Menu
Trusted technology partner to some of the world’s most successful private equity funds and their portfolio companies, through the investment cycle.
Intellectual property rights (IPR) refer to a set of legal rights that are granted to individuals or entities for their creations or inventions resulting from intellectual or creative efforts. These rights provide exclusive control and protection over intangible assets, allowing their creators to benefit from their work and prevent others from using or exploiting it without permission. Intellectual property rights are crucial in fostering innovation, encouraging creativity, and safeguarding the interests of creators and inventors.
These intellectual property rights are usually governed by national laws and international agreements, such as the Berne Convention for Copyright, the Paris Convention for the Protection of Industrial Property, the Madrid Agreement for Trademarks, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) administered by the World Trade Organization (WTO).
The main types of intellectual property rights are as follows:
- Copyright: Copyright protects original artistic, literary, musical, or dramatic works. It grants the creator the exclusive right to reproduce, distribute, display, perform, and create derivative works based on their original creation for a specific period of time.
- Trademarks: Trademarks protect symbols, logos, names, phrases, or designs that distinguish goods or services of one company from others. They enable consumers to identify and associate products or services with a particular brand or source.
- Patents: Patents grant exclusive rights to inventors for new and useful inventions, such as processes, machines, products, or compositions of matter. Patents provide protection for a limited period, during which the inventor has the right to prevent others from making, using, selling, or importing the patented invention.
- Trade Secrets: Trade secrets encompass valuable and confidential information that provides a competitive advantage to a business. This can include formulas, recipes, manufacturing processes, customer lists, marketing strategies, or other proprietary information that is not publicly disclosed. Unlike patents, trade secrets have no fixed duration and protection is maintained as long as the information remains secret.
- Industrial Designs: Industrial designs protect the visual appearance of a product or its ornamental features. They cover the aesthetic aspects that are not purely functional and may include the shape, pattern, color, or texture of an object.
- Geographical Indications: Geographical indications (GIs) identify products originating from a specific geographic location and possess qualities or reputation attributed to that origin. GIs protect the cultural heritage, traditional knowledge, and quality associated with certain products, such as wines, cheeses, or handicrafts.
Several specific intellectual property (IP) factors are particularly relevant for software. Here are the main ones:
Copyright: Copyright protects the expression of original ideas in a tangible form. In the case of software, copyright protects the source code, object code, and the overall structure, sequence, and organization (SSO) of the program. It gives the creator exclusive rights to reproduce, distribute, modify, and display their software.
Patents: Software patents cover inventions that are new, non-obvious, and have utility in the field of software. Patentable software typically involves novel algorithms, processes, or methods that provide a technical solution to a specific problem. Patents grant exclusive rights to the inventor for a limited period, typically 20 years, and allow them to prevent others from making, using, selling, or importing the patented software.
Trade Secrets: Trade secrets protect valuable and confidential information, such as algorithms, formulas, processes, or customer lists, that provide a competitive advantage. In the software realm, trade secrets can include proprietary algorithms, database structures, or other undisclosed aspects of software development. To qualify as a trade secret, the information must be kept secret and provide a competitive advantage.
Trademarks: Trademarks protect brands, logos, symbols, or names that distinguish goods or services in the marketplace. In the software industry, trademarks can be applied to software names, logos, or icons to establish brand recognition and prevent consumer confusion. Trademark protection helps software companies build brand value and prevent others from using similar marks in a way that may cause confusion.
Open Source Licenses: Open-Source licenses govern the use, modification, and distribution of software that is made available to the public with its source code. These licenses include popular ones like the GNU General Public License (GPL) or the MIT License. Open-Source licenses ensure that software remains freely available and can be modified and distributed by others while imposing certain obligations and restrictions on those who use the software.
Software Contracts: Contracts play a vital role in protecting software IP rights. These contracts can include end-user license agreements (EULAs) or software development agreements, specifying the terms and conditions of software usage, distribution, ownership, and confidentiality. Software contracts help define the rights and responsibilities of the parties involved and provide legal protection in case of disputes.
It’s important to note that IP laws and regulations can vary between jurisdictions, so it’s advisable to consult with legal professionals specializing in intellectual property to understand and protect software-related IP rights effectively.
Open-Source Software (OSS) is a type of software where the source code is released under a license that allows anyone to view, use, modify, and distribute the software. This contrasts with proprietary software, where the source code is kept secret, and the software is strictly controlled by the original developers or publishers.
Freedom to Distribute
Users can share copies of the software with others. This is useful when the software is used in a networked environment, as there’s no need to purchase additional licenses.
Community Development
Because anyone can contribute to the software, Open-Source Software often benefits from the input of many different developers, which can lead to more innovative and robust solutions.
Some well-known examples of Open-Source Software include the Linux operating system, the Apache HTTP Server, the MySQL database system, the Python programming language, and the Mozilla Firefox web browser. These projects are maintained by a community of developers who contribute their time and expertise to improve the software and share it with the world.
Percentage of codebases containing open-source by industry
Percentage of code that was open-source by industry
Percentage of codebases containing open-source by industry
Percentage of code that was open-source by industry
Percentage of codebases containing Open-Source by industry
Percentage of code that was Open-Source by industry
Cost-Effective
OSS is generally free to use, which can lead to significant cost savings compared to proprietary software, especially for start-ups or small businesses.
Flexibility and Customizability
With access to the source code, users can modify and customize OSS to suit their specific needs. This flexibility can be a substantial advantage over proprietary software, which is often a “one-size-fits-all” solution.
Innovation and Speed
OSS projects can evolve quickly due to the collaborative nature of their development. Many minds working on a project promoting rapid innovation and quicker solutions to problems.
Quality
As OSS is worked on and scrutinized by many developers, the code quality can be very high. Bugs and issues are often caught and fixed quickly.
Transparency
With OSS, you can see exactly what the software is doing. This transparency provides a higher level of trust than proprietary software, which can often be a “black box.“
Interoperability
OSS is often built with standards that promote interoperability, meaning it is designed to work well with other software. This can be especially important in complex ecosystems where multiple systems need to communicate with each other.
Vendor Independence
With OSS, there’s less risk of being locked into a single vendor’s software ecosystem. You can avoid situations where a vendor’s business decision might force you to change your software setup.
Community Support
Many OSS projects have active communities that provide extensive support networks. These communities can be valuable resources for troubleshooting, advice, and learning.
Learning Opportunities
For developers and IT professionals, working with OSS can provide valuable learning opportunities. By studying and modifying the source code, they can gain deeper insights into how the software works.
Sustainability
OSS is less likely to be discontinued compared to proprietary software because even if the original creators stop working on it, the community can continue to develop and maintain it.
OSS is often built with standards that promote interoperability, meaning it is designed to work well with other software. This can be especially important in complex ecosystems where multiple systems need to communicate with each other.
Vendor Independence
With OSS, there’s less risk of being locked into a single vendor’s software ecosystem. You can avoid situations where a vendor’s business decision might force you to change your software setup.
Community Support
Many OSS projects have active communities that provide extensive support networks. These communities can be valuable resources for troubleshooting, advice, and learning.
Learning Opportunities
For developers and IT professionals, working with OSS can provide valuable learning opportunities. By studying and modifying the source code, they can gain deeper insights into how the software works.
Sustainability
OSS is less likely to be discontinued compared to proprietary software because even if the original creators stop working on it, the community can continue to develop and maintain it.
Security Vulnerabilities
As Open-Source Software is available to everyone, it’s also accessible to malicious actors who can study the code and exploit any security vulnerabilities they find. While there is a large community that actively works on patching these vulnerabilities, not all are addressed promptly.
License Risks
Different OSS projects use different licenses, each with its own requirements and restrictions. Using OSS without fully understanding the license can result in legal issues, including copyright infringement.
Maintenance and Support
OSS often relies on community support for updates and problem-solving, which can be unpredictable. If the community behind a project dwindles or the key maintainers move on, the project could stagnate, leaving users without crucial updates or bug fixes.
Quality and Documentation
The quality of OSS can vary widely. Some projects may lack thorough documentation, making it more difficult to implement and maintain. Also, without a dedicated QA team like in commercial software, some OSS may contain bugs or not function as expected.
Operational Risks
Since anyone can contribute to OSS, there could be operational risks, such as inconsistent code quality or non-standardized programming practices, which could make the software harder to maintain and extend.
Hidden Costs
While OSS is generally free to use, there can be hidden costs. These can include the time and resources needed to properly integrate the software into your existing systems, provide training for your team, and ongoing maintenance.
Dependency Risk
If your project depends heavily on an OSS project and that project becomes obsolete, is no longer maintained, or has critical vulnerabilities that are not addressed, it could pose significant risks to your project.
Compatibility Issues
As OSS is typically developed with general applicability in mind, it may not work seamlessly with your existing software ecosystem, leading to integration and compatibility issues. Despite these risks, OSS continues to be a vital part of software development due to its numerous advantages. The key is to manage these risks effectively through proper vetting, testing, and monitoring of the OSS used.
OSS licensing compliancy issues
These issues and their scale demonstrate the degree to which OSS issues exist exposing their businesses to regulatory non-compliance, fines, and loss of prestige and all the risks of OSS cited above.
OSS software can make it’s way into a codebase either by being added or through being embedded in another component. Such occurrences are not readily apparent without proper tools and procedures.
Certain technologies are typically low in OSS usage, such as .Net, whereas other technologies routinely allow OSS and utilise the re-use that OSS can bring, such as Java, Javascript, and PHP.
Increasingly the usage of Open-Source Software is subject to scrutiny and transparency. Both the US and EU have a particular focus on Open-Source Software and related concerns as follows :
United States
The Securing Open-Source Software Act
Introduced this legislation to improve Open-Source security and best practices in the government by establishing the duties of the director of the Cybersecurity and Infrastructure Security Agency (CISA). The Act directly addresses the top three areas of focus to improve open-source security: vulnerability detection and disclosure, SBOMs and OSPOs.(**)
Other US Open-Source initiatives
The US Government have initiatives encouraging the usage of Open-Source. the General Services Administration (GSA) has established the Open-Source and Code Sharing Policy, which promotes the use of Open-Source Software and encourages agencies to release custom-developed code as Open-Source.
The policy also encourages agencies to prioritize Open-Source solutions during the software acquisition process. While these policies primarily focus on government agencies, they can indirectly influence suppliers working with the government. Suppliers may be encouraged or expected to align with the government’s Open-Source initiatives if they want to secure government contracts or partnerships. However, specific requirements can vary depending on the agency, project, and contract.
European Union
There are several existing and proposed EU regulations that could impact Open-Source Software. Here are some relevant regulations:
European Union Public License (EUPL): The EUPL is an Open-Source Software license that has been specifically designed for use by public sector organizations within the European Union.
European Interoperability Framework (EIF): The EIF provides guidelines for promoting interoperability among European public services, including the use of open standards and Open-Source Software. It encourages the adoption and sharing of Open-Source solutions within the public sector.
Copyright Directive: The Copyright Directive, also known as the “EU Copyright Reform,” was adopted in 2019. While it primarily addresses copyright issues in the digital age, it impacts on Open-Source Software development, with the introduction of new obligations for online platforms hosting user-generated content.
Please note that this list is not exhaustive, and there may be other existing or proposed regulations that could impact Open-Source Software in the EU. It is advisable to consult the latest updates from relevant EU institutions and legal sources for the most accurate and up-to-date information.
OSPO – Open-Source Program Office Serves as the center of competency for an organization’s Open-Source operations and structure.
SBOM – Software Bill Of Materials is an inventory of all constituent components and software dependencies involved in the development and delivery of an application.
License Examination
Start by examining the software’s license. Determine whether it is an Open-Source license (such as GNU General Public License, MIT License, Apache License) or a proprietary license. Understand the specific rights and obligations granted by the license to users, including restrictions, redistribution permissions, and any required attributions.
Copyright Verification
Check if the software is protected by copyright. Copyright protects the original expression of an idea in a fixed form, such as the source code, and grants exclusive rights to the author or owner. Ensure that the software is not infringing on someone else’s copyright and that the necessary permissions or licenses are in place.
Code Auditing
Perform a code audit to identify any potential intellectual property issues within the software. This involves reviewing the source code for any code snippets, libraries, or components that may be subject to licensing restrictions, copyrights, or patents. Look for any third-party code that may have been incorporated and assess its legal status.
Patent Search
Conduct a patent search to identify any existing patents that may cover aspects of the software’s functionality, algorithms, or unique features. This search helps identify potential patent infringement risks. Use patent databases and search engines to search for relevant patents in the software’s domain.
Trademark Verification
Check for any trademarks associated with the software’s name, logo, or branding. Ensure that the software’s name or branding does not infringe on existing trademarks in the relevant jurisdictions.
Legal Consultation
If you have concerns about the software’s IPR, it is advisable to seek legal advice from an intellectual property lawyer or expert. They can provide specific guidance based on your circumstances and help you navigate any potential legal risks or obligations.
It’s important to note that checking IPR can be complex, especially when dealing with complex software ecosystems or incorporating third-party components. In some cases, organizations conduct comprehensive due diligence and engage legal professionals to perform detailed assessments of IPR before using or distributing software.
Security Risk Management
SCA can help identify vulnerabilities in Open-Source components that your software depends on, thereby improving your overall security posture. By using SCA, you can be alerted to these vulnerabilities early and take steps to mitigate them.
License Compliance
Open-Source components come with different licenses, each with its own restrictions and obligations. SCA identifies the licenses associated with each component, ensuring compliance and avoiding potential legal.
Quality Control
Open-Source components vary greatly in quality. By analysing these components, you can ensure that only high-quality components are in use in your software, thus improving the overall quality of your software.
Operational Efficiency
SCA can identify redundant or out-of-date components in your software helping to streamline your software and reduce unnecessary overhead.
Listed here are some of the benefits of performing Software Composition Analysis:
Vendor Management
If third-party vendors are in use for some components of your software, SCA can help manage these relationships by providing insights into the quality, security, and licenses of these components.
Mergers and Acquisitions Due Diligence
In M&A situations, SCA can provide valuable insights into the target company’s software, helping to identify potential risks and liabilities.
Continuous Integration/Continuous Delivery (CI/CD)
SCA tools can be integrated into CI/CD pipelines to continuously monitor and manage Open-Source components, thereby ensuring that new risks aren’t introduced as the software evolves.
Improved Compliance
OpenChain helps companies establish a formal compliance program, ensuring adherence to Open-Source licensing requirements. It provides clear guidelines and processes for managing Open-Source Software, reducing the risk of non-compliance and potential legal issues.
Enhanced Efficiency
OpenChain promotes efficiency by streamlining Open-Source compliance processes, offering a consistent framework for handling Open-Source Software throughout the organization, reducing duplication of effort, and improving resource allocation.
Risk Mitigation
OpenChain mitigates risks associated with Open-Source usage, promoting an understanding and management of licensing obligations, reducing the potential for intellectual property infringements, license violations, and associated legal or reputational risks.
Supplier Relationships
OpenChain mitigates risks associated with Open-Source usage, promoting an understanding and management of licensing obligations, reducing the potential for intellectual property infringements, license violations, and associated legal or reputational risks.
Cost Savings
There are several common software licensing models that govern the distribution and usage of software. Here are some of the most prevalent models:
Proprietary License:
Under this model, the software is owned by a specific company or individual, and users are granted a license to use the software under certain conditions. The terms of use and distribution are typically outlined in an end-user license agreement (EULA). Proprietary licenses often restrict the modification, redistribution, or reverse engineering of the software.
Open-Source License:
Open-Source Software allows users to access, use, modify, and distribute the source code freely. There are various Open-Source licenses, such as the GNU General Public License (GPL), MIT License, Apache License, and many others. These licenses typically require any modifications or derivative works to be distributed under the same Open-Source license terms.
Freeware
Freeware refers to software that is available for use at no cost, but it does not necessarily grant users the right to modify or distribute the software. Freeware licenses vary, and some may impose certain restrictions on commercial use or redistribution.
Shareware
Shareware is software that is typically distributed for free, allowing users to try it before purchasing. Users are encouraged to pay a fee if they find the software useful and wish to continue using it. Shareware often has time-limited trial periods or feature limitations until the user purchases a license.
Subscription-based License
This model involves users paying a recurring fee, typically on a monthly or annual basis, to access and use the software. The software is often hosted on the cloud or provided as a service (SaaS). The subscription usually includes updates, support, and additional features for the duration of the subscription period.
Perpetual License:
A perpetual license grants the user the right to use a specific version of the software indefinitely. This model often involves a one-time payment, and users may have the option to purchase maintenance or support services separately. Upgrades or new versions of the software may require additional fees.
Academic/Educational License:
Academic licenses are tailored for educational institutions, students, or researchers. They provide access to software at discounted prices or for educational purposes only. These licenses may have restrictions on commercial use or redistribution outside the educational setting.