But software these days rarely comes on a CD-ROM or in a box, even when it is a commercial off-the-shelf (COTS) software product. The downloaded, continuously updated nature of software creates what the industry likes to call the “software supply chain.” Because an increasing amount of this software is open source, we need to understand what implications this has for the shape of the chain.

Free as in speech, not beer

It is important to remember that open source has extensions that lead it into the realms of commercial software. In the words of Richard Stallman, this is free as in speech, not as in beer. Developers are free to download open source software and work with it even when they commercialize and monetize their product, if they do so under the agreed terms of the license in question. Open source software is free to use, but the original owners may charge for maintenance and support. Other “proprietary commercialized” open source licenses stipulate that the “locked down” non-dynamic unchanging version of the original source code is paid for — useful if you want to run an air traffic control system with it.

Duncan Clark, head of PatSnap Academy points out that open source software can enter customers source code, including their internally developed proprietary code, in many different and often undocumented ways. Managing this process is key to working with open source channels effectively.

“This makes it notoriously difficult to identify, let alone manage, in terms of associated licensing obligations and risks. Intellectual property risks include copyright infringement, lawsuits and fines, combined with bad publicity. Meanwhile, misuse of open source software or issues of non-compliance can cause complications when it comes to company valuations for investment opportunities or mergers and acquisitions,” said Clark.

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