The rapid evolution of the IT sector has ushered in a wide variety of software distribution models as well as corresponding licensing schemes. From a business perspective, the most prevalent models are Software as a Service (SaaS) and on-premise installations. At the same time, many companies—either exclusively or in combination—opt for open source solutions to develop or integrate functionalities, introducing additional contractual and legal dimensions worth exploring.
When a company enters into agreements for SaaS solutions, it essentially “rents” access to a web-based platform or application. In such cases, the contract typically includes Service Level Agreements (SLAs), terms regarding service availability (uptime), and provisions for protecting data uploaded to the cloud. On the other hand, in an on-premise model, the client obtains (through a license) the right to install the software on its own servers. Here, the contractual clauses focus more on support responsibilities, upgrades, and the rights to modify the code or system architecture.
In both models, incorporating open source technology can offer significant advantages, such as cost savings, faster development, and access to a broad community of developers. However, a careless or poorly managed use of open source components can lead to legal risks. For instance, some licenses (e.g., GPL) may impose requirements to disclose modified code, which can affect the commercial exploitation of a product. Moreover, a lack of proper documentation or no clear information about the origin of specific open source components can trigger issues related to copyright infringement or breaches of trade secrets.
To mitigate these risks, companies should draft comprehensive software contracts. Beyond outlining financial terms and clauses related to availability or maintenance, agreements should explicitly detail how any open source element is integrated, which rights and obligations arise, and what processes are in place to monitor license compliance. Additionally, effective code management (e.g., version control and code repositories), combined with a clear internal licensing policy, helps prevent unintended violations.
By implementing these best practices, businesses and developers can harness the benefits of open source while ensuring the safe and lawful provision of SaaS or on-premise solutions—ultimately safeguarding both their investments and their reputation in the market.
