Free Software and Open Source Software are often confused with the terms sometimes being used interchangeably. This article gives a brief overview of the differences between Free Software and Open Source Software, their business uses and their associated risks.

Free Software

The first mistake people generally make when saying “free” or “open” is to think of price. GNU suggests that “to understand the concept [of Free Software] you should think of it as ‘free speech’ not ‘free beer’”.

The freedom in “Free Software” means the freedom to distribute and change the software. It does not refer to price, and the distributors of Free Software are allowed to charge for the software they distribute.

You may run Free Software in accordance with the “four essential freedoms” to:

  1. run the program as you wish for any purpose;
  2. study how the program works, and change it so it does your computing as you wish;
  3. redistribute copies so that you can help others; and
  4. distribute copies of your modified version to others, giving the whole community a change to benefit from your changes.

It is a community of sharing and cooperation. This freedom applies to all users; programmers, developers and end-users alike.

While Free Software is driven by the freedoms described above, Open Source is driven by the desire for progress and evolution; the availability of un-obfuscated source code to allow experimentation and the evolution of programs. In both cases, we are seeking to distance ourselves from the traditional proprietary model.


Open Source

Open Source could be described as a denomination or a faction of the Free Software movement. Open Source is associated with the collective creation of (hopefully) practical, powerful and reliable software.

However, the licensing criteria for Open Source software will normally be more restrictive  than Free Software licences. While all Free Software is (or should be) Open Source, due to licensing conditions, the reverse is not always true. An Open Source licence must satisfy the (extensive) criteria defined by the Open Source Initiative (OSI Definition) to be considered as Open Source.

The Open Source movement looks to the availability (or “openness”) of the source code, believing that making the source code available will ensure that users and developers may grow the software to create more powerful and reliable software, in turn benefiting everyone who uses the software or code.

This openness does not necessarily extend to modified code and certain “permissive” licences may allow developers to separate the source code and the modified/extended code which may be made available as “patches”. Certain licences may even restrict users from running a further modified version of a patch although the source code should remain modifiable without permissions. This approach is incompatible with Free Software.


How would Free or Open Source Software make its way into my software?

Through the libraries available in the various environments/platforms your business’s researchers and developers use to create software and projects.


Ok, but why does this matter to my business? Can I still use them?

Theoretically, yes but you have to be careful.


Free Software

The user must retain freedom (i.e. benefit from the four essential freedoms listed earlier). This means that you may consider that it is not commercially viable for you to use Free Software in your business.

When you use Free Software, the licence you are working under will generally require the resulting product to be free, applying “inbound=outbound” rules (there are certain exceptions to this relating to “mixed” works). Inbound=outbound means that the modified software must be redistributed on the same terms as the original licence. In practice, this means that you cannot make your modified software “nonfree” on distribution. Remember we do not mean cost-free but freely available to users.

The user/purchaser will benefit from the four essential freedoms in the same manner that you did. This means making all of your code available to purchasers/users at the time of purchase/download or on subsequent request.

You may also not be able to control the way in which the software you distribute is used. Free licences will not usually allow you to place restrictions on future redistributions of the software (it could be redistributed gratis by your customer or the original distributor).

However there is no requirement on you to distribute/sell your code, even when it was developed using Free Software. This means that you may still consider Free Software to be suitable if your aim is to develop software for internal use only (see Risks, below).


Open Source

The Open Source movement was created to relieve businesses’ concerns regarding the Free Software movement. The biggest source of confusion was the use of the word free.

However, as with Free Software, there are many different licences which are certified as being Open Source and, as explained above, many of those are also classed as Free Software licences.

Open Source Software licences will often require you to comply with the same inbound=outbound licence requirements as imposed when using Free Software. This means that you may not be able to choose a different licence for the materials you distribute from the licence which covers the packages or source code which you relied upon when creating your project.

You should anticipate needing to overcome similar hurdles to those described above in respect of Free Software, save that there will be certain permissive licences which may allow you to make and distribute close source versions of your project.



Businesses are likely to have the same practical concerns as they would when considering the purchase of any product, for example:

  • Does this product do what I want?
  • Is it safe?
  • What are my rights and responsibilities if something goes wrong?
  • Does it affect the value of my brand, my output and investment-worthiness?
  • Where does our IP ownership sit?

Whether the software satisfies your requirements will be a commercial and practical decision for you. You may adhere to a Free/Open Source Software ethos, or there may not be equivalent software available under a proprietary licence, either way if you use Free/Open Source Software in the course of business, your appetite for commercial risk will come into play.

Most Free or Open Source Software will be licensed with no warranties at all in respect of the software. This include practical matters such as the skill and care with which the code was prepared, its fitness for (any) purpose, its integrity or whether it breaches anyone else’s intellectual property rights. By exploiting and distributing the code, you may expose yourself to security risks or claims by third parties without recourse to indemnities from the licensor.

You could commit further infringements of original software owner’s intellectual property rights if you do not use the code in accordance with the licence terms – whether inadvertently or not.

If reputation is important to you, your customers or your funders and investors, claims could have a significant impact on your business. You may also have little or not control how code you make available as Free/Open Source Software is used, which may result in uses which conflict with your business ethos.

When carrying out a review of your ownership of the intellectual property rights you exploit in your business, funders and investors may find that your portfolio falls short of their requirements.

There may be additional concerns that should to be addressed when using any software, which we can advise on, such as:

  • data protection – does your project collect user data;
  • trade marks – do you have a project name that you wish to protect, or are you using someone else’s project name without permission; and
  • assignment of rights – do you have assignment agreements in place with your employees, researchers, consultants, etc. in the event that they accrue rights in the software.



Free/Open Source Software can provide exciting opportunities to businesses, researchers, programmers or developers. Although they are now part of an established movement, they remain relatively new territory for investors and professional advisors, which means that they can be perceived as a risk.

There are many kinds of software licences which may be described as free or open and they will be more or less stringent of your right to redistribute the software in a way which you consider to be in your business’s best interest. Changing licence can be possible, but there may be compatibility or permission requirements.

When using any software that will be essential to the development of your project, you should take legal advice on the terms of any licence under which you have obtained the source code or executable code and what you may need to do to comply with that licence.

If you intend to modify Free/Open Source Software, or to make your own software available on a free or open basis, careful thought should be given to the licence you use, any restrictions that may be placed on you in terms of licensing and whether a bespoke licensing agreement between you and your distributor or customers may be appropriate.

If in doubt, you should always seek the advice of a professional. Stephens Scown’s dedicated IT lawyers can provide specialist IT advice.