The use of open source to develop new software products is widespread among technology startups, to the point that there are over 25 million repositories on GitHub, over 430,000 projects on SourceForge and over 21 billion lines of indexed and searchable open source code on the Black Duck Open Hub. Technology startups use open source in three main ways:
- As a tool to aid development, typically used as-is in binary form without any modifications;
- Without modifications, but combined with proprietary code; or
- With modifications and combined with proprietary code.
The latter two uses of open source software are directed toward developing proprietary software—augmenting, modifying or incorporating existing open source code with proprietary code to offer something new and different to the market. Such use in software development is common, but does present potential hurdles or drawbacks, of which technology startups should be keenly aware when deciding to incorporate open source in their technology products.
There are many considerations startups must consider when using open source, but two in particular stand out.
License Obligations and Restrictions
In developing software products, technology startups must maintain a complete, up-to-date inventory of all open source software and open source components they use. If open source is incorporated into the software products themselves—with or without modifications—startups must determine and understand what license requirements their software products are subject to, and must particularly assess the open source, copyleft and other restrictions such licenses may impose on their software development processes and distribution strategies. In particular, attribution, distribution, modification, linking, patent and sublicensing rights and obligations in open source licenses vary widely, and should be thoroughly understood before use.
"Permissive," "free software" licenses, such as the BSD License family and the MIT License are examples of less restrictive open source licenses; the GNU General Public License (GPL) is an example of a more restrictive, "free software" license (it is the most widely used copyleft license and contains a number of significant restrictions). The importance of understanding these licenses and their terms cannot be understated: not only does each license impose particular obligations on any software product that integrates such open source software, but they each also pose compatibility issues with use of other open source code. For example, some licenses prohibit linking with proprietary code or combining with open source code subject to more permissive open source license terms. Other, less restrictive open source licenses allow modifications and incorporation into newly developed code for proprietary purposes, and pose little to no compatibility issues with other open source software.
Accordingly, it is vitally important that startups fully review, audit, evaluate and index all license obligations they are subject to when developing and releasing a software product, not only to protect their proprietary code, ensure compliance and avoid litigation, but also to provide potential investors with the information they need to effectively evaluate the software product and arrive at an appropriate valuation.
Copyleft requirements may obligate release of otherwise proprietary code as open source, and ultimately endanger a startup's business interests and risk the loss of otherwise protectable innovations. Open source software and components provided under copyleft open source licenses require any redistribution or derivative works to be released under the same open source license terms. In other words, if a startup's software product is comprised of or derived from open source code subject to copyleft requirements, the startup must distribute its software product under the same copyleft terms—potentially forcing the startup to make code available as open source that would otherwise be proprietary.
Thus, the original open source code and the startup's software product comprised of or derived from the same open source code (whether modified or not) remain open source—this "share-and-share-alike" requirement of copyleft licenses is intentionally restrictive, and is intended to ensure that downstream derivatives of original open source software remain open source. Accordingly, technology startups must take the time to fully appreciate the terms of the open source licenses their software products and development processes may be subject to, particularly ones with copyleft requirements.
For More Information
Polsinelli attorneys understand open source and the issues technology startups face. For more information on open source, including safe open source practices, developing an open source policy, the types of open source licenses and the impact of open source on valuation, please contact the author, a member of the Startup Ventures or Intellectual Property practice, or your Polsinelli attorney.