Manage Open Source Licenses in Financial Services

September 25, 2024
By Aaron Linskens

5 minute read time

Open Source License Management in Finance | Sonatype

Leveraging open source software (OSS) has become a key driver of innovation, cost reduction, and agility.

However, reliance upon OSS comes with significant responsibility, particularly around managing licenses to ensure compliance and mitigate risks.

As part of our FinServ: Open Source Optimization series, our recent webinar delved into the complexities of open source in financial services, offering critical insights on license management, compliance strategies, and the tools available to streamline the process.

Key Types of Open Source Licenses

Open source software licenses are not monolithic. Understanding the types of OSS licenses and their obligations is essential for organizations using OSS in their software supply chain.

The webinar emphasized the following broad categories of OSS licenses:

• Liberal or permissive licenses: These are the least restrictive. They typically only require users to provide attribution to the original author. An example is the MIT License, which allows developers to freely use, modify, and distribute the software as long as the copyright and license notice are included.

• Copyleft licenses: These licenses allow the use of the software under the condition that the source code must be made available when the software is redistributed. Copyleft ensures that derivative works are also open-sourced under the same license terms. The General Public License (GPL) is a well-known example.

• Banned licenses: Some OSS licenses are too restrictive for commercial use, especially in industries like financial services where confidentiality and intellectual property are crucial. They may forbid commercial use or require full source code disclosure, which can be problematic for proprietary systems.

Best Practices for License Compliance

Effective OSS license management is a critical component of any robust governance framework in financial services.

The following best practices help ensure compliance with OSS licenses:

• Understand license obligations: It is vital to understand the specific terms and conditions of each OSS license in use. This includes ensuring proper attribution, understanding copyleft requirements, and being mindful of any redistribution obligations.

• Automate license detection: Financial services companies can streamline compliance by implementing automated tools to detect the licenses of all OSS components. These tools can provide real-time visibility into the licenses governing each component, helping organizations avoid non-compliance issues.

• Regularly audit and review: Manual checks of OSS licenses are essential to meet obligations, especially with new or updated OSS components in the software supply chain. Automated tools can speed up this process, reducing manual review time.

The Importance of Governance Frameworks

For financial services organizations, integrating OSS license management into existing governance frameworks is essential. A structured approach allows consistent oversight of license use, mitigating the risks of legal non-compliance.

Consider the following key strategies:

• Policy creation and enforcement: Creating a clear OSS license policy helps you define which licenses are suitable based on the software's use. For example, copyleft licenses might be fine for internal apps but not for customer-facing products.

• License selection: For multi-licensed components, organizations must choose wisely, balancing the risks and benefits of each license. This may involve avoiding licenses that might unintentionally disclose proprietary code.

• Mitigating legal risks: Non-compliance with OSS license obligations can expose organizations to legal and financial risks. Real cases like Nutanix's license violation with MinIO show the potential for lawsuits, forced code removal, and reputational damage.

Tools for Streamlining OSS License Management

Managing OSS licenses at scale can be challenging, particularly for large financial services organizations that rely on hundreds or thousands of OSS components.

Several tools can help streamline the process and ensure compliance is maintained efficiently:

• License scanning tools: Automated tools like Sonatype Lifecycle detect licenses in application components and generate attribution reports. This helps financial services companies stay compliant with OSS license terms while reducing manual effort.

• Software bill of materials (SBOMs): SBOMs are essential for managing software components. They provide a comprehensive list of all components in an application, allowing organizations to track licensing obligations and ensure compliance. Tools like Sonatype SBOM Manager automate tracking, visibility, and continuous monitoring, helping organizations manage licensing, compliance, security risks, and detect license changes across updates.

Navigate OSS License Compliance for Long-Term Success

By understanding the complexities of OSS licenses, implementing best practices for compliance, and leveraging automation, financial services organizations can mitigate the risks associated with OSS while reaping the benefits of open source innovation.

As the development landscape continues to evolve, it is essential for these companies to remain vigilant and proactive in managing their OSS licenses within their software supply chains.

For more insights from this session and to explore further discussions on the impact of prioritization and automation on software development, watch the webinar on demand.

Written by Aaron Linskens
Aaron is a technical writer at Sonatype. He works at a crossroads of technical writing, developer advocacy, and information design. He aims to get developers and non-technical collaborators to work better together in solving problems and building software.

Tags
security and licensing risk, licensing, Events and Webinars, OSS licenses, financial services industry