Free and open source software is software which source code is open and accessible to users, who apart from using it are also entitled to take part in its development, in modifying it and in distributing it, thus contributing to improving the software and adapting it to future needs. The use of open source has significant and extensive implications which require a thorough examination of the licensing terms and conditions which allow the use of the software and its code.
Background
Recently there has been an increase in the use of an open source by technological companies. Companies prefer to incorporate in the software they are developing, parts of open source as oppose to a fully independent development of the software, since using open source grants companies the ability to develop the software much quicker, while cutting costs. In spite the inherent advantages in using an open source, the legal and commercial implications involved in it should be taken into consideration prior to such use.
What is Free and Open Source Software?
Free and open source software is defined as application of software which source code is open to be used by the public, so that the users are granted with irrevocable rights of, inter alia, reviewing the code, modifying it and creating adaptations and new versions of it. Using the code is free from license fees, however it is subject to the terms and conditions attached to the license agreement of any such free and open source software.
The rationale behind the open source is simple: when programmers are entitled to review, re-distribute, edit, fix bugs, and change the software’s code (in part of fully), the software develops and improves, and is adaptable to various uses and products. The very “opening” of the code to the general public, enables achieving better software than in the traditional, closed model which limits other users in the software from performing changes and adaptations and its re-distribution, thus only a handful of programmers are able to view the source code, and the rest can only use a block of closed bites (“closed code”).
There are two main types of license agreements for free and open source software: GNU General Public License (“GPL”), and BSD License (“BSD”). Although the GPL license is much more popular and most of the free and open source software programs are based on a GPL license, the BSD license has significant importance due to the extensive use it offers.
GPL licenses includes large number of terms and conditions regarding the method of using the software by the user, such as: the user is not allowed to limit the distribution, transferal or sale of the software to third parties, the license does not require royalties or any other payment, the user must enable making changes and creating versions, and he does not limit the use to any single product; and in the case of re-distribution, the user’s addressees are allowed to use the software with the same conditions that apply to the user, i.e. under the terms and conditions of the original license, and more.
As opposed to the extensive limitations imposed by the GPL license, typical BSD licenses states only 3-4 conditions, amongst them: placing notice regarding the copyrights of the software’s developer and a disclaimer of warranty.
The main difference between the two licenses is that a GPL license enables the free creation of a derivative work into the original software, but requires that this derivative work be usable, distributable and transferable to third parties under the same terms and conditions of the original creation. Thus, the GPL license agreements explicitly state: “this public license does not allow incorporating your software into a closed code”.
In contrast to the GPL, a BSD license does not require that the derivative work’s source code be freely available for use, distribution and transferal to third parties. As a result, a code taken from BSD license-based software can be incorporated directly into closed code projects.
Commercial Uses for Open Source
Companies developing software have a huge interest in using free and open source software. In many cases, using open source enables such companies to develop products more quickly and to cut costs, compared to writing all of the original code themselves.
The fact that the developer of BSD license-based software is not obliged to enable its free distribution to third parties, can be very useful for developers, who on one hand wishes to create commercial products from open source, but on the other hand do not wish to expose the changes they have made to the public, consequently creating a closed code and gain control over the new product they have developed.
Compared to the inherent advantage of using open source from BSD license-based software, GPL license-based software has very limited commercial uses. Attention should be paid to the fact that the commercial use of GPL license-based software is different to the use of closed code software. If a user has developed a derivative work of GPL license-based software, he must enable third parties to be granted the same rights which he was granted, i.e. to use, change and further distribute the software. The critics of the GPL license claim that this limits up to totally neutralizes the commercial value of the derivative work.
For example: a company develops a certain software application, when a substantial part of the software development was incorporated with lines from GPL license-based code. Now the company wishes to sell licenses for the software it has developed, however in light of the terms and conditions of the GPL license, the company may not be able to optimally use the commercial use in the stated application due to the limitations (or lack thereof) applying to part of the code it has used.
This is all the more true in the case of selling the company which developed the software (the longed “Exit”): as part of the due diligence performed by the purchasing company, a thorough examination of the purchased company’s software code is required. Should it be found that the purchased software contains lines of open source (and sometimes the entire software relies on open source), it may lead to the cancelation of the deal, due to the limited commercial use available in the stated open source.
Issues in Intellectual Property
An important issue regarding a Free and open source software relates to the identity of the rightful owner of its intellectual property rights. Specifically, using, changing or performing adaptation to such software necessarily leads to the question of who is the owner of software which has received “creative contributions” from a large number of individual users who are not connected to each other.
A derivative software includes elements and is based on the original version of the software (whose owners are others), and in fact creates a new and separate version to the original version.
The US courts have ruled on several occasions that in case the original owner has granted the right to use the software, and the use was legal, then the owner of the copyrights in the derivative work is the developer of the derivative work, both of the new elements which he has added to the software, and for the full software in its new format. The aforementioned is not to detract from the copyrights which the original owner has regarding the software’s original version. On the contrary, the license agreements state that when a user develops a new version, he must notify regarding the copyrights of the original developer.
It should be noted that massive use of open source in creating independent software may create a situation where it might be impossible to separate the adaptations made to the free and open source software from the user’s software, and this may harm the developer’s ability to grant him rights in the new software products he has developed.
Summary
The use of free and open source software has extensive commercial and legal implications. In this regard, it is worth emphasizing that there may be license agreements which may include different and unique terms and conditions for the unique software being used. As such, and before considering whether to include a code from free and open source software, there should be a thorough examination of the terms and conditions accompanying the specific license agreements, and considering the legal and regulatory implications prior to adopting free and open source software for new software with commercial uses.