Legal aspects of Open Source Software: What makes it different, when it is used, licence terms, basic overview

Open Source Software (OSS) has firmly established itself as one of the cornerstones of the technology industry, so it is essential to understand its features and legal framework. In the first part of a planned series of articles on this topic, we will enter the world of OSS, highlight its particularities, describe it in comparison to other types of software, and explore its licensing dynamics and the basic legal implications involved.

OSS is software whose source code is freely available to the public. This means that anyone can view, edit and share the code. Unlike proprietary software, which is protected and controlled by its developers, OSS is conceptually built on transparency and community development. The openness of the code allows developers and users not only to use the software, but also to actively participate in its control, improvement and extension of its functions.

OSS enters the sphere of law mainly in connection with licensing terms that govern its use, modification and distribution. The OSS is based on public licences, which not only give users and developers considerable freedom, but also set specific rules for disposing with the OSS and its derivatives (including the systems into which the OSS has been embedded).

Traditional approach in the form of proprietary software

Unlike OSS, proprietary software is strictly controlled by its creators, who retain exclusive rights to use, modify and distribute it. Users encounter proprietary software through licences that restrict their ability to modify or share the software. Examples include programmes such as Microsoft Windows or Adobe Photoshop.

Proprietary software is associated with mature user experience and dedicated support, but also limited user flexibility. The source code remains secret, protecting the intellectual property and commercial advantages of the developers. Legally, proprietary software may only be used in line with the rights explicitly granted by the licence, which often makes it difficult to customise or integrate it with other systems.

Comparison with other “free” software types

(in other words, freeware is not the same as OSS)

OSS is often compared to other forms of free software, but it is necessary to say that there are quite substantial differences between them. 

For example, while freeware is – usually permanently – available for free, it does not allow access to the source code. Users can use and redistribute the software for free, but they cannot modify or develop it.

On the other hand, shareware (or trial software) is a type of proprietary software (i.e. closed source software) that is offered for free trial, often with limited features or for a limited time. After the trial period, you must pay for continued use. A typical example is WinRAR or certain game demos.

Another type of software that is often confused with OSS is Public Domain Software. It is software that is “deprived” of copyright[1] and allows unrestricted use, modification and distribution. This concept, previously common especially in the US, does not impose any conditions on the use or modification of the software, unlike OSS.

Particularities of OSS

The OSS is associated with openness and cooperation. According to Open Source Initiative, to be considered truly OSS, the software must meet several key principles:

1. Free redistribution: The licence must allow anyone to redistribute or offer the software without requiring the payment of royalties.
2. Source code availability: The programme must be readily available to users in source code form.
3. Permission for further modifications (derived works): The licence must allow for further development of the software and the creation of own programmes that can be distributed under the same terms as the original software.
4. Allowed restrictions on the distribution of modifications (integrity): The licence may allow distribution of modified source code, but may require that the software be renamed and the changes documented.
5. Non-discrimination against persons or groups: The licence must not discriminate against any person or group of persons. 
6. No restrictions on use (discrimination against fields of endeavour): The use of the software must not be restricted to specific purposes. 
7. The licence must be valid for all: The licence must apply to everyone who acquires the software. No special licences may be granted. 
8. Independence of products: The licence must not be made for only one software, but must also apply to other software developed from the original software. 
9. No restrictions on other software: The licence must not contain provisions relating to other software. 
10. Technology neutrality: The licence must not restrict the distribution of the software to a particular technology.

OSS Licensing

From the above, it is clear that licensing is a fundamental aspect of OSS that defines how software can be used, modified and shared.

It is always the developer or the community of developers who makes the code available with the intention of publishing it as OSS. For this purpose, they usually choose one of the public licences widely available on the market (or they may define their own licence under which they publish their software). Users of a given OSS must be particularly vigilant vis-à-vis the public licence under which the OSS code is published, as this can have quite significant consequences in terms of what the user wants to use the OSS for.

The most important aspect of public licences are the requirements for redistribution of derivative works, i.e. also works in which OSS elements have been incorporated.

There are basically three main categories of OSS licences:

• Copyleft licence: These licences (e.g., the GNU GPL and its variations) require that any derivative works be licensed under the same terms (in other words, “infecting” the product into which the OSS is integrated) – we will discuss this so-called viral effect of copyleft licences, as well as its implications and risks, in another article in the series. The aim is to ensure that the software and its modifications remain free and open. However, this requirement can be restrictive for some developers and companies because it makes integration with proprietary software and creation of commercial products difficult. Indeed, the need to make the source code of all modifications available will generally conflict with the business strategies and protection of intellectual property of commercial entities.
• Permissive licence: Licences such as the MIT Licence and the Apache Licence 2.0 impose minimum restrictions on the use, modification, and redistribution of OSS. They allow integration with proprietary software without strict conditions. This flexibility makes permissive licences popular in both open source and commercial contexts, offering a balance between freedom and practical business needs.
• Restricted copyleft licences: These licences (e.g. the LGPL) represent the middle ground. They allow linking proprietary software with e.g. open source libraries without having to publish the source code of the whole programme. This approach balances the rigour of full copyleft with the flexibility needed for wider adoption, and is thus particularly useful where it is desirable to work in conjunction with proprietary systems.

The final choice of a particular OSS depends on how you plan to use it and what (if any) business goals you have:

1. If you intend to use OSS in a commercial product and want to minimise the risk of having to disclose your source code, an OSS with a permissive licence is definitely preferable. It offers the flexibility needed to integrate with proprietary software while protecting your intellectual property. 
2. On the other hand, if you are developing a project on a non-profit basis, or if you are focused on maintaining openness and sharing the code, the right option for you may be a copyleft licence such as the GNU GPL.

Conclusion

OSS is known for its transparency, flexibility and community development. It brings many opportunities for innovation but also requires a thorough understanding of the legal framework and potential pitfalls. Proper understanding of the different types of public licences and their implications is key to effective OSS deployment. Whether you are involved in a community project or looking for a customisable software solution, OSS offers a wide range of options. However, it is essential to consider not only its benefits but also the legal and licensing issues involved. 

In our practice, we have encountered a number of cases where the use of OSS with an “inappropriate” licence almost thwarted the completion of successful investment rounds in promising startups, significantly complicated long-negotiated transactions or, in worst cases, required (the commitment of) additional reprogramming of some parts of the key software in order to continue with existing business practice, maintain the purchase price in the given M&A deal or a satisfactory valuation of the startup.

If you have questions about using OSS or need advice on its legal aspects, we are here to assist you. Our experience will help you easily navigate the licensing and legal issues of OSS. Whether you are dealing with a community project or a business application, we are ready to provide an effective solution.