The Open Source Initiative’s corporate status is suspended: a CAOS Theory Q&A

UPDATE – The OSI’s status was in early 2010 restored to “Active”, per the California State website – UPDATE

The ability of the Open Source Initiative to steward the Open Source Definition and police the use of the term open source as it relates to software is in doubt following the confirmation that the corporate status of the non-profit company has been suspended in California. What does it all mean?

The OSI’s corporate status is suspended?
According to the website of California Secretary of State, Debra Bowen, yes.

When did this happen?
We’re not sure at this stage. We were alerted to the news via a comment left by Thomas Lord on the Simon Phipps’ blog. Wikipedia indicates that the status has been suspended since at least September 2, 2009.

How did this happen?
Thomas Lord has claimed to be at least partially responsible, having filed a compliant with the state attorney general office following a dispute with the OSI board. See his comment below.

What does the Open Source Initiative have to say about it?
We asked OSI president, Michael Tiemann, and general counsel, Mark Radcliffe, a number of questions related to the suspension. We received the following response from Michael:

“Like many non profits that are staffed by volunteers we have not always gotten our paperwork into the state on time. We have been working with our counsel and accountants to satisfy the state’s requirements for several months, but have not been able to make the submissions as swiftly as the state wanted. Consequently, they have suspended our corporate status. We are working hard to satisfy their requirements and anticipate that we will be able to do so in the near term. Since OSI does not conduct business in a conventional manner, i.e. we are not selling products, we believe that the suspension will have a minimal effect on our mission.”

That doesn’t sound so bad.
No, it doesn’t. With respect, however, we believe the situation is more serious than that statement suggests.

How so?
Regardless of whether the OSI sells products in a conventional manner, the suspension appears to legally prevent the OSI from actively going about its business of approving licenses and stewarding the Open Source Definition.

According to the State of California’s Franchise Tax Board website:

“Suspension or forfeiture affects a business in many ways:
• The business loses its rights, powers, and privileges to conduct business in California.
• The business loses the right to use its business name in California. In turn, another business could register with the suspended or forfeited business’ name, and the name would then belong to the other business.
• The business cannot initiate lawsuits, defend itself against lawsuits, or enforce its legal contracts. But other parties can enforce their terms in these contracts.
• If the business enters contracts while suspended or forfeited, it can never enforce those contracts unless it obtains relief of contract voidability.
• Suspensions and forfeitures are public information.
• The business loses the right to get an extension to file a tax return.”

So the Open Source Initiative could lose it name?
Yes it would appear so. In fact, it may already have done. If that were the case we believe it would impact the OSI’s ability to enforce its trademarks related to “OSI”, “Open Source Initiative”, and the OSI logo.

What about the open source trademark?
There isn’t one (for an explanation of why, see this 1999 announcement by Eric Raymond). The OSI does not have any trademark related to the term “open source”. However, the respect in which the OSI is held, combined with the trademarks that it does hold, has enabled the OSI to discourage the use of the term “open source” with software that does not use OSI-approved licenses. Since the the corporate status of the OSI is suspended its ability to do so in the future is in doubt.

What does this mean for open source?

It means that the organisation responsible for stewarding the Open Source Definition and approving open source licenses is not currently legally allowed to operate in the state of California, or defend itself against legal claims, and may lose its name. Beyond that, we do not know at this stage.

Why is The 451 Group making this information public?
As noted above, suspensions and forfeitures are public information and the bare facts are already available.

We are concerned about the impact that the suspension of the Open Source Initiative could have on open source developers, users, projects, and associated investors and vendors. The 451 Group has clients in all of the above categories so we believe it is appropriate to inform them of the suspension of the Open Source Initiative’s legal status and how it might impact them. We are in the process of creating a formal analysis of the situation for 451 Group clients.

We also believe that the potential impact is significant enough that, while the bare facts are already public, the issue deserves to be brought to the attention of the wider open source community. We will let the members of that community come to their own conclusions about what it means to them.

How can a company be suspended in California?
According to the website of California Secretary of State, Debra Bowen, a Californian company can be suspended:

“1) by the Franchise Tax Board for failure to file a return and/or failure to pay taxes, penalties, or interest; and/or 2) by the Secretary of State for failure to file the required Statement of Information and, if applicable, the required Statement by Common Interest Development Association.”

It is not clear which body suspended the OSI.

Can the company be revived?
Yes, if it was suspended by the Secretary of State then it must file a current Statement of Information.

If it was suspended by the Franchise Tax Board then it must:

“File any delinquent tax returns. Pay any delinquent tax balance, including penalties, fees, and interest. File a revivor request form.”

If it was suspended by both it must:

“first file a current Statement of Information with the Secretary of State and obtain a letter of proposed relief from suspension or forfeiture. Upon receipt of the proposed relief letter from the Secretary of State, the business entity should complete an Application for Certificate of Revivor (Form FTB 3557) and submit the application along with a copy of the proposed relief letter to the Franchise Tax Board.”

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#1 451 CAOS Theory » The Open Source Initiative's corporate status is … | Open Hacking on 10.06.09 at 10:12 am

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#2 Computer Internet and Technology Articles. » Blog Archive » 451 CAOS Theory » The Open Source Initiative's corporate status is … on 10.06.09 at 11:36 am

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#3 Terrell Prude' Jr. on 10.06.09 at 4:53 pm

Well, I’m not exactly happy to see this, of course. But really, the concept of “open source” always missed the point anyway. The real point is the freedom that Free Software has always given its users.

Perhaps it’s time for the “open sourcers” to start focusing more on the freedom that made what they do (did?) possible. That would be a good thing if they did that. This is the real selling point of Free Software–because in the arena of Freedom, the Microsofts of the world can’t even compete at all, no matter how “open” they pretend to be when it’s convenient for them. One example is that MS-PL license that apparently meets “open source” standards, but it sure ain’t Free Software. GNU/Linux was scaring the daylights out of Microsoft long before the term “open source” got invented (Halloween Documents went public in 1997, a year before “open source”).

Oh, but what about “alienating” business? Puh-leeze. Too many companies are making too much money with Free Software (e. g. Red Hat). It comes down to actually having a decent business plan, and if you don’t have one, you’re going to be toast no matter what field you’re in. On the contrary to alienation, Free Software is a very good way to help *save* your business, because of its overall cost-effectiveness.


#4 Bob Friesenhahn on 10.08.09 at 11:46 am

In what way as “open source” invented in 1998? This statement is confusing to me since the term has been in active use since at least the early ’80s, and possibly since the ’70s when Ken Thompson started cutting and mailing out the first Unix source tapes in 1973.


#5 Valuable Internet Information » 451 CAOS Theory » The Open Source Initiative's corporate status is … on 10.06.09 at 7:30 pm

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#6 Anonymous on 10.06.09 at 8:36 pm

Hopefully someone notified them about this before making this public. They are not the first or last company to fail to submit an SOI. As long as they get it in ASAP they’ll be back in business. A quick call to their board would likely have been sufficient to get this resolved. Hopefully someone has contacted their Secretary or CEO/President.

#7 Matthew Aslett on 10.07.09 at 1:01 am

As noted above, even though the information was already public, we contacted the OSI’s general counsel and president before publishing this.

#8 Russell Nelson on 10.06.09 at 10:16 pm

This is a problem which has been long in the making, and will take some time to resolve. In the meantime, “Open Source” is not in any jepoardy. If someone proffers software which claims to be Open Source, but which does not comply with the industry standard definition (our definition), you can sue them for fraud (they’re trying to make money by misrepresenting the quality of something). Where we are enjoined is in *our* enforcement of the OSI Approved trademark. That is a problem we have been working on rectifying for some months now. It wasn’t a simple problem to create and it’s not a simple problem to solve. We’re working on ti.

#9 Matthew Aslett on 10.07.09 at 1:05 am

Hi Russell,

Thanks for your comment. We appreciate that this is not a simple situation and would agree that in many ways “open source” is no more or less protected legally than it was before, however the OSI does hold significant influence given the respect in which it is held, so it is the detriment of everyone that it cannot function properly. Here’s hoping for a swift resolution.

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#13 enriqueotero on 10.07.09 at 4:57 am


#14 Thomas Lord on 10.08.09 at 4:55 pm

Hi, Thomas Lord here.

I can not be certain but I suspect that the OSI was suspended quite a few months ago and in response to a complaint that I filed with the state attorney general office.

I had had an unpleasant interaction with the OSI – one that startled me and offended me. I thought to look deeper into the organization and in particular to examine its sources of funding and its use of funds. With the help of a couple of “internet friends” on Bruce Perens’ former blog, “technocrat”, I discovered that OSI had (per the public record, at least) failed to file federal tax forms (form 990) for several years running. I also noticed what seemed to my amateur eyes like oddities in how they had spent money, at least as far as one could tell from published board meeting minutes. I also noticed what to my eyes were some inappropriate comments on the board’s blog. I reported these facts to the state A.G. office. Not much later, OSI became a suspended corporation.

Per (wise) policy the A.G. office will not discuss matters with me unless I want to add to my complaint – they protect the “innocent until proved guilty”. Bless them.

And I wish to be very clear that, although it seems the several years of missing tax forms is not in dispute, my additional suspicions about how they spent their money are purely speculation and should not be taken as anything more than part of my own personal motivation for talking to the A.G. Nobody should assume based only my word that OSI has done anything more wrong than missing a few filing deadlines. Clear?

As far as I can tell, the OSI board has several really wonderful, proactive, smart, social benefit do-gooders. I do not wish to impugn the board or the organization. Yes, I do have some strong differences with a couple of the board members. Yes, I do have some suspicions about their history as a fiduciary – but for now that’s between me, the A.G. office, and OSI. It’s not something I want other people to start believing only because “Tom says….”.


#15 Thomas Lord on 10.08.09 at 6:34 pm

Please see my comment, below. I was the instigator of a complaint to the CA state attorney general about OSI that I suspect but can not be certain led to the suspension. Mr. Nelson is not kidding when he says the problem was long in the making – per public records OSI was deliquent but several years in their filing of federal tax forms required of a 503(c). Years.


#16 Russell Nelson on 10.09.09 at 8:35 pm

Matthew, I am puzzled by your comment “[OSI] cannot function properly.” Yes, our corporate status is suspended, but we operated without being a corporation just fine for the first few years of our existance as an unincorporated organization. Business as usual, life goes on, nothing to see here, move along, no worries mate!

#17 Matthew Aslett on 10.10.09 at 1:14 am

Hi Russell,

I noticed that the OSI continues to describe itself as “a California public benefit corporation” and solicit donations and therefore continues to conduct business as a corporation in California, despite the suspension.

Perhaps I misunderstood the meaning of the term “The business loses its rights, powers, and privileges to conduct business in California”. If you have any insight into how the OSI can continue to operate “business us usual” without being in breach of California state law, I would be happy to update the Q&A accordingly.


#18 Ken Coar on 10.13.09 at 3:55 pm

Perhaps I’m being simplistic, but it seems to me that our ‘business as usual’ can continue elsewhere. The restriction is on doing business in California; we have people all over the planet. Since they’re not in California, are they enjoined to not pursue the OSI’s interests in their own regions? I suspect not.

As Michael pointed out, the OSI is not your father’s style of corporation.

#19 Matthew Aslett on 10.14.09 at 1:37 am

Well I am not a lawyer, obviously, but my understanding is that if a company registered in California continues to operate while its corporate status is suspended in California it is in breach in California state law.

#20 451 CAOS Theory » CAOS Theory’s most popular posts of 2009 on 12.22.09 at 9:52 am

[…] The Open Source Initiative’s corporate status is suspended: a CAOS Theory Q&A […]

#21 Russ Nelson on 02.24.10 at 11:49 am

Our status has been restored to “Active”, per the California State website. The link you have is bad; for some reason they broke the ability to link directly in with an entity number. Just search and you’ll see the current satus.

#22 451 CAOS Theory » Is it time to rethink the open source license approval process? on 05.25.10 at 7:19 am

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