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Venture Capital Funds Intellectual-Property Software

Black Duck Software raises another $12 million in venture capital to help finance the company's software, which checks software under development to make sure it doesn't violate another company's intellectual-property rights.

Black Duck Software Inc. on Monday revealed it has closed a Series B round of funding worth $12 million and led by Fidelity Ventures. The company, which sells software and services that businesses use to ensure their application-licensing compliance, is expecting that key growth in other areas will lead it to profitability as early as next year.

Intel Capital and SAP Ventures, a division of SAP, also participated in the round, as did existing investors Flagship Ventures, General Catalyst Partners, and Linux provider Red Hat. Together with its Series A funding, Black Duck has raised $17 million to date.

Black Duck is looking to tighten its relations with Intel beyond the chipmaker's investment. The software company plans to port its protexIP/development product to run on servers powered by Intel's 64-bit chips by the end of the summer, says Black Duck president Doug Levin. "ProtexIP/development will not only run on 64 bit, it will take full advantage of 64 bit," he adds. The company also plans to expand its relationship with SAP, but Levin declined to comment further.

The appeal of application compliance software is broad, Levin says. "Companies are interested in what's in their code," he adds. "It's not just open source that's floating around in their code; we can identify binaries and other components and who owns what. Black Duck is all about identifying third-party code."

Black Duck last week expanded its reach into the Asian market with its first international distribution agreement with Ten Art-ni Corp., a distributor of open-source-based software in Japan. Ten Art-ni will sell Black Duck's protexIP/development product and offer product support and professional services to customers in the Japanese market.

Software for sniffing out third-party code has grown in popularity with the rise of open-source software. Palamida Inc., which has a business model similar to Black Duck's, last week said that Cisco Systems will deploy Palamida's IP AMPlifier product for automatically detecting, managing, and reporting on software intellectual-property assets.

Companies are beginning to turn to intellectual-property integrity tools to help them understand the risk of open source, says Mark Tolliver, Palamida's CEO and a former Sun Microsystems executive. "Equally valuable to companies is to use it as a validation tool around commercial software that's incorporated into their code stack."

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