HCR Law Events

17 September 2021

Key legal considerations for companies using open source software

For most businesses, open source software (OSS) is a high quality, cost-effective, accessible and transparent code base. It allows companies to tap into an eco-system already in place whereby source code is constantly developed, bugs fixed and additional functionality added at no cost.

Whilst the benefits of using OSS within a derivative software solution are clear, most companies are unaware that use of particular OSS licences can have potentially damning consequences. We look here at some of the legal issues to consider when using OSS.

What is OSS?

OSS is software provided under a licence which grants certain freedoms to a licensee. The underlying source code in OSS can be used, inspected, modified and enhanced by anyone with modules readily downloadable from sites such as github.com and sourceforge.net.

OSS is different to proprietary or ‘closed source’ software which entitles only the person, team or organisation which created the source code to modify it and maintain exclusive control over the same.

Risks of using OSS

Some OSS can be restrictive and contain ‘copyleft’ issues which, at their worst, can lead to substantial damage to a company’s goodwill and loss of certain intellectual property rights held within the derivative proprietary solution incorporating such OSS.

A copyleft licence can contain polluting elements when incorporating OSS into an overall derivative software solution. This can in turn force the licensee to make its derivative proprietary solution freely available to the general public.

An example of a copyleft provision is shown below:

“You may modify your copy or copies of the Program or any portion of it, thus forming a work based on the Program, and copy and distribute such modifications or work… provided that you also meet all of these conditions…

“b) You must cause any work that you distribute or publish, that in whole or in part contains or is derived from the Program or any part thereof, to be licensed as a whole at no charge to all third parties under the terms of this License.”

This OSS licence compels the user to distribute any derivative work containing the licensed OSS to any and all third parties at no charge. The most common types of restrictive OSS licences are:

  • Zlib
  • Eclipse 1.0
  • GPL 2.0
  • GPL 3.0
  • LGPL

Where a company has developed proprietary software using the above, we recommend it considers replacing the source code with an alternative that will help continue the functionality offered by the restrictive licence.

Companies often do not realise the impact of restrictive OSS until shareholders want to exit the business in the form of a share sale. Buyers will commonly ask their legal advisors to carry out a legal due diligence exercise, which may lead to a review of software licences, particularly in the case of a software or IT business being acquired.

Depending on the importance of the derivative solution to the target business being acquired, the value of the target company could reduce drastically if copyleft OSS is found and is difficult/impossible to replace before completion.

Restrictions, complications and developments will all be under discussion at our Cyber Conference starting on September 21; join us here.

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About the Author
Nicola McNeely, Partner, Head of Technology Sector

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Nicola McNeely is a Cardiff based solicitor, specialising in Technology.

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