Why Does Open Source Compliance Matter for Software Companies?
Modern software development depends heavily on open source components. Whether building AI systems, SaaS platforms, mobile applications, or enterprise software, companies incorporate open source libraries, frameworks, and tools that accelerate development and reduce costs. However, using open source software creates legal obligations that many companies overlook or mismanage, leading to compliance violations with serious consequences.
Open source licenses aren’t “free software with no strings attached.” Licenses like GPL, MIT, Apache, and others impose specific requirements regarding attribution, modification disclosure, license propagation, and in some cases mandatory open sourcing of derivative works. Violating these terms can trigger enforcement actions from original authors, cease and desist demands requiring product modifications, copyright infringement litigation, and reputational damage within developer communities.
For AI companies using open source machine learning frameworks, data processing libraries, and development tools, and software companies building products with open source components, understanding and managing open source compliance is essential for avoiding legal risks while benefiting from the collaborative innovation open source enables.
Understanding Common Open Source Licenses
Permissive Licenses: MIT and Apache 2.0
Permissive licenses impose minimal restrictions on how you can use, modify, and distribute open source software. The MIT License requires only that you preserve the original copyright notice and license text in copies of the software. You can use MIT-licensed code in proprietary products, modify it extensively, and distribute binaries without releasing source code.
The Apache License 2.0 similarly allows broad use but includes additional provisions regarding patent grants from contributors, trademark restrictions prohibiting use of project names, and requirements to document modifications.
Permissive licenses are generally business-friendly and create minimal compliance burdens beyond preserving attributions.
Copyleft Licenses: GPL and AGPL
Copyleft licenses require that derivative works or distributions be licensed under the same terms. The GNU General Public License (GPL) mandates that if you distribute software containing GPL-licensed components, you must license your entire work under GPL and provide source code to recipients.
This creates challenges for commercial software companies wanting to keep proprietary code confidential. If you incorporate GPL code into your product, you may be required to open source your entire application.
The Affero GPL (AGPL) extends GPL requirements to software accessed over networks. If you run AGPL software on servers that users access remotely, you must provide source code to users even without traditional “distribution.”
Weak Copyleft: LGPL and MPL
Weak copyleft licenses occupy a middle ground. The Lesser GPL (LGPL) allows linking proprietary software with LGPL libraries without requiring the proprietary code to be open sourced. However, modifications to the LGPL library itself must be released under LGPL.
The Mozilla Public License (MPL) similarly allows combining MPL code with proprietary code while requiring modifications to MPL files be shared.
Key Compliance Obligations
Attribution and Notice Requirements
Most open source licenses require preserving copyright notices, license text, and attribution information. This typically means including original copyright notices in source code, providing license text to recipients, and maintaining attribution in user-facing elements like “About” screens or documentation.
Failure to provide proper attribution violates license terms and constitutes copyright infringement.
Source Code Disclosure
Copyleft licenses require providing source code for covered works. For GPL, this means making complete source code available to anyone receiving binaries, providing instructions for building from source, and ensuring source corresponds to distributed binaries.
Some companies attempt to avoid GPL obligations by not “distributing” software, instead offering only hosted services. However, AGPL specifically addresses this by requiring source disclosure for network-accessed software.
Derivative Work Analysis
Determining what constitutes a “derivative work” triggering copyleft obligations is complex and sometimes uncertain. Factors include how closely your code integrates with open source components, whether you modified open source code, linking methodology (static vs. dynamic linking), and the nature of dependencies and interactions.
Courts have not established bright-line rules, leaving some scenarios ambiguous.
License Compatibility
Combining code under different licenses can create conflicts. For example, GPL and Apache 2.0 have some incompatibilities in certain contexts. Mixing incompatible licenses may be impossible without violating one or both.
Companies must audit license combinations to ensure compatibility.
Building an Open Source Compliance Program
Inventory and Tracking
Maintain comprehensive inventories of all open source components including direct dependencies your code imports, transitive dependencies brought in by direct dependencies, and embedded or copied code snippets.
Use automated tools like FOSSA, Black Duck, or WhiteSource to scan codebases and identify open source components and their licenses.
Approval Workflows
Implement processes requiring developer requests to use new open source components, legal/compliance review of licenses, and approval based on license type and use case.
Some companies maintain approved lists of permissive-license components while requiring special approval for copyleft licenses.
Developer Training
Educate developers about open source license types and obligations, approval processes for incorporating new components, and proper attribution practices.
Developers often don’t understand legal implications of different licenses or assume all open source is freely usable without restrictions.
Documentation and Recordkeeping
Document which open source components are used where, what licenses apply, what modifications were made, and compliance measures taken.
This documentation supports demonstrating good faith compliance and facilitates responding to inquiries or disputes.
Common Compliance Challenges
Transitive Dependencies
Modern development tools automatically download numerous dependencies. A single package might pull in dozens of additional libraries, each with its own license. Developers may not realize what licenses they’re accepting when adding a dependency.
Automated scanning tools help identify transitive dependencies and their licenses before they create compliance issues.
Code Snippets from Online Sources
Developers frequently copy code snippets from Stack Overflow, GitHub repositories, or blogs. These snippets often carry open source licenses, but developers may not preserve attribution or consider license implications.
Train developers to verify licenses for copied code and maintain proper attribution.
Forked or Modified Open Source
When developers modify open source components, they must comply with requirements for documenting changes, maintaining original licenses, and potentially releasing modifications under the same license.
Establish clear processes for modifying open source code and tracking those modifications.
Dual Licensing and Commercial Options
Some open source projects offer both open source licenses (often GPL or AGPL) and commercial licenses for proprietary use. If you want to avoid copyleft obligations, purchasing commercial licenses may be necessary.
Evaluate whether commercial license costs are justified by avoiding GPL compliance burdens.
Responding to Open Source Violations
Discovery and Assessment
If you discover potential violations, assess the scope immediately including which components violate licenses, how extensively they’re integrated into your products, and what remediation options exist.
Remediation Strategies
Options for addressing violations include replacing violating components with compatible alternatives, obtaining commercial licenses or permissions, restructuring code to eliminate derivative work issues, or in extreme cases, open sourcing portions of your codebase to comply with copyleft requirements.
Communicating with Rights Holders
If contacted about violations, respond professionally and promptly. Demonstrate good faith by acknowledging issues, proposing remediation plans, and implementing compliance measures.
Many open source communities prefer collaboration over litigation if companies show genuine commitment to compliance.
Special Considerations for AI and ML Development
Training Framework Licenses
Popular AI frameworks like TensorFlow, PyTorch, and scikit-learn use permissive licenses (Apache 2.0 or BSD). However, some specialized libraries or models may use restrictive licenses.
Verify licenses for all ML libraries and pre-trained models you use.
Model and Data Licenses
Pre-trained models and training datasets may carry license restrictions separate from software licenses. Some models prohibit commercial use, derivatives, or specific applications.
Review model licenses carefully before building on them.
Deployment Considerations
Deploying AI systems may trigger AGPL obligations if you use AGPL-licensed components in services. Consider whether your deployment model constitutes “network use” triggering disclosure requirements.
Open Source in M&A Due Diligence
Acquirers scrutinize open source compliance during due diligence. Issues they examine include comprehensive open source component inventories, license compliance documentation, GPL or AGPL code in proprietary products, and unresolved license violations.
Non-compliance can reduce valuations, derail deals, or require extensive remediation before closing.
Industry Standards and Best Practices
The Linux Foundation’s OpenChain Project provides specifications for quality open source compliance programs. Adopting industry standards demonstrates commitment to compliance and provides frameworks for building programs.
Conclusion: Balancing Innovation and Compliance
Open source software enables rapid innovation and reduces development costs, but it requires disciplined compliance management. Companies must understand license obligations, implement tracking and approval processes, train developers on compliance requirements, and remediate violations promptly when discovered.
Effective open source compliance programs balance enabling developers to leverage open source innovation with managing legal risks and respecting the collaborative norms of open source communities.
Contact Rock LAW PLLC for Open Source Compliance Counsel
At Rock LAW PLLC, we help software companies develop and implement open source compliance programs.
We assist with:
- Open source license analysis and compliance audits
- Compliance program development and implementation
- Developer training on license obligations
- License compatibility analysis
- Violation remediation strategies
- M&A due diligence support
Contact us to build effective open source compliance practices protecting your software business while enabling innovation.
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