Open-source software: legal advantages, risks and licence pitfalls

The popularity of open-source software continues to grow among businesses. Open-source tools have become a genuine alternative to their proprietary counterparts, now offering equivalent functionality and quality.

The term is often used loosely, however, which makes the open-source ecosystem harder to understand than it needs to be. A brief overview of its legal and operational implications is therefore useful.

How does the law define open-source software?

The Free Software Foundation defines open-source software as software distributed under a licence granting users the freedom to run, copy, distribute, study, modify and improve the software.

Software is considered open-source if its licence guarantees four fundamental freedoms: unrestricted use, unrestricted copying, direct access to the source code, and the right to modify and redistribute the code. This philosophy is the opposite of proprietary software, which is distributed in object code with rights restricted by the vendor.

In practice, the freedoms granted to users include reproducing the software on multiple machines, packaging it with other components to create derivative works (subject to licence compatibility), adapting and extending the software, and using it commercially.

Users are also encouraged to fix bugs and contribute developments back to the community. As a result, open-source software is likely to be supported over a longer period than proprietary software, where a vendor’s change of commercial direction can disrupt its customers’ operations.

Legal advantages and risks of open-source software

The main advantages of open-source software are cost reduction and a better balance of power between the developer and the users. This does not necessarily mean the software is free of charge, but rather that the user is not locked into an agreement with a single vendor, particularly for maintenance.

Since the source code is accessible, it is entirely possible to handle maintenance in-house or through a third-party maintenance contract. Open-source software also reduces exposure to software licence compliance audits.

The most sensitive legal issue is copyleft contamination. Certain licences require that any derivative work based on a module under that licence must be redistributed under the same licence. Some licences are incompatible with each other (for example, the GPL and the BSD licence). A thorough analysis of applicable licences is therefore essential before any development. For development contracts specifically, see the article on essential clauses in a software development contract.

Common open-source licences

Numerous open-source licences exist: GPL, LGPL, Apache, CeCILL, MIT, and Python, among others. Each has different characteristics: some allow commercial redistribution, some require derivative works to be distributed under the same licence, and some maintain all four freedoms while others do not.

When deciding to use open-source software or to integrate an open-source component into a development project, it is essential to review the applicable licence before use in order to identify alternatives if the licence is incompatible with the intended use. For an overview of the key provisions, see the SaaS contracting guide.

Conclusion

Adopting open-source software is a decision that requires careful upstream analysis on both technical and legal fronts. Licence compatibility and copyleft contamination risk are the two points that must be verified systematically. If you are integrating open-source components into your developments, book a call to discuss it.

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