ALP: What is "Open Source" Software and How Can It Impact My Business?

February 2006

Categories of Software

It is easier to understand "open source" software when it is compared to the other categories of software. Generally, there are three categories of software: "open source", proprietary and public domain software. When we think of software in the business context, we generally think of proprietary software, such as Microsoft Office XP®, iManage®, and Deltaview®, among others. However, there is increasing use and awareness of “open source” software in the business environment. Technically, there is a fourth category of software, which is a “combination” software consisting of proprietary and “open source” software, and this category is probably going to be the largest category of software in the near future.

Proprietary Software

Proprietary software is software that is distributed only in executable (machine readable) form, which enables us to use the software but not to access it. Access to the source code of a particular software program is necessary to change or enhance the software or otherwise exploit it. The source code is the code that is readable by humans as opposed to being machine readable. Proprietary software is typically kept confidential and maintained as a trade secret by providers whose business objective is to have software that works better or has better features than the software of competitors typically keep proprietary software confidential and maintained as a trade secret.

Public Domain Software

Public domain software is software in which the underlying intellectual property rights are not owned by anyone anymore. Software is most often protected by a copyright or as a trade secret, but sometimes software can be patented. Intellectual property rights in software can expire or can be released. Currently the term of a copyright in software produced by an individual is the life of the individual plus 70 years. It therefore seems unlikely that there is a large volume of public domain software available for public use. The creator of software can also abandon or release all of his or her rights in the software to the public, but this too is an uncommon situation.

Open Source Software

Open source software is software where the source code for the software is published and available for public use under the terms of the specific license that accompanies the software. One of the themes that underlies the "open source" movement is the idea of "community" development of software, meaning that software that has been developed, tested, tweaked and challenged by many tends to be better than software developed in-house by a few. Examples of open source software include software released under the GNU General Public License (; FreeBSD (; the Mozilla license (; and the MIT license ( There are wide variations in the terms and conditions found in the various "open source" licenses, and it is these terms and conditions that raise significant issues for businesses using “open source” software or software that contains “open source” software.

Business Issues

More and more businesses that develop software in-house are turning to "open source" software as starting point, since, in many cases, this software is high quality. Some businesses use the in-house developed software for their own purposes, and others license this software to third parties. Under certain of the BSD licenses, developers are free to take the source code and modify it at will, and then treat such modified code as proprietary software, protected by copyright and trade secret laws, for the use and benefit of the business. At the other end of the spectrum is the GPL license. It is the GPL license (and the software released under that license) that can strike fear in the heart of any lawyer who has reviewed the GPL license provisions. In some cases, the use of source code that is governed by the GPL license requires that any software derived from this use be disclosed and made available for public use under the same GPL license. In other words, a small integration of GPL-governed code into an otherwise completely proprietary code could make the entire software program subject to the GPL license, requiring disclosure and public accessibility of the source code. For some businesses, offering up its new software innovation to the world would destroy the competitive advantage that the business might have enjoyed as a result of the software.

The other types of "open source" software that is available have licenses that range from the BSD model to the GPL model, and anywhere in between. Prior to any use of "open source" software, a business should obviously review very carefully the license associated with the "open source" software in the context of the planned current and future use of the software by the business.

Lack of Clarity

Even a careful review of the license may leave the reader in doubt. The GPL license is confusing to say the least and has been the subject of many seminars for lawyers who struggle to find ways for their clients to use the GPL licensed software in a manner that will not "infect" the other proprietary software of the business. The GPL license suggests in some sections that GPL licensed code can be used with other proprietary software without adversely impacting the status of that proprietary software, but then, in other sections of the GPL license, there is language that raises doubt about this same type of use. While there have been court cases on some “open source” issues (namely, the SCO Group, Inc. cases), the courts have yet to offer up an interpretation of the confusing GPL license provisions that govern the use of GPL licensed software with other proprietary software.


The software industry is in a constant state of innovation and advancement. With the increase in numbers of individuals who have software development skills (and this will likely continue to increase with each new generation adapting even more quickly to the current software environment than the generation before), there will be a natural attraction to “open source” software. “Open source” may be the next be wave, and with it there will also be a big wave of legal issues to be litigated and resolved.