Open Source Software Compliance

Managing the Legal Risks Hidden in Your Codebase

Open source software powers modern technology — and that’s precisely what makes it a legal issue. Virtually every software company today incorporates open source components, and each component carries license obligations that can range from permissive (do almost anything, just include the notice) to restrictive (distribute your own source code under the same terms). Getting this wrong doesn’t just create legal exposure — it can derail a funding round, an acquisition, or a commercial partnership. John Montague has been advising technology companies on open source compliance for over fifteen years, integrating it into his broader technology transactions and M&A practice. His work at Locke Lord LLP (now Troutman Pepper Locke), an AM Law 200 firm, gave him early exposure to the IP diligence issues that open source creates in corporate transactions — experience that has only become more relevant as open source adoption has accelerated.

Tip from John Montague: Most companies don’t have an open source problem — they have an open source visibility problem. The engineering team is making license decisions every time they pull in a dependency, but there’s rarely a process for tracking those decisions or evaluating the cumulative obligations. By the time a company is in due diligence for a deal, reconstructing that history is expensive and stressful. Build the tracking system before you need it.

How We Help

Montague Law advises technology companies on all aspects of open source software compliance. John Montague’s practice includes conducting open source audits to identify all open source components in a company’s software products and assess license compliance; performing license compatibility analysis to determine whether open source licenses are compatible with the company’s commercial distribution model; developing open source compliance policies and procedures that integrate with the engineering team’s development workflow; advising on copyleft license obligations, including GPL, LGPL, AGPL, and MPL, and their implications for proprietary software distribution; preparing open source disclosure documents and compliance materials for M&A due diligence; and counseling companies on contributing to open source projects, including contributor license agreements and community governance considerations.

The Spectrum of Open Source Risk

Not all open source licenses create the same level of risk. Permissive licenses like MIT, BSD, and Apache 2.0 impose minimal obligations — typically just attribution and inclusion of the original license notice. These are generally low-risk for commercial software companies. At the other end of the spectrum, copyleft licenses like the GPL family require that derivative works be distributed under the same license terms, which can require disclosure of proprietary source code if the integration isn’t properly structured.

The challenge for most technology companies isn’t a single problematic license — it’s the cumulative complexity of dozens or hundreds of open source components, each with its own license terms, interacting in ways that can create unexpected obligations. A software product might include components under MIT, Apache, LGPL, and GPL licenses simultaneously, and the way those components interact with each other and with proprietary code determines the company’s aggregate compliance obligations.

John Montague regularly encounters these issues in the context of technology M&A and venture capital transactions. Investors and acquirers increasingly request open source audits as part of their due diligence, and companies that can demonstrate clean open source practices negotiate from a stronger position. His experience as a visiting professor of Entrepreneurial Law at the University of Florida reinforces his ability to advise startups on building compliance infrastructure early — before it becomes a deal issue.

Frequently Asked Questions

What is a copyleft license and why does it matter?

A copyleft license (such as the GPL) requires that any derivative work incorporating the copyleft-licensed code be distributed under the same license terms. For a commercial software company, this can mean being required to release proprietary source code under an open source license — a significant IP consequence. Whether a particular use constitutes a “derivative work” under the GPL is a complex legal question that depends on how the open source component is integrated with the proprietary code.

When do investors and acquirers care about open source compliance?

Open source compliance has become a standard component of technology M&A and venture capital due diligence. Investors want to know that the company’s core IP isn’t encumbered by copyleft obligations. Acquirers want to verify that they’re getting clean ownership of the technology they’re paying for. Companies that can produce a current software bill of materials with license classification move through diligence faster and with fewer valuation adjustments.

Does Montague Law help set up open source compliance programs?

Yes. John Montague works with technology companies to build practical compliance programs that integrate with their development processes. This typically includes establishing an open source policy, implementing license review procedures for new dependencies, creating a software bill of materials, and training the engineering team on license obligations. The goal is a system that’s lightweight enough to actually be used but rigorous enough to satisfy investor and acquirer diligence requirements.

Related Practice Areas: Technology Transactions | Software Licensing | Technology M&A & IP Due Diligence

Need an open source compliance review? Call 904-234-5653 or schedule a consultation.