Open source software used, say respondents, but might not be adequately policed

The DLA Piper Technology Leaders Forecast Survey indicates that although a majority of software companies are using open source applications in their products, many do not have an open-source policy to control the use of that software. This result is consistent with the findings of Gartner Group and other analysts.

Because open source licenses impose obligations on the licensee just as licenses of proprietary software, companies need to manage the use of open source software like any third party software. Companies who haven’t developed policy to manage their open source use might be unknowingly exposed to risk that could derail a merger or affect their financing.

“Many people believe that open-source software comes with no strings attached and no obligations. That’s simply wrong – it’s like any other software in that it’s provided under a license. And some of those licenses can be quite unusual,” said Mark Radcliffe, partner at DLA Piper.



Most open source applications, Radcliffe said, are granted under a General Public License, which mandates that upon distribution of the software the source code be available for free use, distribution, and modification.

Smaller companies are more apt to use open-source software because of its potential to cut costs, the survey states. But Radcliffe cautions that companies with proprietary business models – whether large or small – need to use open source software with care so that their proprietary licensed software does not become subject to the terms of the General Public License. He provided the example of a global Fortune 100 company that made a $500 million acquisition only to find out the acquired company might have to make their fundamental software available under the General Public License which would have reduced the value of the acquisition dramatically because the acquired company had used software under the General Public License in its product.

Though the acquiring company determined that the General Public License did not apply to its proprietary software, the incident caused the company to establish a separate due diligence process that addresses the use of open source for all of its M&A.

“Open source is ubiquitous, it’s inexpensive and it’s central to the cost structure of most businesses,” said Radcliffe. “But you need to use it sensibly. You need to understand what your obligations are and you need to make sure that you comply with those obligations. The only way to do that is through an open source use policy.”