The Cost of “Free”
Open-source sounds great for small technology companies. What can be better than free software if you’re on a tight budget?
But David Boutcher and Bob Stankey of law firm Reed Smith have just published an insightful article in Computing Magazine highlighting some of the pitfalls; what they call “Open Source’s Dark Side“.
The piece raises an issue that should concern any high-tech investor: “open-source software is…not put in the public domain with no strings attached.”
Any code subject to a “reciprocal” license has to be made freely available to others. As David and Bob point out, a number of large companies have fallen foul of this by packaging open-source code into commercial products, and have found themselves in court as a result.
From an investor’s perspective, licensing should be covered by the legal due diligence. But it’s important to have a technical expert with open-source knowledge to investigate what code is actually being employed by the proposition company in its products.
Failure to cover this in the technical due diligence could turn “free” into “very expensive”.