First up in my series of posts about IP and Open Source is an important issue - understanding licensing. This issue can be somewhat obscure and seem unimportant at the beginning of a startup's life. It isn't -- consider it to be one of the most important items in the future of your company. Ignore at your own peril.
As an entrepreneur, if you are thinking about using open source in your prototype or project, you will need to become knowledgeable about the various types of licenses used by various open source projects.
(Disclaimer -- I am not a lawyer. The opinions expressed are mine and should simply be considered a starting point NOT an end-all-be-all explanation of a very complex issue)
There are quite a few licenses -- fortunately you can cover quite a bit of ground by reviewing and understanding just a handful of them. The vast majority of other licenses will probably be derivative of these major licenses (and probably even say so in their docs) Understanding licenses might be the difference between having to distribute any modifications you have made in source code form, or distributing in binary form with the proper attribution.
As you might guess, having to distribute your changes in source code form to your competitors might cause more than one VC to end the due diligence process immediately and move onto other startups with IP that can be protected.
Major Open Source Licenses
1. GPL - GNU General Public License. The granddaddy of them all and also one of the licenses that causes some big headaches if it isn't understood. The GPL FAQ pretty much sums up the issue that can kill a round of funding before it even begins:
if you release the modified version to the public in some way, the GPL requires you to make the modified source code available to the program's users, under the GPL.
In other words, if you modify a library or framework that uses the GPL for licensing and then intend to distribute the work, you have to distribute the complete source also. Any VC will immediately notice that your IP has diminished in value. How much value has been lost depends on how much of a differential advantage the changes provide your startup.
2. LGPL - GNU Lesser General Public License. A somewhat less restrictive version of the GPL. However, it can have significant impact - tread carefully.
3. Apache 2.0 - The latest revision from the Apache Group. In my experience a large percentage of libraries and frameworks are under this license (Apache web server, Tomcat, Jakarta) In general, the license is easy to work with and understand.
4. BSD-style licenses - Generally one of the least restrictive requirements. An example is the OpenSSL licenses which state:
... both licenses are BSD-style Open Source licenses
This might be a bit confusing at first ("what does BSD-style mean??") but realize that the intent is to allow for modification and distribution of the modification in binary form.
Moving Forward
Print out a copy of each of the licenses listed above. Read over them three or four times. Do some research, ask questions, make notes. It will be time well-spent. Note that a large number of licenses can be found at OpenSource.org