Arduino LLC vs. Arduino SRL
Posted: Wed Apr 01, 2015 1:00 am
Arduino was founded around 2005 by five people, two of whom are Massimo Banzi and Gianluca Martino. These two are now embroiled in an international lawsuit that much of the Arduino community is up in arms over. You can see the court complaint and some interesting exhibits here.
In or about 2005, Banzi, who was working as a college professor, had a student who produced a novel idea called Wiring. He developed a board and a language to program it in. Banzi convinced him to take the project open-source. As soon as the student did this, Banzi swooped in, took the open source, and used it to bootstrap what would eventually become Arduino. Banzi and four other individuals, including Martino, formed the Arduino company. Eventually, they incorporated into Arduino LLC. Banzi DID NOT cut his student in on this deal, and as far as we know, has never given him a dime for his contributions.
During the formation of the company, no contract was ever drawn up or signed - an enormous mistake. Instead, they had email discussions. Some of those emails are attached as exhibits - you can read them in the link above. All five members get an equal 20% share. At one point, Martino says that he would like to control the hardware manufacturing. He says that as he's one out of five members, he would entertain a discussion about changing that arrangement in the future if desired, but he doesn't agree in advance to whatever the others might decide; he says only that he's willing to talk about it. The other members, Banzi included, do not seem to have taken him up on this point at all. They don't correct him or suggest an alternative.
Martino then proceeds to gear up his factory, run by his company Smart Projects SRL (SRL is like LLC in Italy), to produce Arduino boards. These are distributed in boxes that say they're "under license from Arduino LLC". As Martino is part of Arduino LLC, this is akin to them being manufactured under license from individuals including the manufacturer's owner himself. That makes the "under license from" thing a little murky. He invests significant time and capital in this project, and for about a decade, his factory churns out the boards. I don't know what it costs to tool up for something like this, but it's obviously not cheap. From the emails, it's also clear that he was responsible for collecting and distributing royalties. Martino also acquired the Arduino trademark in Italy. A year later, when the rest of the team tried to register the trademark in countries worldwide, they discovered what Martino had done. Apparently, they were still "all friends" at this point, so nothing much came of it.
In 2014, Banzi started talking about branching out to other hardware manufacturers, which would effectively end Martino's (exclusive) control of the hardware side of the business. Martino, according to emails Banzi's own legal counsel attached to the lawsuit, seems to have a reasonable expectation that he would continue to run the hardware side. Additionally, unless Banzi and the other founders helped him tool up for and run the production, I think he has a pretty good case that he has far more skin in the Arduino game than any of the other founders. Martino's response was to stop paying royalties to the others, to rename Smart Projects to Arduino SRL, to file for dissolution of Arduino trademarks held by Arduino LLC, and to open the site Arduino.org (vs. the pre-existing site, Arduino.cc) to present a storefront and whatever other services he wants to offer.
The reporting, and community response, has been fairly one-sided, and in favor of Arduino LLC (Banzi et al). This is probably because Arduino's forums have always been controlled by the LLC. They see Martino's moves as unethical, provocative, etc.
What they don't seem to see is that Banzi got his own student to open-source important work, and then immediately turned around and turned it into a profit machine. I am uncertain of what Banzi's contribution to Arduino is, aside from procurement of other peoples' work in questionable circumstances. Apparently, the other Arduino team members did things like designing some boards, running the forums (in a way that is so hands-off that some community members are offended), and some other miscellaneous tasks. They have also worked on the Arduino IDE, which in my opinion has been terribly stripped-down and hard to use since I first installed it in 2009, but work on it they did. I may be wrong about this, and I will admit that my information on this saga is not encyclopedic. However, it seems to me that Smart Projects SRL (now Arduino SRL) is the entity that put the most time and money into Arduino, not to mention shouldering financial and administrative burdens, by far. I find Martino's actions somewhat brash and ill-advised, but I find Banzi's actions significantly worse. To me, it seems that Banzi is feeding off the work of others, and he contributes far less than he takes. One of those others is Martino.
Reading through the complaint, their case seems awfully thin. There is no contract, at all. There is no language about who controls the IP (trademarks), whether anyone can make decisions unilaterally or whether a vote is required. (Or whether that vote would be a simple majority, unanimous, etc.) They left all of these things to chance. I also looked at the articles of incorporation for Arduino LLC. David Mellis, another of the team members, is the only member mentioned in the LLC filing or any of the subsequent statements of information. He is listed as having signatory power for dealing with real (not intellectual) property, dealing with the Secretary of the Commonwealth (like Secretary of State in other states), etc. The government doesn't seem to recognize Mellis as having any exclusive powers to determine what happens with the trademarks.
The emails that Banzi's lawyers cite as a basis for their complaint make them look just as bad as the defense. They repeatedly refer to Martino/Smart Projects as some kind of separate entity, as not being part of the original founders. However, the emails state that he's got the same 20% share as anyone else - and that Smart Projects will handle the manufacturing - and that Martino is willing to discuss this arrangement in the future, but nothing more.
Both of the litigants are claiming to be "the real" Arduino. They both have some claim on this. I believe the judge will sift through the emails, ask a lot of pointed questions, figure out what each parties' investment, risk exposure and reasonable expectations were of each other, and then figure out to what degree each party violated those reasonable expectations.
In or about 2005, Banzi, who was working as a college professor, had a student who produced a novel idea called Wiring. He developed a board and a language to program it in. Banzi convinced him to take the project open-source. As soon as the student did this, Banzi swooped in, took the open source, and used it to bootstrap what would eventually become Arduino. Banzi and four other individuals, including Martino, formed the Arduino company. Eventually, they incorporated into Arduino LLC. Banzi DID NOT cut his student in on this deal, and as far as we know, has never given him a dime for his contributions.
During the formation of the company, no contract was ever drawn up or signed - an enormous mistake. Instead, they had email discussions. Some of those emails are attached as exhibits - you can read them in the link above. All five members get an equal 20% share. At one point, Martino says that he would like to control the hardware manufacturing. He says that as he's one out of five members, he would entertain a discussion about changing that arrangement in the future if desired, but he doesn't agree in advance to whatever the others might decide; he says only that he's willing to talk about it. The other members, Banzi included, do not seem to have taken him up on this point at all. They don't correct him or suggest an alternative.
Martino then proceeds to gear up his factory, run by his company Smart Projects SRL (SRL is like LLC in Italy), to produce Arduino boards. These are distributed in boxes that say they're "under license from Arduino LLC". As Martino is part of Arduino LLC, this is akin to them being manufactured under license from individuals including the manufacturer's owner himself. That makes the "under license from" thing a little murky. He invests significant time and capital in this project, and for about a decade, his factory churns out the boards. I don't know what it costs to tool up for something like this, but it's obviously not cheap. From the emails, it's also clear that he was responsible for collecting and distributing royalties. Martino also acquired the Arduino trademark in Italy. A year later, when the rest of the team tried to register the trademark in countries worldwide, they discovered what Martino had done. Apparently, they were still "all friends" at this point, so nothing much came of it.
In 2014, Banzi started talking about branching out to other hardware manufacturers, which would effectively end Martino's (exclusive) control of the hardware side of the business. Martino, according to emails Banzi's own legal counsel attached to the lawsuit, seems to have a reasonable expectation that he would continue to run the hardware side. Additionally, unless Banzi and the other founders helped him tool up for and run the production, I think he has a pretty good case that he has far more skin in the Arduino game than any of the other founders. Martino's response was to stop paying royalties to the others, to rename Smart Projects to Arduino SRL, to file for dissolution of Arduino trademarks held by Arduino LLC, and to open the site Arduino.org (vs. the pre-existing site, Arduino.cc) to present a storefront and whatever other services he wants to offer.
The reporting, and community response, has been fairly one-sided, and in favor of Arduino LLC (Banzi et al). This is probably because Arduino's forums have always been controlled by the LLC. They see Martino's moves as unethical, provocative, etc.
What they don't seem to see is that Banzi got his own student to open-source important work, and then immediately turned around and turned it into a profit machine. I am uncertain of what Banzi's contribution to Arduino is, aside from procurement of other peoples' work in questionable circumstances. Apparently, the other Arduino team members did things like designing some boards, running the forums (in a way that is so hands-off that some community members are offended), and some other miscellaneous tasks. They have also worked on the Arduino IDE, which in my opinion has been terribly stripped-down and hard to use since I first installed it in 2009, but work on it they did. I may be wrong about this, and I will admit that my information on this saga is not encyclopedic. However, it seems to me that Smart Projects SRL (now Arduino SRL) is the entity that put the most time and money into Arduino, not to mention shouldering financial and administrative burdens, by far. I find Martino's actions somewhat brash and ill-advised, but I find Banzi's actions significantly worse. To me, it seems that Banzi is feeding off the work of others, and he contributes far less than he takes. One of those others is Martino.
Reading through the complaint, their case seems awfully thin. There is no contract, at all. There is no language about who controls the IP (trademarks), whether anyone can make decisions unilaterally or whether a vote is required. (Or whether that vote would be a simple majority, unanimous, etc.) They left all of these things to chance. I also looked at the articles of incorporation for Arduino LLC. David Mellis, another of the team members, is the only member mentioned in the LLC filing or any of the subsequent statements of information. He is listed as having signatory power for dealing with real (not intellectual) property, dealing with the Secretary of the Commonwealth (like Secretary of State in other states), etc. The government doesn't seem to recognize Mellis as having any exclusive powers to determine what happens with the trademarks.
The emails that Banzi's lawyers cite as a basis for their complaint make them look just as bad as the defense. They repeatedly refer to Martino/Smart Projects as some kind of separate entity, as not being part of the original founders. However, the emails state that he's got the same 20% share as anyone else - and that Smart Projects will handle the manufacturing - and that Martino is willing to discuss this arrangement in the future, but nothing more.
Both of the litigants are claiming to be "the real" Arduino. They both have some claim on this. I believe the judge will sift through the emails, ask a lot of pointed questions, figure out what each parties' investment, risk exposure and reasonable expectations were of each other, and then figure out to what degree each party violated those reasonable expectations.