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Source Code Basics

Software is a work of authorship that is protected by copyright. Open source code is source code for which the author has granted a license under that code's copyright when the code is downloaded. However, there are conditions on almost every open source code license, some of which are damaging.

Some types of open source code licenses allow modification and distribution of the open source code as part of a proprietary product.  This is only on the onerous condition that the entire source code for that proprietary product be made available to the world without cost. This type of open source code license also requires that the company grant a patent license for certain of its patents that are infringed by the combination of the open source code with the other source code of the product. This applies whether the product is distributed directly to customers or is provided to customers interactively by company owned or controlled servers. Consequently, the use of certain types of open source code can have a devastating effect on a product.

Other types of open source code have conditions that are fairly innocuous, like requiring merely that the original author’s copyright notice and disclaimer of liability be included with the product. But if the use of the open source code fails to meet these innocuous conditions, the open source code is unlicensed to the company with the result that the company has an infringing product in the marketplace.

Other types of open source code have licenses that require that, for some uses, the entire product source code must be made available at no cost to the world. While for other uses of the open source code, that requirement does not apply.

Further types of open source code licenses provide that a product’s source code can become a contribution to the open source code and is then downloadable by each downstream user of the open source code.

The use of open source code in products is routinely investigated in the due diligence process for mergers, acquisitions, and financings. Therefore, using open source code without clearance of counsel in advance may negatively impact the valuation of a company.

The above discussion illustrates that the use of open source code in a product can require complex analysis in an effort to assure that there is no negative impact to the product.

Enforcing the Open Source Code License

The authors of open source code can enforce the above conditions by litigation. Consequently, using open source code in a product can subject a company to potential liability and otherwise avoidable costly circumstances.