Legal and Monetary Issues
There are many different licenses that qualify as free software according to the Open Source Definition 2. These include the BSD license, the Artistic license, the MIT/X Consortium license, Netscape's Mozilla Public License, and the Free Software Foundation's GNU General Public License 20. Of these, I shall be discussing the GNU General Public License (GPL) in greatest detail. It is the most popular way to license software in the free software community, and is considered by many to be the best license under which to place software in order to ensure that it remains free forever.
In order to show that legal issues matter in a strict utilitarian evaluation, it has to be shown that these issues affect utility. With legal issues, this relationship can come in two forms: 1) saving money on software and legal expenses and 2) saving time relating to legal issues.
If money can be saved, there is a benefit of free software. If a company is being discussed, the company's operation becomes more efficient. They can either spend the money they have saved on other things such as research, or pass the savings on to their customers. For individuals, the money can be used for other things - paying bills, household expenses, paying off a mortgage, etc.
Saving time also leads to benefits. This issue applies primarily to companies. If they save time dealing with legal issues, they become more efficient, leading to the same consequences as saving money. They can put more resources into development, for instance, which benefits not only themselves but everyone who uses their products.
The GNU General Public License
The GPL is the license under which most free software is placed. The idea of the GPL is to ensure that a given piece of software will always remain free, and that others can use part or all of it in their free software projects, subject to a few restrictions. In a nutshell, this is accomplished by requiring that sources be distributed alongside any compiled version of the program, and requiring that any program that uses some GPL code must itself be under the GPL. The GPL only restricts the ability to copy the program in that if it is given to others, the sources must be made available, too. People can use any GPL program on as many of their machines as they wish. GPL does not address cost; it is possible to charge for GPL software, but the cost is often very low or non-existent since it is legal to make a free copy of someone else's software.
Businesses Benefit from the GPL
In today's world, most companies pay a large amount of money for software. With GPL software, people are allowed to make as many copies as they want, for no extra charge. Most GPL software can be downloaded off the Internet at no cost. A few programs have to be purchased by CD-ROM or some other non-Internet method, but once the program had been obtained, it is legal (and encouraged) to use it on as many computers as desired. For instance, if Compaq suddenly decided to pre-install Linux on the computers they sell instead of Windows, they would go from paying Microsoft $750 million per year [16, page 2] to paying a Linux CD vendor $7. While this is an extreme example, the general idea is there: Businesses spend a lot of money for software.
There are indirect costs as well. Businesses must keep meticulous records of the software that they have, and the associated licenses, to make sure that they do not violate any licenses. If these records are not kept, or contain a single mistake, there is a risk that the business could face an expensive lawsuit. Keeping records takes time, and even if records are kept, there is still a possibility of a lawsuit.
Businesses must divert more time and energy from the things important to their companies to meticulous record-keeping or perhaps even liability insurance. This means that either they must charge their customer more or they have fewer resources to devote to support, research, and development. This can lead to harm outside the business as well.
Individuals Benefit from the GPL
People have budgets, too. Sometimes, people are forced to avoid using a particular software program simply because they cannot afford it. This is certainly not beneficial. If everyone could afford the software that they want or need, they'd be better off because their desires are fulfilled, and they'd most likely be more productive, since they have software that fits their needs better.
An example of this is tax preparation software. Consider the situation of somebody that cannot afford to have an accountant prepare his taxes, and cannot afford to purchase a software program to help him. This person could very well make mistakes on his tax return, which could result in serious fines from the government, making his financial situation even more precarious. Obviously, there is a net loss of utility with this sort of proprietary software.
Now consider if he were to use a GPL tax-preparation program. Not only would the program itself likely be of higher quality for reasons already outlined in section 3, but also he would likely be able to download the program and use it at no cost to himself. His tax return will more likely be correct, and he has a smaller chance of getting a nasty fine from the government.