On Tue, 04 Oct 2011 15:41:21 -0700, <i...@bandshed.net> wrote:

but I was under the impression that any derived work could be licensed outside of the GPL provided the source code of the derived work was made available upon request.

You may be confused with the "binary redistribution" clause of the GPLv2,
which (simplified) allows you to redistribute it in binary form, provided
you give or promise to give the source code. However they still have the
rights to redistribute it themselves and creating other derived copies
with the source code you provide.

That doesn't mean you are surrendering the GPL. You are using a clause
  from the GPL, but your licensees are automatically given the same rights
you were given, the moment they receive the copy, under the terms of the
GPL.

So, it looks like you may go away from the GPL, but actually your users
are automatically covered by the GPL as well.

The 'source code' is the ISO image

In the GPL, "source code" means "the preferred form of the work for making
modifications to it", typically the program in, say, C, Python or whatever
language the original author used to create it.

So, an ISO image for a binary-based distribution is never source code.

Regardless the icluded closed source content
falls outside of the GPL and there is no law forbidding me to distribute
it on an ISO of my making providing I have the permission of the
developers which I do.

Copyright law forbids you, though, to restrict your users to redistribute
verbatim copies of GPL software in your distribution. The question is: are
you?

All of the above doesn't imply you are actually violating the terms of the
GPL. I'm just explaining what the license says.

I do think, however, that you are in a gray area, but you may step out of
the gray area with some work. For example, check how the Flash player
installation works in Debian (don't you love source code?)

First, make a fully compliant GPL distro without non-GPL demos. This will
help your distro to be freely redistributable.

Second, include a repository with packages that automatize the download,
installation and full integration of commercial demos into your distro.

Third, make sure you provide the source code yourself for the versions you
are providing.

Best "IANAL" regards. :-)

--
Octavio.

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