Are you a company worrying about open source software legal risks? Perhaps you are the one providing the software, or maybe you want to use it.
It is best to speak to a lawyer about how to avoid legal action from the developer before you start using intellectual property. We have lawyers in Toronto, Vancouver, and Beijing.
If you are not located in these three cities, you can still reach out to us. We might be able to connect you with an attorney that we trust enough to recommend.
Many companies and users use open source software these days. However, almost no one reads the user agreement before they start work on their project. There will be restrictions on what you can and cannot do with the open-source software.
Open source software risks
Let’s assume you use a companies software, and you build a great product. There are likely no problems at this point. But let’s say you then raise millions of dollars, build a great company, and then sell your product to another company for $50 million.
Large companies have their own lawyers that are constantly searching for violations of their intellectual property. If you violated the open-source software agreement (which you didn’t read), that company will likely sue you for $50 million.
Even worse, if they learn about the fact that the company is going to buy you for $50 million, they might want a settlement or they will file a lawsuit. If the company that is purchasing you learns about an IP dispute, they will likely abandon the deal. This could cost you $50 million!
Security risks and best practices
This is why it’s important to have a lawyer to review everything before you get started with your company. If you want to sue someone, or you are being sued for violating a commercial contract, you can contact us. Our lawyers can assist you.
The scary thing about IP lawsuits is they normally only get filed when a company is successful. It doesn’t make sense to sue a company that is likely going to fail on their own.
Some companies file lawsuits against other companies just to put financial pressure on them. You need to make sure all your legal compliance is tight.
Open-source vs proprietary software
Some other things that a lawyer can help you with are protecting your proprietary code, making sure you understand your licensee’s obligations and sending out copyright notices.
Breach of contract lawsuits is very serious. Even if there wasn’t a copyright infringement case, they might sue you for breach of contract.
These lawsuits can go on for years. You should think about purchasing legal insurance. You could also set aside money for legal disputes in a separation bank account that you don’t touch. Your company should have a minimum of $50,000 set aside.
If you win your lawsuit, you might be able to get your costs reimbursed. If you are the one that has had your rights or contract violated, do not assume that suing someone is a waste of time. What is the point of having a contract if you do not enforce it?
Open Source Software Legal Risks
If you are a company that purchases a product that violated copyright or open-source agreement, you will also likely be sued. That is why you should speak to a lawyer before purchasing anything. You don’t want to get involved in a lawsuit worth millions of dollars (or pay millions of dollars) because of something someone else did.
You need to make sure your use of proprietary software follows the licensing conditions. Open-source software has great benefits. There are many cost benefits and there is more freedom than companies like Microsoft might offer.
When you are a cash strapped start-up, you likely don’t have the resources to develop all of your own software. You need to understand the risks. If you have in house developers, you likely won’t develop too much of your own code.
Open Source Versus Proprietary Software
You can build their code into your code. Outside of the open-source software legal risks, there are also cybersecurity risks. You need to make sure the code is secure and maintained.
There are tons of different styles of coding, and you are now taking some unknown code, and putting it into yours. You are then selling this to your clients. What happens if this causes damages to your clients?
You can count on being sued. So, you should speak to one of our lawyers in Canada or China about open-source software legal risks. You can also reach out to us if you want to start an action or defend against a lawsuit.
If you don’t keep track of what open source components you are using, it can get risky. When you don’t know if there was security around the coding, and then you are selling it, you haven’t done risk management on your own code. You can also destroy your reputation as a company.
Spending Money On Lawsuits
You need to consider the cost benefits of open source technology versus your risk of spending tons of money on lawsuits. Security vulnerabilities left unchecked will cause damage to your company.
Almost all applications use open source. And in applications, the average amount of open source technology is around 50%. What happens if the open-source technology came from Russia or North Korea? There are examples out there where open source vulnerabilities affected 140 million people.
In conclusion, you need to have a litigation trial lawyer ready to help you. You should get legal advice when agreeing to any terms of a contract.
Author: Alistair Vigier, CEO of ClearWay Law