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Royalty fees for open source / free browser

Hi,

Apologies if this has been asked before, but I can't find a question with the exact situation we're in.

We're a group of open source developers who develop a server for multi-user virtual worlds called OpenSimulator (http://www.opensimulator.org). We are considering developing a new client-side application, and are looking into doing it in UE (among other options). Part of the decision falls on the licensing model.

Our client-side application is a browser that receives all content dynamically from servers running our OpenSimulator software. Note that we, ourselves, don't run these servers; they are like Web servers, so various people install them and run their own servers and for their own users. We also don't distribute any content as such; these operators do. We are a bit confused about the royalty fees in this case. Here are a few concrete questions:

1) I assume we (OpenSimulator devs) don't have to pay any royalties, because we distribute everything free of charge. Our license is BSD. No fees, right?

2) If the operators of our software use it for their own commercial purposes, but don't distribute the client application themselves, do they have to pay royalties? Let me break this question down:

  • Operator A uses our free-of-charge client-server software as an ancillary application to their existing revenue model, something that's not the main source of revenue. For example, a University using it for virtual campus visits, or a company using it to promote their products. Do they need to pay royalties?

  • Operator B uses our free-of-charge client-server software as a primary source of revenue. For example, a VR dating site, or an architecture company that delivers their models to their clients via our software. Do they need to pay royalties if they don't distribute our software, but simply use it?

3) Operator C is a bit more demanding and decides to take our software and make a derivative commercial product that is closed source and proprietary. They distribute that derivative work to their users. Do they need to pay royalties?

Thanks!

Product Version: UE 4.21
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asked Dec 17 '18 at 04:22 PM in Legal & Licensing

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DivaCanto
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1 answer: sort voted first

1) Correct, we only collect royalties on revenue, so if there is no revenue, no royalty.

2) I think we'll need more detail here. To be clear, UE4 is only used for the client-application, which is an executable, correct? How is the client-application (i.e., licensed technology) used/distributed by the operator in each case?

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answered Dec 18 '18 at 10:33 PM

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SonsOfKorhal STAFF
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avatar image DivaCanto Dec 18 '18 at 11:08 PM

Thanks for replying!

Correct, UE is only used for the client. In case 2), the client would be distributed by us, open source developers. The operators would point their users at our web site for the download of the client part that uses UE. The operators may use the system in all sorts of ways: commercially, non-commercially, main revenue or ancillary. Look at it as a web server - web browser duo, but where the content is 3D. Whatever use cases you see on the Web, you see here too. We are the makers of the duo, but have nothing to do with either their operation or the content that is being served.

The 3D content being served from these operators is placed there by them, and may come from a variety of sources. Clearly if they are distributing content that is subject to fees or royalties, then they need to pay them to the authors of that content -- be it Epic or others. But they may chose to serve only content created by them or licensed to them. And this is the murkiest case, in our view, especially if they use their virtual world as their main source of revenue.

In case 3), the operators would distribute their derivative software themselves to their users. So I think I know what the answer to case 3) is, but I'll wait for your reply.

avatar image SonsOfKorhal STAFF Dec 19 '18 at 09:05 PM

It sounds like the client-application may include Engine Tools. If that's the case, your distribution rights are limited by Section 1(A).b of the EULA. Namely, you can only distribute through Epic's channels.

avatar image Melanie_T Dec 19 '18 at 09:15 PM

Could you explain what engine tools are? As far as I am aware, nothing made by Epic is distributed, save for the compiled game. The import of the dynamic content isn't done via Epic asset tools, we developed from scratch code for that.

avatar image SonsOfKorhal STAFF Dec 19 '18 at 09:23 PM

Engine tools are:

“Engine Tools” means (a) editors and other tools included in the Engine Code; (b) any code and modules in either the Developer or Editor folders, including in object code format, whether statically or dynamically linked; and (c) other software that may be used to develop standalone products based on the Licensed Technology.

It sounds like your use may fall under (c). Our concern here is that operators must be licensed UE4 users in order to build and commercialize products that rely on the Licensed Technology.

Notwithstanding that concern, to respond to your original question, the answer for the specific scenarios (A), (B), and (C) are no, yes, yes, respectively.

avatar image Melanie_T Dec 19 '18 at 09:29 PM

I respectfully disagree. Our code uses only exposed APIs in your game engine API, it neither copies, nor paraphrases, reimplements or replaces any UE4 code. Our code cannot work without the environment of UE4, it was never intended to. It uses your existing, published API to create procedural mesh and it uses blueprints to express the materials by simply providing parameters. In no way could the code be considered duplicating Unreal Engine functionality, nor can it be construed, much less actually be used, to create something that is apart or removed from the UE4 runtime. As an aside, our code doesn't require editor source to be compiled and run.

avatar image DivaCanto Dec 19 '18 at 11:29 PM

Thanks for your answer, SonsOfKorhal. It looks like we might be putting our commercial users under legal liabilities if they would fail to license UE, even though they wouldn't use it directly. This makes UE not viable for our project -- the licensing model looks complicated, and therefore people wouldn't want to use it. We will look at the other options.

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