Open source software or patents. They sometimes appear to be diametrically opposed to each other but this is not necessarily true. They can even complement each other. In this blog we discuss the advantages and disadvantages of open source software and how to use it strategically.What is open source?
Open source does not simply mean that a code is free and freely accessible. It is a licensing model whereby you make the source code publicly available under certain conditions. These conditions are set out in a licensing agreement. i.e. an open source licence. It is, as it were, a contract with an unknown party - the general public. Unlike in the case of a regular licensing agreement you therefore do not know with whom you are making the agreements and what their intentions are. This means you have little control over who uses your software and what they do with it.
TL;DR The Opportunities and Risks of Open Source Software
Open source software offers benefits such as faster development, improvements through external contributions, and transparency. At the same time, it carries risks like limited legal protection, loss of control over the code, and potential investor concerns regarding intellectual property.
A strategic approach combines open source with patents: patent the valuable components and make the rest available as open source. Pay close attention to licensing terms and the revenue model. Open source and patents don’t have to be opposites—they can actually reinforce each other.
Opportunities of open source software
The fact that it is more difficult to control does not mean that open source is always a bad idea. Open source has a number of important advantages:
- Faster development: When you use open source components, you are able to develop faster. After all, you don't have to invent everything yourself.
- Improvement of the software: Open source software is available to be improved. This way everyone benefits from external expertise and improvements.
- Transparency and security: Because it is open source, everyone can check what the software does. This makes it more secure and transparent.
Risks of open source software
Before making your software open source it is a good idea to also weigh up the risks and consider how you ultimately want to make money from your software. You will need to take the following into consideration:
- Limited protection: Open source software is usually protected by copyright. This provides a more limited scope of protection than a patent. If someone implements your algorithm with a different code, copyright will no longer provide protection.
- • Loss of control: You have no control over who views your code or what they do with it. If your code contains a valuable algorithm that is not protected by a patent, someone could be inspired by it and use it again without making a literal copy. You also have no control over who does this and whether this is a party to whom you would entrust the code.
- Investor interests: Investors look at intellectual property in particular when considering start-ups. If everything is open source, it can be more difficult to attach a tangible value to it.
- Commercial restrictions: If you want to make money from the software you have developed, open source licences will restrict you. This is particularly disadvantageous for start-ups which often have limited resources.
You can also have both
Fortunately, patents and open source are not necessarily mutually exclusive. An interesting strategy is to combine patents and open source. You can apply for patents for the most valuable parts of your software and still release it as open source. By doing so you enhance your open source licence with patent protection and make it more difficult for others to circumvent your intellectual property. It also gives you more control over your innovation.
American software company Red Hat is a good example of a company that combines open source with patents. They sell the open source Linux operating system as a commercial product while they also protect their intellectual property with patents. Their patent strategy is defensive. They promise not to attack, but only to defend themselves with patents if they are accused of infringement. This is a smart move, because even when using open source, you can unwittingly infringe on other people's patents. Without your own patent portfolio, you are in a weaker position when your company grows and is challenged on this.
Keep this in mind when adopting the hybrid approach
If you want the best of both worlds, pay attention to the licensing terms. This applies both when you use open source yourself and when you make your own software publicly available via an open source licence. For example, do you also have to make your own code open source if you use open source software? Are you allowed to use the software commercially? Also consider the revenue model when you offer your software as open source. How are you going to make money with the software? Include this in your business plan. Finally, determine the most valuable parts of your software and consider patent protection for these, even if you opt for an open source strategy.
Open source and patents are not opposites but can actually complement each other when used strategically. If you would like some advice on finding the right balance between the two, please get in touch with us, we are happy to help!
