If you operate a software based business and you are seeking growth capital or a venture capital investment, you are most likely working with some third-party code with your software. There is nothing wrong with using these third-party codes, because it is extremely common now (and probably a best practice as well). But what is your method to evaluate and monitor this code and the affiliated license terms (remember I am an attorney)? Well, here are three thoughts that might help:
1) Written Policy. Think through (a) the times that it makes a goo deal of for your organization to utilize open source code (possibly with functionality that is not core to your offering), and (b) what varieties of licenses you will permit and won’t (perhaps try to avoid GPL licenses if you plan on distributing your code to your customers). For instance, you may perhaps allow licenses which only demand attribution/notice. Oh yeah, don’t forget to compile this information and tell it to all your developers (and contractor developers). See below for an example of attribution wording:
2) Tracking Process. It’s important to observe where you utilize the open source code and the associated license terms and thankfully it’s really easy to do. Your process can look as easy as a spreadsheet which includes the name of the open source code, an outline of your goods (and version) with which it is integrated, any license requirements and a copy of the license agreement. This tracking process is extremely straightforward if you implement it as you go, and truly challenging to re-create if you need to perform it years later when another person (an acquirer or your CEO) wishes to know what open source code is embedded in your product.
3) Annual Audit. While several people neglect this, whoever is in charge of your open source procedure (and I recommend you place one person in charge who owns this policy) must annually review what your developers (which includes any developers who are in fact contract developers) know and comply with your policy.
This could become a great deal more complex, but I find that a software company searching for its company exit strategy desires at least these 3 fundamental steps and not necessarily the 25 page open source policy.
Disclaimer: This is not intended to serve as legal advice. It is provided for educational and informational purposes only.
Jeremy Aber is a Senior Adviser at OpenView Venture Partners. He works with the portfolio companies on value add-legal initiatives as part of the Organization/Operational Team of OpenView Labs.
September 25th, 2011
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