

One of the revenue models for open source (OS) companies is the selling of support services and documentation. JBoss is widely known for pioneering the model of making money off support rather than off selling a product. The question that is posed is how do they protect this revenue stream? You can set-up a shop somewhere in Eastern Europe, staff it up with committers to that particular open source project in order to gain credibility, set-up a workforce that masters the product and costs 3 to 4 times less than their Western counterparts and start selling support services. Chances are that you will be able to leap ahead of the original open source company because of the pricing power you yield due to lower costs.
So, how do the OS companies protect themselves from this threat? One great protection is thru the use of trademarks. Take a look at Red Hat, MySQL, and JBoss. Boy, do they protect their brand. MySQL goes as far as to prevent the use of its trademark on documentation. An IT shop selling support services for MySQL (for example) could be taken to court by MySQL because they are using the MySQL trademark (when they are advertising “Buy great MySQL support from us”) without consent from the MySQL group. An IT shop planning to compete with them on support should make sure it flies under the radar and doesn’t make a significant dent in the original OS company’s revenues. The moment it gains traction in the market and starts having an effect they should prepare to meet the original OS company’s legal team. Chances are they will not be able to sell their services in a country/region that takes intellectual property (IP) seriously.
Eastern Europe could sell support for OS software to small and medium business in the West mainly because this is a market that is not in the OS companies’ cross-hairs. Western small and medium business could gain from this service (no-cost software and low-cost services) because currently their other alternatives for troubleshooting their Linux desktop are googling their problems or calling tech-savvy cousin Joe.
I really like the way these OS companies manouver. You may have the impression that OS is run by a bunch of pony-tailed hippies fed on utopia, the fact is that these guys grok IP and grok it very well. These guys seem pretty well prepared for an environment in which IP is the main expenditure. A lot better than some closed-cource establishments…

Later Edit: Who would have thought this is possible? You know what I think? That the APIs are a commodity, what is not a commodity is the knowledge to use them, knowledge which is very important given the size and power of these APIs. It looks like RedHat is protecting that knowledge from becoming a commodity pretty well, but the manner in which they are doing it smacks of despair. You would have thought that the almighty “professional open source” model would not rely on hunting down individuals who piggyback on an OS product to make some money, but it looks like RedHat is looking at locking down that revenue stream.