Last Updated on 13/08/2025 by Damin Murdock
In today’s fast-paced digital landscape, open-source software (OSS) offers Australian businesses incredible opportunities. It is a powerful resource, providing flexibility, accessibility, and often, significant cost savings. However, beneath its seemingly free nature lies a complex web of legal obligations that businesses must understand, especially when developing or distributing commercial software products.
At Leo Lawyers, we understand the allure of open-source, but we also know the critical legal risks. Misinterpreting or misusing open-source code can lead to severe consequences, including costly lawsuits, hefty financial penalties, reputational damage, and even the forced disclosure of your proprietary code. It can also result in your business failing its due diligence with a potential investor.
Understanding the Legal Framework: Source Code and Copyright
In Australia, source code is not a free-for-all. It is meticulously protected under the Copyright Act 1968 (Cth) as a literary work, similar to a book or a film. This protection extends to both the human-readable source code and the machine-readable object code.
As established in landmark cases like Computer Edge Pty Ltd v Apple Computer Inc [1986] HCA 19, even the partial use of someone else’s code can constitute copyright infringement. This fundamental principle underpins all open-source licensing.
“Open-Source” Doesn’t Mean “Unlimited Use”
The term “open-source” can be misleading. It signifies that the creator has granted permission for others to use, modify, and distribute their code, but always under specific license conditions. These conditions vary significantly and commonly include requirements such as:
- Giving credit to the original author which is normally referred to as ‘attribution’
- Limiting use for commercial purposes without explicit permission which is normally referred to as “non-commercial use restrictions”
- Requiring you to share your own code if you modify or distribute the open-source software (as seen in licenses like the GNU General Public License – GPL), which is often referred to as “copyleft” restrictions.
If you fail to comply with these license terms, your rights to use the software can be automatically and immediately revoked.
Commercial Use: When Can You Use Open-Source in Your Product?
The answer is clear: yes, but only if the specific open-source license permits commercial use.
Before integrating any open-source code into your commercial software product, it is vital to ask critical questions:
- What is the specific licence governing this code?
- Does this licence explicitly allow commercial use?
- Are there any attribution or “copyleft” requirements that obligate me to share my own proprietary code?
- Am I combining this open-source code with my confidential, proprietary code in a way that could create legal entanglements or inadvertently force disclosure?
Licences like MIT or Apache 2.0 are generally considered “permissive” and business-friendly, often allowing commercial use with minimal restrictions. However, “strong copyleft” licenses such as the GPL require you to license your entire derivative work under the same terms, which is often incompatible with developing a proprietary commercial product.
The Perils of Non-Compliance: What Could Go Wrong?
Ignoring open-source licensing terms can lead to serious legal and business repercussions:
- You could face legal action for unauthorised use of copyrighted code
- Your ability to use the open-source code can be immediately terminated, potentially crippling your product
- Non-compliance can severely harm your brand, erode customer trust, and deter investors
- You might be forced to undertake costly re-development, remove key features, or even publicly release your own valuable proprietary code.
Your Guide to Safe Open-Source Integration: How to Stay on the Safe Side
Navigating open-source effectively requires a proactive and diligent approach. At Leo Lawyers, we recommend the following best practices:
- Never assume “open-source” means “no restrictions.” Always scrutinise license terms before incorporating any third-party code into your projects
- Implement robust systems to track the origin of all code within your software, document the specific licenses that apply, and keep detailed records of your compliance efforts
- For complex software projects, or whenever you have any doubt about open-source licensing, consult with a technology lawyer. This is particularly important if you plan to sell, license, or scale your software product
- Periodically audit your codebase to ensure ongoing compliance. As your product evolves and your team grows, adapt your internal processes to manage open-source dependencies effectively.
Final Thoughts
Open-source software is an invaluable asset for Australian businesses, fuelling innovation and efficiency. However, it is a powerful tool with inherent legal obligations. For any business building or distributing software, a comprehensive understanding of open-source licensing and copyright law is not just beneficial, it is absolutely essential for long-term success and legal protection.
At Leo Lawyers, we are dedicated to helping Australian businesses confidently navigate the intricacies of software licensing, copyright protection, and all tech-related legal risks. Whether you are launching a groundbreaking new application, scaling your existing software, or simply reviewing your product’s compliance, we are here to provide the expert legal guidance you need to get it right.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our social media accounts.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
