Open-source licences: what startups should know

Almost every software product contains open-source components. Open source speeds development and cuts cost, but every component comes with a licence, and obligations differ. Ignoring them can have serious consequences, such as having to open your own source code.

Licence types

Permissive licences

Licences such as MIT, BSD and Apache 2.0 allow use in commercial products, modification and closed-source distribution, usually requiring only that copyright notices and the licence text are kept. Apache 2.0 also includes patent provisions.

Copyleft licences

Licences such as the GPL family may require that, when you modify and distribute the software, the derivative work is offered under the same licence with its source code.

• GPL: strong obligations for distributed derivative works
• LGPL: more flexible when linking as a library
• AGPL: may require sharing source even when software is offered as a network service; especially relevant for SaaS.

Risks in commercial products

• Adding strong-copyleft code to a closed product can create an obligation to open your source.
• Missing licence notices can count as a breach.
• Projects sometimes change licences; check before upgrading.
• Copying code from unclear sources carries copyright risk.

Licence inventory

• List all dependencies and their licences; automated scanners help.
• Write a simple policy on which licences are acceptable.
• Add a licence check for new dependencies to code review.
• Ship the required licence notices with the product.

Investor review

Open-source compliance is part of technical review in investments and acquisitions; see our due diligence guide. An up-to-date inventory speeds this up.

Open-sourcing your own code

Some startups open-source part of their product to build community and speed adoption. Choose the licence together with your business model; see our IP guide.

Conclusion

Open source is a powerful resource; using licences knowingly greatly reduces risk. This guide is general information; consult a lawyer on specific situations.