Does Open Source Software cause issues in your contracts?

27th February 2019

Open-Source software (OSS) has been described as one of the ‘great disrupters’ of the IT (and specifically software) industry. It is increasingly being embraced by our clients, from SMEs to multinational corporations, and has become a more significant point of negotiation in a number of the IT contracts we have recently advised on.

What is OSS?

OSS is a type of computer software in which, generally, the source code is released under a licence which allows the copyright holder to grant users the right to study, change, and distribute the source code to anyone and for any purpose. This is in contrast to traditional software licences for proprietary software that usually place stricter conditions on the use of that software and come at a cost.

These wider rights can come with certain restrictions, the most common of which is that the new user of the OSS does not place any additional restrictions on the use or onward distribution of the OSS. Where a new software product is created incorporating OSS, often an OSS licence will only require the user to make available the source code relating to the OSS; however there are more complex OSS licences which place stricter conditions on the user.

Why do businesses negotiate OSS clauses?

We have seen many businesses go from a position where the use of OSS in any form is strictly prohibited, to one where they have a presumption in favour of the use of OSS solutions. This has resulted in a point of contention in IT contracts between businesses who are more cautious around the use of OSS (usually the buyer), and those who embrace it (usually the developer).

What should I do if I am buying software containing OSS?

The default position of many buyers of software, is to require a warranty (and sometimes an indemnity) from the developer that there has been no OSS included in the software product. Although this significantly lowers the risk around OSS, in reality this stance is impractical.

The majority of software products now include OSS in some way and most of the time the OSS is perfectly safe with minimal onward restrictions. There is always some degree of risk (e.g. IPR infringement, security) involved in using a third party’s software products – the presence of OSS should not act as a stumbling block to completing a deal.

Alternatively, as a buyer you may want to ask that the seller warrants that any OSS included in the software product is free of potentially harmful onward restrictions. You may also ask the seller to provide you with a list of the OSS used in the product, and the licence under which they use it, so you can review the licences.

What should I do if I am using OSS in my software?

As highlighted above, even though OSS is free and comes with a host of benefits, it does come with restrictions. The strings that can come attached can require developers to share any changes they make to the source code. Other licences may even impact whether the open source software can be used in products for commercial sale.

The key thing as a software developer is to work out what licence the OSS you are using is under, and to have these licences reviewed. Some can be simple as a couple of paragraphs, whereas others are technically complex and will require attention from your lawyer. There are risks depending on the language of the licences and you have to read them to know what risks you’re facing.

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