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See discussion of an earlier draft here:

https://news.ycombinator.com/item?id=33458374

We've removed "Open Source" from the name because the license may be incompatible with point 6 of the OSI definition here: https://en.m.wikipedia.org/wiki/The_Open_Source_Definition

Here is the license text:

  Copyright (C) <YEAR> <COPYRIGHT HOLDER>

  All rights reserved.

  Redistribution and use in source and binary forms, with or without
  modification, are permitted provided that the following conditions
  are met:

  1. Redistributions of source code must retain the above copyright
     notice, this list of conditions and the following disclaimer.

  2. Redistributions in binary form must reproduce the above copyright
     notice, this list of conditions and the following disclaimer in
     the documentation and/or other materials provided with the
     distribution.

  3. Use in source or binary form for the construction or operation
     of predictive software generation systems is prohibited.

  THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS
  "AS IS" AND ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT
  LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
  A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT
  HOLDER OR CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL,
  SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT
  LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE,
  DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY
  THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT
  (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE
  OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
The above is a verbatim (word-for-word) copy of the BSD 2-Clause License (https://en.m.wikipedia.org/wiki/BSD_licenses), except for the addition of a third clause:

  3. Use in source or binary form for the construction or operation
     of predictive software generation systems is prohibited.
The BSD license restricts both "redistribution" and "use":

  Redistribution and use in source and binary forms, with or without
  modification, are permitted provided that the following conditions
  are met:
Training a Copilot-like system is unambiguously "use" in violation of the new third clause.

Comments and suggestions are welcome.

What I said last time is still true of this version: it's neither Free Software nor Open Source, and it doesn't even work for its stated purpose, since Microsoft is already willing to let Copilot violate licenses, e.g., by not providing attribution, which they virtually all require.
Take another look. We removed the "Open Source" wording in response to your comments.

And it was never intended to be a Free/Copyleft license: this is a permissive MIT- or BSD-style license.

The No-AI 3-Clause License explicitly and unambiguously prohibits TRAINING.

No other license does so. That's the key difference.

I think my confusion about the use of "use" [1] is actually about what josephcsible is saying. It may be that copyright empowers you can write a license that limits how someone can use the material, but then it falls outside what is an "open" license.

Still, I agree with the spirit of license, and I don't have any quarrel with any of the wording. But now I also agree with josephcsible that if MS is now the business of ignoring FOSS licensing and clouding the issue for everyone, this isn't going to change that.

[1] https://news.ycombinator.com/item?id=33457063&p=3#33457782

Microsoft can argue that Copilot emits a mixture of intellectual property (a pattern from here, a pattern from there), so they don't need to give attribution.

But if we disallow training, it's unambiguous.

Either you fed the program into your training system or you didn't. The No-AI 3-Clause License forbids use in training, no question about it. If you train your model on this text, you are obviously violating the license.

Systems like Microsoft Copilot are a new threat to intellectual property. The open source licenses need to change to adapt to the threat.

Otherwise Microsoft and Amazon will pillage open source software, converting all our work into anonymous common property that they can monetize.

We're watching it happen.

You misunderstand Microsoft's legal argument. They aren't saying that ambiguity in the licenses means that they're in compliance with them. Their argument is that what they're doing is fair use, so they don't need to follow the licenses.
If the fair use argument holds, there will be no possible defense against it. Microsoft will convert all open source into anonymous common property and monetize it.

That's the hopeless scenario.

Otherwise, the fair use argument fails to be upheld. Then Microsoft must argue that normally Copilot regurgitates a mixture of patterns from various sources, and therefore the licenses in the training data can be ignored.

To defeat this fall-back argument, we must attack the root of the problem: the moment our code is used in training.

That's precisely what the No-AI 3-Clause License achieves, while otherwise being the permissive BSD 2-Clause License that we know and love.