Report, incuding industry benchmarks and recommendations

Audit and improve your ESG reporting (Environmental, Social and Governance)

Evaluates the quality of ESG management and organisational resilience in terms of climate risks and social governance

Provides essential insight into the target's ESG performance and recommendations to improve your decision making 

Highlights the current performance on environmental and sustainability matters

Provides concrete guidance on the processes to put in place to achieve, and maintain, a net-zero goal

Proves to stakeholders and investors that you are meeting industry standards

ESG audits explained

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GDPR imposes strict data management obligations on businesses, covering aspects such as user consent, data protection by design and default, and respect for individuals’ rights. Failing to comply can result in hefty fines, up to 20 million euros or 4% of annual global revenue. 

As a result, one of the tools to ensure this compliance is conducting a GDPR audit, a key tool to identify non-compliance risks and avoid costly penalties. 

GDPR applies to all businesses, regardless of size, that handle the personal data of EU residents. This includes companies directly within the EU as well as those outside it that offer goods or services to EU individuals or monitor their online behavior. Among those affected are online storefronts, data-driven tech companies, SaaS providers, and any other entities collecting or processing personal data for commercial purposes. Non-EU companies are also bound by GDPR when they deal with EU data subjects, making GDPR one of the most globally influential privacy regulations. 

Adopt transparent and effective cookie management

One of the first and most obvious aspects of a GDPR audit is cookie management and consent mechanisms. Many websites install non-essential cookies without obtaining prior explicit consent from users, which violates GDPR provisions. It is crucial to ensure clear and transparent cookie management, allowing users to choose which cookies they wish to authorise. 

A common issue in GDPR audits is improper cookie and consent management. Many businesses do not obtain explicit consent before placing non-essential cookies (e.g., for advertising or analytics), which breaches GDPR requirements. To ensure compliance: 

Clarify the distinction between essential and non-essential cookies in your consent banner. 

Obtain explicit consent before placing non-essential cookies. 

Ensure users can easily withdraw or modify their consent. 

This transparent approach not only helps avoid fines but also builds user trust in your site. For instance, e-commerce websites or storefronts that rely on tracking for marketing insights must ensure no non-essential cookies are placed before obtaining explicit user consent. Implementing a clear consent banner that allows users to accept only essential cookies helps these businesses stay compliant and avoids any attempts to circumvent cookie rules. 

Another essential best practice is applying the principle of "data protection by design and by default." This means that data protection should be considered from the outset of every project or initiative. It ensures that personal data collection is limited to what is strictly necessary and that technical and organisational measures are in place to safeguard it throughout its lifecycle. 

In an audit, verification occurs at the level of:

Data collection, which must be minimised and limited to what is necessary for the activity. 

Automated data deletion systems to ensure that unnecessary or outdated data is removed to avoid prolonged retention risks. 

A key best practice for GDPR compliance is thorough documentation of your processes and measures. Documentation demonstrates how you are fulfilling GDPR requirements and provides clear evidence in case of an audit. By maintaining detailed records of data processing activities, consent mechanisms, and security protocols, you can effectively show compliance efforts and make it easier to identify areas for improvement. 

This proactive approach ensures that data protection is embedded into all processes and systems across your business, not just addressed as an afterthought. By treating data protection as an integral part of each project, you minimise data risks and maintain a higher level of compliance from the start. 

Facilitating the exercise of users' rights 

GDPR grants individuals several rights, such as the right to access, correct, delete, or limit the processing of their data. Ensuring that these rights can be exercised easily is one of the essential best practices for compliance. 

Implement a simple and accessible process for users to request access, correction, or deletion of their data. 

Comply with legal deadlines: under GDPR, requests must be processed within one month. Failure to do so could lead to penalties. 

If a request is complex or if the business cannot meet the initial deadline, GDPR allows for an extension. In such cases, the company must inform the user of the delay within the first month, explaining the reason, and the response time can be extended by an additional two months. 

Ensuring these rights are accessible not only reinforces compliance but also improves user satisfaction. Users who feel their rights are respected and their data is in safe hands are more likely to engage positively with your business. 

Data security is one of the cornerstones of GDPR. In addition to implementing efficient data management processes, ensuring the security of data through robust technical and organisational measures is crucial. A GDPR audit assesses the strength of these measures, whether it's encryption, access control, or system monitoring. 

Among the recommended best practices, it is essential to establish appropriate security protocols and regularly train employees. This ensures that all stakeholders in your company are well aware of the risks and responsibilities associated with handling personal data. This training should be updated regularly to reflect legislative changes and new cybersecurity threats. 

To achieve this, it is recommended to: 

Implement robust technical measures, such as data encryption and strict access control. 

Regularly train employees so they stay informed of best practices in data protection. 

Security is critical to preventing data breaches, which can have severe financial and legal consequences. However, compliance is not a permanent state; it must constantly be updated as technology and laws evolve. Regular audits help maintain vigilance and implement necessary adjustments. 

Conduct regular GDPR audits for ongoing compliance

Maintaining GDPR compliance is an ongoing process, not a one-time effort. Regular GDPR audits allow you to continually assess and refine your data protection practices to keep pace with regulatory updates and technological changes. Whether conducted internally or with the help of a specialised provider, regular audits are a practical way to verify the compliance of your processes, prioritise corrective actions, and ensure that your company stays aligned with current regulations. 

Periodic audits also provide an opportunity to address new risks or vulnerabilities that may arise as your business grows or your technology stack evolves. A thorough review of your data protection practices can reveal areas that may require additional safeguards or adjustments to ensure ongoing compliance. 

By implementing these best practices and maintaining a proactive approach to GDPR compliance, businesses of all types—from e-commerce websites to large data-driven companies—can strengthen data protection, improve user trust, and minimise the risk of costly penalties. GDPR compliance is an investment that not only helps avoid regulatory issues but also enhances the reputation and reliability of your business in the eyes of consumers. 

The opinions, presentations, figures and estimates set forth on the website, including in this blog, are for informational purposes only and should not be construed as legal advice. For legal advice you should contact a legal professional in your jurisdiction.

The use of any content on this website, including in this blog, for any commercial purposes, including resale, is prohibited, unless permission is first obtained from Vaultinum. Request for permission should state the purpose and the extent of the reproduction. For non-commercial purposes, all material in this publication may be freely quoted or reprinted, but acknowledgement is required, together with a link to this website.

Giuliana is a French legal counsel specialising in intellectual property and technology law. She holds a Master’s degree in Intellectual Property and Digital Law from Université Paris-Saclay, along with certifications in GDPR compliance and information systems security. Currently serving at Vaultinum, she is involved in implementing data protection policies and supporting businesses in securing their digital assets.

Giuliana Drean

Compliance with the General Data Protection Regulation (GDPR) is a priority for any company handling personal data, especially in the European Union. A well-executed GDPR audit can assess your practices and identify gaps in data management. By following best practices, you can ensure that your company meets regulatory requirements while optimising data protection. 

Learn how to achieve GDPR compliance with best practices for data protection, user rights, and cookie management. Explore the importance of regular audits to avoid penalties and build trust.

A comprehensive guide to GDPR compliance for businesses and websites

How to ensure your business and website are GDPR compliant: best practices 

Tech due diligence is a comprehensive evaluation of a company’s technology assets, processes, and capabilities, typically conducted during mergers and acquisitions (M&A), investments, or partnerships. The goal is to assess the technical health, risks, and potential of a company's technology stack, development practices, and technical team.

As we continue to shift further from a traditional brick and mortar economy and closer to virtual realities, companies are faced with new and emerging threats such as software failure, data breaches, privacy disputes, open-source software intellectual property issues, cyber-threats, sustainability, among a myriad of others. In this new digital landscape, security and the protection of digital assets takes on a new meaning. 

We have outlined in this article the 4 main areas- Intellectual Property, Third-Party Software, Technology Performance and Cyber Security- and the key questions to ask to prepare for a Technology Due Diligence.

Intellectual Property: IP Due Diligence Checklist

The management of IP is a critical component to the growth and success of a company. Moreover, the importance of IP rights in the overall valuation of companies is gaining more global recognition. Intangible IP assets represented only some 17% of market value of S&P 500 companies in 1975, by 2015 had grown to 87% and in a 2019 analysis, industries that make intensive use of IP rights generate around 45% of GDP in the EU (€6,6T).

Key Questions for Intellectual Property Due Diligence

Has the target company acted to protect the IP rights of their software source code by depositing it with a trusted third party or copyright office? 
Software, like works of art or literature, is protected by copyright law. In order to assert this right, a deposit of the source code and any updates must be made with a trusted third party or copyright office. A deposit creates proof of ownership of the source code at a point in time. 

 Are IP transfer agreements in place with all consultants and employees that have worked or are working on developing the software?
In some countries, IP transfer may be automatic in employer-employee relationships, but it is not always the case and it is certainly not the case in relation to consultants. This creates potential litigation risk and may, in turn, have financial and reputational impacts on the company.

 Does the company own all rights necessary to make, use, sell, or offer for sale its actual and proposed products?
The use of high risk third-party licenses (copyleft, copyrighted or proprietary) and not having an effective IP management process in place that identifies and manages these licenses and other IP rights creates potential issues that may restrict the freedom to commercialize the end-product.

Companies rely more and more on third-party software to help run their operations and/or develop their software product. Third-party software can be open-source or commercially licensed, and in both cases there are typically licenses that condition their use. The misuse of, or becoming too dependent on, third-party software can hinder a company’s growth and even threaten its survival.

Key Questions for Thirty-Party Software Due Diligence

Have they entered into escrow agreements that enable them to access the software source code that they rely on for their operations, for example in case of supplier failure or bankruptcy (or failure of servers if it runs in SaaS mode)? 
Dependencies on third-party software means that the company is exposed to the risk of such software becoming obsolete, not maintained, not supported or even decommissioned. An escrow agreement is essential to continue operations and comply with client obligations. 

Is the company able to identify all the open-source software that is used within the end-product?
Integrating open-source software into the end-product may limit the company’s ability to commercialize and enjoy the full use of the product due to non-compliance with licensing terms or infringement of IP rights. 

 Do they have a process in place to check for regular updates to open-source software that they use?
Updates may resolve vulnerabilities so that the software continues to function in accordance with expectations and limits the risk to end-users.Failing to update may also restrict a company’s use of their software product depending on the license.

While software is fast becoming the backbone to many businesses, a shockingly large number of software projects still fail to meet company expectations in terms of performance, software scalability, maintainability, cost, or delivery schedule. There are several factors at play and each one has varying levels of impact on the successful delivery, performance and reputation of the software product. 

Key Questions to consider on Technology Performance

Was there proper knowledge transfer carried out by developers who participated in the initial stages of the product development?
Knowledge transfer management needs to occur during the entire software development and use life-cycle. Not having access to the initial stages of development can have negative effects on the maintainability and scalability of the end-product.

 Is the technology infrastructure currently ready to scale without any further development in case of rapid growth of the client base?
Not having a technology infrastructure ready to scale in the event of rapid growth may generate critical system failures or functionality issues leading to financial loss and reputational damage.

Are there any organizational aspects of the development team that may have a direct impact on its overall capability to deliver successfully?
A well-organized, smooth-functioning development team is critical to the success of the product. A few key elements to bear in mind are the location and distribution of the team (not being dispersed across too many times zones or offices) and regular reporting to management (to ensure strategies are aligned).

The global cost of cybercrime in 2020 reached $945 billion, and is expected to grow by 15% annually, reaching $10.5 trillion per year by 2025. Every day new technical and security breaches are discovered. Every business change can create unintended vulnerabilities. Every new employee, consultant or contractor is a new risk that needs to be managed. A hacker only needs to be successful once, while a company’s security measures must be successful 100% of the time - in an ever-changing threat landscape. Thus, the importance of having a solid cyber risk management program cannot be underestimated. 

 Is client data stored at, accessed by, or transmitted through, an offshore environment (in a country different to that in which they receive client data)?
Data privacy regulations and mandatory breach disclosure laws vary widely across the globe, making it of prime importance for businesses, articularly multinationals, to conduct the requisite legal due diligence across markets to ensure their compliance. Moreover, international communication isn't necessarily safe and poses greater risk.

 Does the company utilize encryption to protect data? 
Encryption makes data unusable and illegible to any party who does not possess the decryption key. Encryption is a way to ensure that even if a data breach occurs and data is subsequently stolen or copied, the potential of it being usable is much lower. Breaking encryption is very difficult, which makes it one of the best security measures to protect data.

Are there complete records, which are kept and maintained, regarding all company devices including computers, tablets, mobiles, laptops, etc.? 
Proper documentation allows an organization to keep track of all company devices. It is an important risk mitigation measure as it helps to prevent loss and allows for a rapid response in the event of an incident, such as remotely disabling lost or stolen devices. A device that is unaccounted for presents a security risk as it can potentially be hacked, opening the door to an attack on the organisation’s systems and networks. 

DOWNLOAD OUR TECH DUE DILIGENCE CHECKLIST

Tech Due Diligence is no doubt one of the essential aspects of any modern business transaction and knowing which elements to consider before taking the next step is crucial. However, it requires expertise, experience, and insights that are best obtained from an independent third-party. 

Unlike traditional approaches to Tech Due Diligence, Vaultinum offers an online software due diligence tool: through an in-depth source code scan, reviewed by an IT expert, the solution analyses Intellectual Property, Cyber Security, Scalability and Third-Party risks. The results are shared in a detailed report, which includes scoring, recommendations and fixes. 

Why Choose Vaultinum for your Tech Due Diligence

With 40 years’ experience in IT and Legal, each step of Vaultinum’s solution was designed in collaboration with leading experts in the fields of Cybersecurity, Intellectual Property, Software development and Compliance, to provide users with a comprehensive, trusted, risk analysis. 

Enter your investments with confidence, with the assurance of Vaultinum’s technology due diligence solutions that have been custom-built for today’s digital world.

Kristin is a registered US attorney specializing in the areas of IP and technology law. She is a member of Vaultinum’s Strategy and Legal Commissions charged with overseeing and implementing the policies and processes related to the protection of digital assets.

Kristin A.

It is more important than ever, whether you are an investor or potential buyer, to know that the company that you are interested in is operating in accordance with best practices and has laid proper foundations for solid growth. 

In this article, we have outlined the 4 main areas- Intellectual Property, Third-Party Software, Technology Performance and Cyber Security- and the key questions within each to ask when conducting Technology Due Diligence.

Ready to invest? ? Discover how to prepare for technical due diligence and the key questions when performing your technology due diligence

Tech due diligence checklist, questions for technology due diligence

Understanding the concept of software scalability

"Software scalability" refers to the capability of a software system to handle a growing amount of work or its potential to be enlarged to accommodate that growth. In simpler terms, a scalable software can effortlessly adapt and expand to increasing user demand without compromising its performance.

For instance, imagine a mobile application that performs excellently with a few hundred users. However, if its user base grows into millions and the app starts to lag or crash, it's clear that the software is not scalable. This lack of scalability can hinder the potential for growth, making it a risky investment.

Conversely, a scalable software application will continue to perform well regardless of the increasing user demand, representing an excellent opportunity for business expansion and investment.

The different aspects of software application scalability

Vertical scalability, often referred to as scaling up, involves increasing the resources of a single server to handle additional load. This can include upgrading CPU, RAM, or storage capacity. While vertical scaling is relatively straightforward, it has limitations, as a single server can only be upgraded to a certain extent. High-end hardware might be costly, and there's a ceiling on how much performance can be gained.

In contrast to vertical scalability, horizontal scalability, or scaling out, involves adding more servers to distribute the load. This approach is highly scalable, allowing applications to handle increasing traffic by adding more server nodes. Cloud computing has significantly facilitated horizontal scalability, allowing organisations to dynamically allocate resources as needed.

Elasticity is the ability of a system to automatically adapt to changing workloads by provisioning and de-provisioning resources in real-time. Cloud computing platforms, provide elasticity by allowing organisations to scale resources up or down based on demand. This flexibility ensures optimal resource utilisation and cost efficiency.

Database scalability is a crucial aspect, considering that databases often serve as the backbone of software applications. Scaling databases can be achieved through techniques like sharding, partitioning, and replication. Sharding involves distributing data across multiple database instances, partitioning involves dividing a database into smaller segments, and replication involves creating copies of a database for redundancy and improved performance.

Adopting a microservices architecture involves breaking down a monolithic application into smaller, independent services. Each microservice can be developed, deployed, and scaled independently, allowing for greater agility and scalability. Microservices also facilitate fault isolation, making it easier to manage and scale individual components.

The risks of ignoring software scalability

Ignoring software scalability can have significant consequences, as exemplified by the early days of Twitter. Launched in 2006, Twitter (now X) rapidly gained popularity, with users sending tweets in increasing volumes. However, the platform was plagued by frequent downtimes, causing a lot of frustration among users. The infamous "Fail Whale" became a symbol of the platform's inability to handle the growing user demand. 

This was largely because Twitter's initial architecture wasn't designed for scalability. The software couldn't handle the massive growth, which led to frequent crashes and performance issues. Investors and users alike were worried about the platform's future.

Twitter had to undertake a significant overhaul of its entire infrastructure to address these issues. This process was time-consuming, costly, and caused reputational damage. If scalability had been a priority from the start, Twitter might have avoided these issues and grown more smoothly.

This serves as a reminder for investors to prioritise software scalability during Technology Due Diligence. The cost of overlooking scalability can be high, and it's far better to invest in a software asset that is prepared for growth from the outset.

Why scalability in software is so important : the role of software scalability in investment decisions 

Investors, particularly those involved in the tech industry, are always on the lookout for scalable software solutions. The reason for this is twofold: 

Scalable software can easily accommodate growth. As the user base of a software application grows, the software can scale up to meet the increasing demand without compromising on performance or user experience. This ability to scale means the company can potentially cater to a much larger audience, leading to increased revenues and profits. This is an attractive prospect for any investor, who is looking for returns on their investments. 

Investing in scalable software solutions is also cost-effective in the long run. It may require initial financial outlay for development and deployment, but the ongoing costs associated with managing and upgrading non-scalable software can be much higher. Therefore, investing in software scalability now can save money in the future. 

Several factors can impact the scalability of software. These include: 

The software's architecture should be designed in a way that allows it to scale efficiently. The architecture should be modular, with components that can be added or removed as needed. 

The database is a critical component of software scalability. It should be designed to handle large amounts of data and be scalable as the business grows. 

The code should be written in a way that allows it to be easily modified and scaled. It should be modular rather than monolithic and designed to handle increased demand. 

The infrastructure supporting the software should be scalable. This includes the hardware, network, and other components needed to support the software. 

Why use Technology Due Diligence to assess software scalability

Here are some key factors to consider when evaluating the scalability of a software application. All these factors can be revealed by an IT Due Diligence, provided it includes source code scanning and an in-depth analysis of the Git history. Source code scans delve deep into the software's structure, identifying potential bottlenecks and weaknesses that could impede scalability. 

A software application with a modular architecture and a clear separation of concerns is generally more scalable than a monolithic application with a tightly coupled design. Look for software applications that are designed to handle horizontal scaling, which involves adding more instances of the application rather than increasing the resources of a single instance. 

It is important to evaluate how well the software application performs under stress and load. This can be done through performance testing, which involves simulating the expected usage of the application and measuring its response time. Some Technology Due Diligences may offer performance testing as an option to the process. 

It’s important to have visibility into the performance and health of the software application in real-time. Look for software applications that have monitoring and alerting systems in place, which can detect performance issues, errors, or crashes and notify the relevant parties. This can help identify scalability issues before they affect the users or the business. 

The development practices used to build and maintain the software application are also fundamental in building scalable, resilient software. A Technology Due Diligence can use code scanning to identify whether the coding culture is healthy. For instance, a scan of the Git History can reveal whether best coding practices such as continuous integration and deployment (CICD), automated testing, and code reviews are in place. These practices can ensure that the software application is scalable, maintainable, and extensible. 

In conclusion, software scalability is a crucial factor for investors when conducting Software Due Diligence. It gives them the confidence that the software can manage increased demand and grow with the business. Moreover, it is a more cost-effective solution in the long run, maximising the return on investment. 

Investors understand that in the current digital age, the ability of a software solution to grow and adapt is paramount. Hence, software scalability plays a crucial role in their investment decisions. As a tech company, investing in scalable software isn't just about better performance; it's also about attracting investors and securing your business's future growth. 

Scalability isn't just a feature; it's a future-proof strategy for tech businesses and a golden ticket for investors. Embrace software scalability today for a better, more prosperous tomorrow. 

Vaultinum, a leading provider of Technology Due Diligence solutions, is an excellent example of a tool that aids investors in understanding the scalability potential of a software asset. Vaultinum's proprietary code scanners meticulously examine the software's structure, identifying potential scalability issues that could affect its future performance and growth. 

This advanced technology has proven invaluable for investors. In numerous cases, Vaultinum's insights have prompted investors to re-evaluate the value of a deal, negotiate better terms, or even walk away from investments where the scalability potential was inadequate. 

By providing a clear and comprehensive picture of a software's scalability, Vaultinum ensures that investors can make informed decisions. It highlights the importance of not just understanding a software's current performance, but also its capacity to grow and adapt to future demands. 

By integrating Vaultinum's Technology Due diligence Solutions into their investment assessment process, investors can confidently invest in software assets that offer a promising return on investment and are equipped for future growth. 

DO YOU NEED HELP ON YOUR SOFTWARE SCALABILITY?

The opinions, presentations, figures and estimates set forth on the website, including in this blog, are for informational purposes only and should not be construed as legal advice.  For legal advice you should contact a legal professional in your jurisdiction.

The use of any content on this website, including in this blog, for any commercial purposes, including resale, is prohibited, unless permission is first obtained from Vaultinum.  Request for permission should state the purpose and the extent of the reproduction.  For non-commercial purposes, all material in this publication may be freely quoted or reprinted, but acknowledgement is required, together with a link to this website.

Philippe is the CEO of Vaultinum. An expert in new technologies and high finance, and after 20 years in the international fintech industry, Philippe now heads Vaultinum.

Philippe Thomas

In the increasingly competitive investment landscape, Technology Due Diligence is proving integral for investors. One key factor they pay close attention to is "software scalability", which can significantly influence the future growth and success of a tech company. Scalability is a critical factor in the success of software applications, influencing their performance, responsiveness, and ability to handle increased workloads. As technology advances and user demands evolve, understanding the various angles of scalability becomes essential for developers and businesses.

Understand the importance of software scalability in technology investments. Learn why investors prioritise scalable solutions when assessing potential tech companies for investment.

Software scalability, the importance in business IT Technology

Why software scalability is so important for investors

The AGPL origin story: closing the “SaaS” loophole 

The AGPL was initially created by Affero, Inc., a webservice company for non-profit donations. The license was designed to address what was perceived as a loophole in the traditional GPL regarding software used over a network. In the late 1990s and early 2000s, the rise of the internet and web-based applications exposed limitations in the GPL’s approach to software freedom. Specifically, the GPL required that changes to licensed software be shared when software was distributed as a product, but it did not cover scenarios where software was modified and run on a server to provide services over a network.

The original Affero GPL (often referred to as AGPLv1) was approved by the Free Software Foundation and was published in March 2002. This version was based on the GNU GPL version 2 but included an additional provision. This provision required that the complete source code be made available to any user interacting with the software remotely through a computer network.

The introduction of the AGPL marked a significant moment in open-source licensing, particularly for applications deployed over networks. It reflected a broader recognition within the free software community of the need to adapt legal tools to the realities of how software was being used. The license aimed to ensure that the freedoms guaranteed by the GPL could be preserved in a world where software may not be distributed in the traditional sense but provided as an online service.

Understanding the market adoption of the AGPL

The AGPL is distinct among open-source licenses for its strict copyleft conditions, which ensure that any modifications made to the software and served over a network are made available under the same license. This requirement, while preserving the freedom and openness of software, poses challenges for businesses, particularly those offering proprietary solutions.

Quantifying the adoption of the AGPL is challenging because many projects do not need to report their usage of various licenses. However, data from sources like GitHub and software composition analysis firms indicate that AGPL is less commonly used than other open-source licenses such as MIT, Apache, and GPL. This relative rarity can be attributed to its strong copyleft conditions, which some businesses find too restrictive, especially in commercial contexts where proprietary modifications are a competitive advantage.

Despite its challenges, the AGPL is favored in certain environments, especially those where developers and companies want to ensure contributions to their community or prevent their work from being used in proprietary products without contribution. For instance, MongoDB originally used the AGPL to govern its database server, encouraging companies to contribute back to the open-source project or purchase a commercial license if they preferred to keep their modifications private. This approach exemplifies how the AGPL can be strategically employed to balance open innovation with commercial interests.

With a clearer understanding of the AGPL's position in the market and the strategic use cases that drive its adoption, companies must carefully consider how to navigate its compliance requirements effectively.

Navigating AGPL compliance: key questions for your business

Incorporating AGPL-licensed software into products or services requires vigilant management to mitigate legal and operational risks. This section outlines essential questions that businesses need to consider to navigate this landscape effectively.

1. How is the AGPL-licensed software integrated into our product?

Determine if the AGPL software is a standalone service or integrated directly with your proprietary solutions. Direct integration often necessitates broader disclosure under the AGPL. Consider using the software in a way that maintains a clear separation, such as running it in a separate container or server, to limit the impact on your proprietary code.

2. Do users interact with the AGPL-licensed software over a network?

User interaction over a network, especially direct interaction with the software’s functionality (like a web interface or API), triggers the AGPL’s requirements. Evaluate how your product exposes the AGPL software to users and what aspects of your code might be considered part of the "Corresponding Source" as defined by the AGPL .

Resource: GNU's AGPL FAQs  provide insights into network use and corresponding source requirements.

3. Have we modified the AGPL-licensed software?

Any modifications to AGPL software must also be released under AGPL if they are made available over a network. Document all changes, no matter how minor, and ensure they are publicly accessible.

Resource: Open-Source Guides  offer practical advice on managing open source software projects, including how to track and document modifications.

4.What is our strategy for distributing or publishing the source code?

Develop a clear strategy for how and where to host the AGPL-licensed source code and any modifications. This may include using services like GitHub or Bitbucket or integrating source code distribution mechanisms into your application.

Resource: ChooseALicense.com  provides guidance on how to present source code and licensing information properly.

5. Are we prepared to fulfill the complete disclosure requirements?

Reflect on the potential business implications of disclosing source code, especially if it includes proprietary elements. Consider restructuring your application architecture to isolate AGPL components from proprietary components to minimize exposure.

Resource: Software Freedom Law Center  offers legal resources and advice for complying with open-source licenses.

Ensuring compliance with the AGPL requires careful planning and ongoing management. Regular compliance audits, engaging with legal experts, and maintaining an open dialogue with your development teams are key steps in managing the use of open-source software under the AGPL. Addressing these questions will help align AGPL software use with your business objectives and legal obligations.

Tools for effective AGPL compliance management

For businesses incorporating AGPL-licensed software while aiming to protect proprietary code, establishing a robust compliance framework is essential. At Vaultinum, our experience with technical due diligence and code scanning technology has given us a unique vantage point on how companies are effectively managing their AGPL compliance. Integrating technical tools into development and deployment pipelines plays an important role in achieving this. 

Here are several types of technical solutions that can help manage AGPL compliance effectively:

Software Composition Analysis (SCA) tools

These tools automatically scan your codebase to identify open-source components and their corresponding licenses. By incorporating them into your CI/CD pipelines, you can ensure that any new code commits are checked for license compliance in real-time. This helps in identifying potential licensing conflicts early, allowing for timely remediation.

Using containerization technologies like Docker or Kubernetes can help isolate AGPL-licensed components from proprietary code. This method maintains clear boundaries between open-source and proprietary elements, mitigating the risk of licensing "contagion" where AGPL requirements could extend to proprietary modules.

Implementing API gateways or management tools helps manage how your applications expose and consume services, including those based on AGPL software. This layer can control access and monitor the interaction between AGPL components and other parts of your software stack, providing an additional layer of separation and oversight.

Regular audits are crucial for maintaining compliance. Code auditing tools can help automate the review of your source code to ensure that it adheres to the required standards. Additionally, maintaining thorough documentation of your use of open-source software, including any AGPL components, helps demonstrate compliance efforts during audits or legal reviews.

Implementing regular training sessions for your development teams ensures that they are aware of AGPL requirements and the best practices for integrating open-source software. Education on compliance can significantly reduce the risk of unintentional violations.

Employing these technical solutions facilitates a proactive approach to AGPL compliance, ensuring that proprietary software companies can utilize open-source innovations while safeguarding their intellectual property.

As cloud computing continues to dominate, understanding and navigating the implications of licenses like the AGPL will be increasingly important for both open-source communities and businesses alike. The integration of AGPL-licensed software into commercial products demands not only legal understanding but also strategic technical management. Drawing on insights from Vaultinum’s experience with technical due diligence and code scanning technology, it is clear that proactive compliance strategies, such as regular code scans, containerization, API management, continuous audits, and educational initiatives, are fundamental to managing open-source software usage. These practices not only help in mitigating legal risks but also foster an environment of sustained innovation and responsible software development.

The Affero General Public License (AGPL) is distinct among open-source licenses, particularly for its implications in the era of cloud computing and Software as a Service (SaaS). It is often discussed alongside its more well-known relative, the GNU General Public License (GPL). Understanding the AGPL's distinct features and its implications for developers and businesses is essential. 

This article explores the origins of the AGPL, its impact on the tech industry, and provides a comprehensive guide for businesses navigating its compliance landscape. It outlines key considerations regarding integration, user interaction, modifications, and distribution strategies, and highlights strategic tools and practices that enhance compliance efforts. This ensures that companies can leverage the benefits of open-source software while safeguarding their proprietary innovations.

Learn how to navigate AGPL compliance in tech. This guide covers AGPL’s unique implications for cloud and SaaS businesses, offering insights into integration, modification, and distribution strategies to protect your proprietary innovations while leveraging open-source benefits.

Guide to AGPL Compliance: Best Practices and Key Considerations

The essential guide to AGPL compliance for tech companies

Programmers and software developers may be experts in their scientific domain, but ask any of them, and they will let you know that software development is as much an art as it is a science. After all, when a team of coders creates software, it is nothing short of a creative synergy that emanates from them. So, if software code is an expression of the coder's creativity, how can it be protected?

That's where software copyright comes in. Copyright law protects all artistic expressions, and computer software falls under this purview. That's why it is important for all programmers and developers to have a clear idea of how to protect software using copyright. 

Software copyright is a type of intellectual property law that protects original works of authorship, including software and databases, in the same way as books, music, and other creative works. It gives the copyright owner exclusive rights to use, copy, distribute, and make derivative works based on the protected software or database. This protection encourages innovation and creativity by providing incentives to inventors, creators, and developers to continue creating new and innovative software solutions. 

Copyright laws differ from country to country, but the essence in most cases remains the same. It requires originality and applies automatically as soon as the software or database is created. This means that the creator of the software or database owns the copyright unless they decide to assign or license the rights to someone else. In some cases, a team of people may collaborate to create a software program, and in those cases, the copyright ownership may be shared among the collaborators. 

The software copyright is automatic and applies as soon as the software is created and fixed in a tangible form, such as a source code or executable file, and this extends for 70 years in most cases. However, the extent of the copyright remains only in the code; the idea behind it cannot come under intellectual property protection.

The software copyright gives the exclusive rights to reproduce, distribute, and publicly display the software or database. This means that others cannot use or copy the software without the owner's permission. The owner can license their software to others, granting them specific rights to use the software or database, in exchange for payment or other considerations. 

Software copyright gives the software author the exclusive right to do or authorize any of the following: 

Create derivative works based on the software 

Distribute copies of the software to the public 

Why it is essential to protect copyright in software

Software is unique in the sense that it can not work without being copied. For a software program to run, it must be copied from any tertiary memory device to the system's primary memory. This itself is an unavoidable act of copying.

However, such copying is not considered a crime as it is essential for the software to function. The problem arises when the software code is copied by a third party that aims to gain from such copying. Not only direct copying but the adaptation of software code into another computer programming language may also fall under copyright infringement. 

To prevent this from happening, software developers and publishers distribute their software under different licenses. Despite that, any computer user knows that software piracy is currently a multi-billion dollar industry. The moment a new software application is created, hundreds of copycats surface, often with similar names and functionalities. 

So, if you intend to protect your software against intellectual property theft, then it is essential that you know how to protect software using copyright.

Protect your software copyrigh with Vaultinum

What are the benefits of protecting copyright in software?

Let's face it: software takes time and resources to develop. So, it is only natural that the creators will want to protect the final product against intellectual property theft. After all, the code that you've written might be the only way to solve a particular problem. In case other developers get unfettered access to it, they can use it in any way without your permission.

 This is where copyright comes in. When you get copyright protection for your software, this means you're in complete control of the code's ownership rights. Other developers cannot use the code without your permission. In this way, you exercise effective control over your creation.

As we've already mentioned before, the moment your code's in the compiler, you're entitled to its copyright. Materializing copyright protection for your software is tantamount to declaring to the world that you're the owner of the code. At this point, no one can get away with unauthorized copying of your code.

If you're filing a lawsuit against another party for copyright infringement, then legal copyright makes it easier to claim damages. Today, given the easy methods for software distribution, claims can be as high as hundreds of thousands of dollars. Winning such claims is made easy with copyright.

In most countries, the law doesn't allow the software to be patentable. In such a case, copyright laws are your only method to protect your software from unlawful use. What's more, copyrighted software can give you better terms in different licensing agreements. These are only some of the benefits that you can get from copyrighting software. At the same time, it's essential to know in what ways your software copyrights can be infringed. That's what we're going to touch upon in the next section.

Discover the reasons why and how you should protect Software Intellectual Property with copyright. Analyze the different alternatives and methods to protect software and source code IP.

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