In the modern “build fast” culture of Pennsylvania’s tech hubs, including the AI startups of Pittsburgh’s Robotics Row and the health tech firms in Philadelphia’s University City, developers rarely start from zero. Instead, they build with Open-Source Software (OSS).

OSS is the invisible ingredient in almost every modern application. It is efficient, cost-effective, and usually high quality. However, a persistent myth exists in the business world that open source means free of rules. Using open source software is a legal transaction. When you download a library or use a framework, you are agreeing to a contract. If you break that contract, the result is not just a technical issue. It can lead to an intellectual property infringement claim.

Understanding the Two Types of Open Source Licenses

Not all open source software is treated the same under the law. To manage legal risk effectively, businesses must understand the two primary families of open-source licenses: permissive and copyleft.

Permissive Licenses

Commercial software companies commonly use licenses such as the MIT, Apache 2.0, and BSD licenses. These licenses generally allow developers to use, modify, and sell the software as part of a closed-source product. The primary obligation is to provide proper attribution in documentation or an about section.

Risk Level: Low. As long as the original copyright notice is preserved, compliance is usually straightforward.

Copyleft Licenses

Licenses such as the GNU General Public License (GPL) and the Affero GPL (AGPL) follow a different philosophy. These licenses are designed to keep software freely available. When strong copyleft code is used in a product distributed to customers, the license may require the company to release its proprietary source code under the same open-source license. In some circumstances, particularly with AGPL, these obligations can arise even without traditional distribution.

Why Copyleft Is Often Called “Viral”

Attorneys often describe strong copyleft licenses as viral because certain forms of code integration can require the release of proprietary code to the public. When this occurs, valuable intellectual property that once provided a competitive advantage may lose its exclusivity.

How Open Source Issues Derail Funding and Acquisitions

For many Pennsylvania businesses, the most serious open source risk does not come from an unexpected lawsuit. It arises during due diligence.

Imagine reaching the final stages of a Series A funding round or an acquisition by a larger company. During legal review, the buyer conducts a Software Composition Analysis. The analysis reveals that a developer used a GPL-licensed library within a core system component to meet a tight deadline.

From the buyer’s perspective, this creates a contaminated codebase. Because the company may be legally required to disclose its proprietary source code, the valuation can drop immediately. In some cases, the deal collapses entirely. Fixing the problem by removing and replacing infringing code is costly, time-consuming, and often delays transactions for months.

The 2026 Regulatory Landscape and SBOM Requirements

As software regulation continues to evolve in 2026, expectations around reasonable care in development have increased. Following high-profile supply chain attacks, many enterprise customers and government agencies now require a Software Bill of Materials (SBOM).

An SBOM functions as a list of ingredients for software. It identifies which open source components are used and the licenses that govern them. Companies that cannot produce an accurate SBOM may be excluded from major contracts or fail to meet cybersecurity requirements that are increasingly incorporated into Pennsylvania commercial law.

How Small Businesses Can Protect Themselves

Using open source software does not need to stop. What is required is legal hygiene implemented before problems arise. A proactive approach includes the following steps.

Adopt a Written Open Source Policy

License decisions should not be left solely to individual developers. A written policy should identify pre-approved licenses, such as MIT or Apache, and flag prohibited licenses, such as GPL or AGPL, that require legal review.

Use Software Composition Analysis Tools

Manual license review is no longer necessary. Modern tools can automatically scan GitHub or GitLab repositories and identify high-risk licenses before they are embedded in the software architecture.

Audit Contractors and Freelancers

Contracts with outside developers should require full disclosure of open-source use. Contractors should also warrant that their work does not expose proprietary code to license obligations that compromise ownership.

Maintaining Good Standing Under Pennsylvania Law

Protecting intellectual property also depends on the legal status of the business itself. Under Pennsylvania Act 122, companies must file annual reports to remain in good standing. A business that is administratively dissolved may lose the legal standing needed to enforce its own copyrights, even if it has properly managed open source compliance.

Conclusion: Use Open Source, But Verify

Open source software remains a powerful driver of innovation. However, it carries obligations that cannot be ignored. By understanding the difference between permissive licenses and copyleft requirements, businesses can build modern software while protecting their intellectual property and long-term value.

Using Open Source Software Safely Without Sacrificing IP Value

If your business relies on open-source software and you want to ensure your codebase remains compliant, defensible, and investor-ready, speaking with an experienced technology attorney is a smart next step. Nathan Wenk at Spengler & Agans advises Pennsylvania businesses on intellectual property protection, software licensing, and risk management.
Schedule an online consultation to receive guidance tailored to your business needs.