Open source software has become foundational to modern technology development, but using open source code without understanding its licensing terms can create serious legal and business risks. Open source licenses grant broad permissions to use, modify, and distribute code, but they also impose conditions that can affect the rights of IP owners who incorporate open source components into their products. PerspireIP advises businesses on open source license compliance and IP risk management in the context of modern software development.
What Are Open Source Licenses?
Open source licenses are copyright licenses that grant recipients broad rights to use, copy, modify, and distribute software. Unlike proprietary licenses that restrict what users can do with software, open source licenses empower developers to build upon existing code. However, open source is not the same as license-free. All open source software is protected by copyright, and the license governs what you can and cannot do with the code. Violating the terms of an open source license is copyright infringement, with all the legal consequences that entails.
Types of Open Source Licenses
Permissive Licenses
Permissive open source licenses impose minimal conditions on users. The most widely used permissive licenses include the MIT License, the Apache License 2.0, and the BSD licenses. These licenses generally require only that the original copyright notice and license text be included in distributions. They allow users to incorporate the open source code into proprietary commercial software without imposing any requirements on the proprietary portions. From an IP ownership perspective, permissive licenses are the most business-friendly because they do not affect the ownership or licensing terms of your own code.
Copyleft Licenses
Copyleft open source licenses use copyright law to ensure that derivative works remain open source. The GNU General Public License (GPL) is the most prominent example. If you incorporate GPL-licensed code into your software, the GPL requires that the entire combined work be distributed under the GPL terms, effectively requiring you to make your proprietary code available as open source. This is sometimes called the viral effect. Strong copyleft licenses like the GPL v2 and v3 present significant IP risks for businesses building proprietary products.
Weak Copyleft Licenses
Weak copyleft licenses, such as the GNU Lesser General Public License (LGPL) and the Mozilla Public License (MPL), apply copyleft requirements only to modifications of the original code, not to larger works that merely use or link to it. Under the LGPL, for example, you can use an LGPL-licensed library in your proprietary software by linking to it dynamically, without being required to open source your proprietary code. Understanding the distinction between strong and weak copyleft is essential for IP owners managing open source usage in commercial software.
Key Open Source Licenses Compared
- MIT License: Maximum permissiveness, minimal conditions, IP-friendly for proprietary development
- Apache License 2.0: Permissive with an express patent license grant, protects users from patent infringement claims by contributors
- GPL v2: Strong copyleft, requires derivative works to be GPL-licensed
- GPL v3: Strong copyleft with additional provisions addressing tivoization and patent retaliation
- LGPL v2.1: Weak copyleft, allows dynamic linking from proprietary software
- MPL 2.0: File-level copyleft, modifications to MPL files must remain MPL-licensed but can be combined with proprietary code
- AGPL: Like GPL but extends copyleft to software used over networks, critical for SaaS applications
- Creative Commons: Not for software code but widely used for documentation, creative assets, and data
The Business Risks of Open Source Non-Compliance
Open source license violations can have serious consequences. The Software Freedom Conservancy and other organizations actively enforce copyleft license conditions on behalf of copyright holders. Enforcement actions can result in injunctions requiring you to stop distributing your product, demands to publish your proprietary source code, and lawsuits for copyright infringement damages. In highly publicized cases, companies have been forced to open source products they developed at great expense or to withdraw products from the market. Investors and acquirers also scrutinize open source compliance as part of due diligence, and undisclosed open source obligations can kill deals or result in price reductions.
Open Source Auditing and Compliance Programs
Every company that develops software should implement an open source governance program. This includes maintaining an inventory of all open source components used in your products and their respective licenses, reviewing license obligations before incorporating new open source components, establishing a process for approving use of open source with copyleft terms, ensuring that attribution notices required by permissive licenses are included in all distributions, and training developers on open source license compliance. Tools such as FOSSA, Black Duck, and Snyk can automate open source license scanning and help maintain compliance at scale.
Open Source and M&A Due Diligence
In merger and acquisition transactions involving software companies, open source license compliance is a critical due diligence area. Buyers conduct open source audits to identify all open source components in the target’s software, assess compliance with license obligations, and evaluate the risk that copyleft obligations might require disclosure of proprietary source code. Material open source issues can affect deal structure, representations and warranties, indemnification provisions, and valuation. PerspireIP assists both buyers and sellers in preparing for and conducting open source due diligence in M&A transactions.
Conclusion
Open source licenses are powerful tools that enable collaborative software development, but they impose real obligations on IP owners who use open source code. Understanding the difference between permissive and copyleft licenses, maintaining a comprehensive open source inventory, and implementing a governance program are essential practices for any software business. PerspireIP provides open source compliance audits, licensing advice, and M&A due diligence support to help businesses manage open source IP risk effectively.