The internet environment offers many opportunities to use and exploit online content which is offered free of charge by copyright owners. In this context, there are a few legal licensing schemes available online which are designed to promote and regulate such uses on the internet. One such model is the Creative Commons licensing scheme ("the CC License"). Many internet users are interested in incorporating and using, free of charge, existing content licensed under the CC License in combination with their own original content. For example: User A ("the Licensor") may permit other internet users to use free of charge, under certain terms, her original code line ("Code A"), by licensing it under a CC License. User B ("the Licensee") incorporates Code A with her original code ("Code B"), thus creating code AB ("the IP Product"). The IP Product thus comprises both original and existing content licensed under a specific CC License. This combination raises many questions, and particularly about its impact on transactions involving or relating specifically to the IP Product.

Creative Commons is a nonprofit organization whose goal is shifting from an 'all rights reserved' copyright regime towards a more permissible copyright regime of 'some rights reserved' or 'no rights reserved'. Creative Commons' aim is to break the barriers raised by copyright law to the use and sharing of content, by reducing the transaction costs associated with copyright protection. Creative Commons promotes this end through the issuance of CC Licenses. Each CC License comprises three layers: the legal layer that contains the legal format of the license; the human layer that offers a summary of the legal documents in layman’s terms; and the technology layer that enables other software and search engines to read it. Creative Commons offers six licenses composed of a menu of standardized terms: attribution (BY), no derivative work (ND), noncommercial use (NC), and share alike (SA). The most restrictive CC License is the CC BY-NC-ND (Attribution-NonCommercial-NoDerivs) license, which allows others to only download the content and share it with others, subject to a credit being given to the author of the content, and also prohibits others from modifying or making commercial use of the content. The most permissive CC License is the CC BY (Attribution) license, which permits others to distribute, modify and make commercial use of the content, provided that credit is given to the author of the content. It should be noted, that CC Licenses have been enforced in the courts in various jurisdictions. In Israel, CC Licenses were de facto validated in the District Court case, CF (Jer) 3560/09 Avi Re'uveni v. Mapa – Mapping and Publishing Inc. (published on January 6, 2011), which concerned a claim of copyright infringement of the plaintiff's photos that were licensed on Flickr under a CC License whereby use of the photos was permitted under the following three terms: attribution (BY), no derivative work (ND) and noncommercial use (NC). The court did not discuss specifically the CC License. However, by ruling that the plaintiff's copyright was infringed, the court, in practice, validated and enforced the CC License.

CC Licenses can foster creativity and the proliferation of information; it is a welcomed method for promoting the sharing of creative content. Theoretically, it seems that using free content governed by CC Licenses can be fairly easy and safe. However, it can also be problematic when a user wishes to sell her IP Product, or attract investors in order to develop her IP Product. The fact that the IP Product contains content regulated by a CC License can in fact reduce the value of the IP product.

Some CC Licenses include the term 'share alike', which means that all content based on or incorporating the work, subject to the CC Licence, will bear the identical licensing terms. In other words, the Licensee is obligated to license the IP Product under the identical CC License terms attributed in respect of Code A. If the Licensor prohibited the commercial use of Code A, then this will infer that the IP Product (code AB) cannot be commercialized as well. If the CC License permits a derivative work then likewise this would mean that others are permitted to make derivative works of the IP Product. Thus, this type of licensing term can curtail investment in, or commercialization of, the IP Product.

Furthermore, the fact that the content is offered under a CC License does not guarantee that the person licensing the content is actually the owner of the content, or that the CC License that one finds on the internet is the original CC License that the Licensor (User A) selected. First, the fact that someone offers content under a CC License does not constitute a guarantee that she is the copyright owner of the content. Second, there can be a thread of licensing contracts relating to the same original content (Code A). E.g.: User A (the Licensor) created Code A and licensed it under a CC BY-NC-SA license (Attribution-NonCommercial-ShareAlike); User B (the Licensee) used Code A and offered her code (Code AB) under a CC License that permits commercial use. Theoretically, any subsequent user (User C) that will make commercial use of Code A relying on User B’s CC License would then be vulnerable to infringement claims by User A (setting aside possible defenses). The lack of assurance as to the source of the content licensed under a CC License can also influence the value of the IP Product. It should also be noted, that the Licensor can change her mind and stop distributing her content under the CC License. Indeed, CC Licenses are not revocable.  If the Licensee was using the content when it was licensed under a CC License, before the Licensor stopped distributing the content under CC License, the Licensee can continue using it according to the CC License's terms. However, the ability of the Licensor to change her mind at will, also contributes to the uncertainty surrounding the IP Product.

Therefore, and in light of the above, when using content licensed under a CC License we recommend taking, inter alia, the following steps:

  1. Verify that the person licensing the content is indeed the copyright owner of the content which is subject to the CC License, or that she is authorised to permit the use of the content; in this respect:
    1. Make sure that the person licensing the content is the originator or copyright owner of the content.
    2. Make sure that the CC License in respect of the content is the original CC License under which the content was first offered, and not a second or third ‘metamorphosis’ (i.e., that this is not a license in a thread of licenses). 
  2. Review carefully and diligently the terms, obligations and requirement of each CC License. Make sure that there are no terms that might limit the intended use or commercial exploitation of the IP Product in the future. For example: avoid using content licensed under a CC License containing terms such as 'share alike' or 'non-commercial use'.
  3. Retain written documentation of any detail that can indicate the origin of the content you intend to incorporate in your work. This has material importance during the due diligence process. For example, keep records, inter alia, of the following:
    1. the web page hosting the content;
    2. the identity of the user licensing the content and any information supporting the fact that she is authorized to permit the use;
    3. the specific CC License governing the content, and the terms under which the use is authorized; and
    4. the fact that the content was licensed under a CC License (in case the licensor stops distributing the content under a CC License).

Admittedly, the CC Licensing scheme can reduce transaction costs and promote creativity. It is tempting to use content offered free of charge on the internet. However, in the context of transactions involving IP Products, free can turn out to be very expensive.