Open source software (OSS) has become a cornerstone of modern corporate development. From accelerating product development to reducing costs, the benefits are clear. Yet, while many businesses in England and Wales embrace open source components, the legal risks are often overlooked. Improper use or integration of open source software can expose companies to intellectual property disputes, licence violations, and compliance issues—sometimes with significant financial and reputational consequences.
This article explores the hidden legal risks associated with OSS, the obligations that arise under English law, and practical strategies for managing exposure.
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Understanding open source software
Open source software is code made publicly available under a licence that allows anyone to use, modify, and distribute it. Popular examples include Linux, Apache, and PostgreSQL. Unlike proprietary software, OSS often comes at no upfront cost and is maintained by a community of developers.
However, the very freedoms that make OSS attractive also create legal complexity. Each OSS licence imposes specific obligations. Failing to comply with these obligations can result in licence termination, litigation, or the forced disclosure of proprietary code.
Common open source licences
Open source licences vary widely, and their requirements can differ significantly. Common licence types include:
- Permissive licences, such as the MIT or Apache 2.0 licences, allow broad use and modification with minimal obligations, usually requiring only attribution.
- Copyleft licences, such as the GNU General Public Licence (GPL), impose stricter obligations. If OSS is incorporated into proprietary software, the resulting code may also need to be distributed under the same licence, potentially requiring disclosure of proprietary source code.
- Lesser GPL (LGPL) licences allow linking with proprietary software under certain conditions but still carry obligations regarding modifications and redistribution.
Understanding the licence type is essential. Misclassifying a licence or failing to comply with its terms can inadvertently create liability.
Legal risks for corporate users
While OSS offers practical advantages, the legal risks for corporate developers are real and often underestimated.
- Licence compliance
The most common legal risk is breach of licence terms. Non-compliance can occur when:
- Software is incorporated into proprietary products without fulfilling copyleft obligations.
- Modifications to OSS are redistributed without including the required licence or copyright notices.
- Attribution requirements are ignored.
Licence breaches can lead to enforcement actions by copyright holders, including injunctions, financial damages, or orders to release proprietary source code.
- Intellectual property infringement
Even if the OSS licence is followed, there is a risk of underlying IP infringement. Some OSS may inadvertently incorporate patented technology, and using such software could expose the company to claims from third-party patent holders. Conducting thorough IP due diligence is crucial before integrating OSS into commercial products.
- Security vulnerabilities
Legal exposure is not limited to intellectual property. OSS components may contain security flaws, and failing to address them can lead to regulatory liability, particularly under UK GDPR if personal data is compromised. Boards and compliance teams must account for these risks when deploying OSS in production environments.
- Integration with proprietary code
Integrating OSS into proprietary software without proper review can inadvertently trigger licence obligations, particularly under copyleft licences. This can result in the unintended disclosure of sensitive or proprietary code, which may impact competitive advantage and intellectual property rights.
- Cross-border compliance issues
Many corporate development teams operate internationally. Using OSS across multiple jurisdictions can complicate compliance, particularly where local laws impose additional restrictions on IP, export controls, or data localisation.
Mitigating open source legal risks
Corporate boards and legal teams can take several steps to reduce exposure while still benefiting from OSS.
- Establish an open source policy
A clear internal policy should define how OSS can be selected, integrated, and distributed. The policy should cover:
- Approved licences and types of software that can be used.
- Procedures for reviewing licence terms and obligations.
- Guidelines for attribution and documentation.
- Processes for approval by legal or compliance teams.
- Conduct licence audits
Before integrating OSS, companies should audit components for licence type, obligations, and potential conflicts with proprietary code. Automated tools can assist in identifying licence compliance issues, but human review is essential for high-risk integrations.
- Maintain a bill of materials
Tracking all OSS components and their licences in a software bill of materials (SBOM) ensures transparency. It allows legal teams to quickly assess exposure, respond to audits, and demonstrate due diligence in the event of a dispute.
- Implement IP risk assessments
Legal review should include intellectual property due diligence to identify any potential patent claims or copyright disputes. Where necessary, companies may negotiate licences or indemnities to mitigate risk.
- Train development teams
Developers should be trained on OSS compliance requirements. Awareness of licence obligations, attribution rules, and integration risks reduces the likelihood of inadvertent breaches.
- Monitor updates and vulnerabilities
OSS is frequently updated, and security vulnerabilities can emerge over time. Legal and technical teams should coordinate to ensure that patches are applied, and that compliance with licence obligations continues throughout the software lifecycle.
Strategic considerations for boards
Boards should treat OSS compliance as a strategic issue, not merely a technical or operational one. Directors’ duties to exercise care, skill, and diligence under the Companies Act 2006 extend to managing legal and reputational risks associated with software development.
Key considerations include:
- Integration with corporate risk frameworks: Incorporate OSS compliance into enterprise risk management.
- Oversight and accountability: Ensure that responsibility for OSS compliance is clearly assigned within the organisation.
- Reputation and stakeholder communication: Understand the reputational implications of licence violations or IP disputes.
- Investment and M&A implications: OSS compliance issues can affect company valuation and diligence processes in mergers, acquisitions, or financing rounds.
Conclusion
Open source software is an essential component of modern corporate development. It accelerates innovation, reduces costs, and fosters collaboration. Yet, the hidden legal risks are significant. Licence violations, IP disputes, security vulnerabilities, and integration issues can all result in regulatory, contractual, or reputational consequences.
Businesses in England and Wales can manage these risks through robust governance, clear policies, thorough due diligence, ongoing monitoring, and legal oversight. By taking a proactive approach, boards and legal teams can harness the benefits of open source software while protecting the company from unexpected liabilities.
Blackstone Solicitors advises clients across England and Wales on open source compliance, intellectual property management, and risk mitigation in corporate software development. Effective legal oversight ensures that organisations can innovate confidently and sustainably, reducing the chance of costly disputes and regulatory exposure.
We have a proven track record of helping clients deal with the legal implications of corporate law. We will guide you diligently and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting. You can read more about the range of corporate services we offer by clicking here: https://blackstonesolicitorsltd.co.uk/corporate-legal-services/
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Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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