When “Free” Isn’t Free: The Hidden Risks of Open-Source Licensing 

By Andre Yeghiazarian, Avi Bhandari and Kaviyana Sitartha, Dispute Resolution and Intellectual Property Lawyers at gunnercooke LLP  

Open-source software is everywhere. It powers websites, runs mobile apps, and supports the tools used in finance and other industries. Modern technology depends on it. Many people assume that because open source is “free to use,” it can be adopted in any context without restriction. In reality, open source comes with rules and misunderstanding those rules can create serious legal and commercial problems. 

Open source does not mean “no rules.” Put differently, not all licenses are created equal. Every piece of open-source software is distributed under a licence, and those licences vary widely. Some, like the Massachusetts Institute of Technology (“MIT”) or Apache licence, are permissive and allow for almost unlimited commercial use.  

Others, such as the General Public Licence (“GPL”) family, impose stricter obligations. They may require you to release your own modifications, limit how you can combine code or impose conditions that makes some commercial use unviable. If your use falls outside the permitted scope of the licence, you may find yourself facing demands for payment or forced compliance. 

For personal programming projects, these distinctions may not seem especially important. However, in a commercial setting, they can carry significant consequences. A business that unknowingly builds a product on top of software it is not properly licensed to use may face unexpected costs, reputational risks, or even legal disputes. Investors too are increasingly alert to these issues. Discovering a shaky IP foundation during due diligence can raise red flags and stall growth opportunities. 

It is not just about whether you “have a license.” You always do. The real issue is whether you are following its rules. Most open-source software grant permissions only if you meet their conditions. Breach the terms and you are in copyright infringement territory.  

This does not mean businesses should avoid open source. Open source is the backbone of modern software development and a huge driver of innovation. It does, however, mean companies need to approach it with their eyes open. Understanding which licences govern the software you rely on, and how those terms apply to your specific use, is critical. Mapping your dependencies and checking compliance early is always less costly than dealing with a dispute later. Build policies around usage and have legal or IP experts review anything going into production. 

The bottom line? Open source may be free to download, but misunderstanding its licensing terms can make it expensive in the long run. If your business relies heavily on open-source libraries, and most do, it is worth asking: are we truly compliant or just assuming we are? 

If you have any questions in relation to this topic or other Intellectual Property and Technology matters more generally, please contact us using [email protected].