The number of different open source licenses is growing and the variation in their terms and complexity is increasing. A number of licenses that appear to be, or are commonly referred to as “open source” do not actually meet the Open Source Initiative (OSI) definition of “open source.” Thus, they do not appear on the OSI list of approved open source licenses. We like to say that these licenses are open source-ish! The lack of standard definition of “open source” can lead to potential legal issues and business problems, particularly in connection with investments or acquisitions in companies that use software covered by such licenses. This is relevant to both companies that use open source software (OSS) and potential investors in or acquirors of those companies.

For example, when conducting diligence and drafting representations and warranties in deal documents, it is critical to ensure a comprehensive definition of “open source” that includes both true open source licenses and those that are only open source-ish. Many of the standard definitions that are used in form legal documents do not follow this practice! Failure to properly define open source in diligence requests can lead to situations where software covered by a license that triggers significant legal or business issues should be identified and disclosed, but is not!

Companies using OSS, and investors in or acquirors of those companies, should work with counsel who specializes in open source licensing (and understands its many intricacies and nuances) to minimize adverse legal issues and business problems associated with the use of OSS. For example, companies using OSS should work with open source counsel to develop and implement a written corporate open source policy. Investors in and acquirors of such companies should engage specialized open source counsel to handle open source diligence and legal issues that arise in transactions.

For more information on these issues see our white paper “Open Source-ish! What Defines Open Source and Why it Really Matters in Investments and Acquisitions.”