Blackboard's Fabian Strategy Against Open Source

Near the end of the third century BC a new force crossed the Pyrenees and the Alps, marching menacingly to the doorsteps of Rome. Led by the brilliant Hannibal, the Carthaginian army and its cavalry of elephants achieved punishing victories in lightning succession against much larger forces. The greatest empire in the world was under threat.

Carthage lost. Rome won. Hannibal's ultimate defeat in large measure was due to a strategy devised by Fabius Maximus. Recognizing that time was on the Roman side Fabius avoided direct pitch battles, choosing instead to follow a patient, slower war of attrition. In the end, Fabius' strategy paid off. After his army's defeat Hannibal was hunted down by Roman troops to the Sea of Marmora, where he committed suicide by poison.   

Blackboard's war against the open source menace is following Fabius' strategy: Avoid direct engagement and erode the enemies' strategic vulnerabilities over time. Open source software's strategic weaknesses are twofold and Blackboard will exploit them ruthlessly: a) the lack of legal protection or indemnification for end users;  b) the necessity of creating an ecosystem of commercial partnerships around the core software. Blackboard's patent litigation simultaneously strikes at both, cleverly and indirectly.

By using open source software your organization exposes itself to legal liability. Blackboard doesn't have to say it. Your legal counsel knows it. Commercial software is usually accompanied by an intellectual property contract provision ("indemnification") which protects the end-user against third-party infringement and misappropriation claims. For example, here is an excerpt from Microsoft's  "Intellectual Property Indemnification" protection to end users:

Askance by K. Tokuyasu

"For any covered software, we will: defend you against any claims made by an unaffiliated third party that the covered software infringes its patent, copyright, or trademark or misappropriates its trade secret, and pay the amount of any resulting adverse final judgment against you (after any appeals) or settlement to which we consent."

Although Blackboard's current counsel has said that "for business reasons" his company doesn't intend to sue open source projects or higher education institutions, it's not a binding commitment. Go to your counsel's office and say: "It's ok for us to use Sakai because Blackboard has promised not to sue us." I am sure she will listen to everything you have to say and politely show you to the door. See then if she ever invites you back. (If your counsel is receptive to your ideas, then your institution probably needs to get a new counsel.) From a risk perspective using mission critical software without indemnification is like going through life without catastrophic health insurance. Large institutions can afford to play the russian roulette risk game because if the gun goes off it's not likely to be lethal. Smaller and mid-size institutions don't have that luxury and Blackboard knows it.

The other Achilles heel of open source software is found in its symbiotic relationship with commercial providers. All commercial providers in the e-learning space, not just those that directly infringe Blackboard's patent, are now at legal risk. If I am an entrepreneur who is thinking of entering this space or a company such as Unicon, which is trying to build products and services around open source offerings, I have to calculate seriously my legal risks and ongoing investments needed to mitigate that risk. Guess what? I will probably go elsewhere. Why would I want to waste my time navigating legal landmines placed by an 800 million dollar company?

In short, Blackboard will choke open source by slowing new adoption and sucking all the oxygen from enterpreneurs around open source.

As one investment advisor has noted, time (and money) is on Blackboard's side and its monopoly choke hold on e-learning:

"Now, the controversy generally wouldn't matter that much -- academics are an easily angered lot (I should know, being among them), and they often take principled stands. That's fine, and often admirable, but it doesn't often have a huge impact on companies or businesses"

"Now, I don't think this is going to be that big a deal, and I expect that the firestorm of controversy within the academic community will simmer down in the coming months."

"No, I bought shares in Blackboard because, although still a small cap company, they have a dominant market position, a very well-integrated product, and a set of competitors that, though myriad, are quite weak in comparison. I see BBBB as having a near monopoly on this market, or at least a monopoly on the segment of the market that will always prefer to have a professional, supported suite of products as opposed to a homegrown or self-supported open source solution."

"I'm still holding my shares and I believe the prospects are good several years out,.."