Open Source Software (also called Free Software, Software Libre, or F/OSS) is software that is generally available to anyone to use as they wish at no charge. It is not public domain, in that it is covered by Copyright. Instead it is made available under an Open Source License which allows much broader rights to the end users (you) provided only that you follow some reasonable guidlines (typically, that you do not try to steal it and claim that it is your own, or try to prevent others from using it if they wish, etc).
And example, from one of the files in Rails:
Copyright© 2004 David Heinemeier Hansson
Permission is hereby granted, free of charge, to any person obtaining
a copy of this software and associated documentation files (the
“Software”), to deal in the Software without restriction, including
without limitation the rights to use, copy, modify, merge, publish,
distribute, sublicense, and/or sell copies of the Software, and to
permit persons to whom the Software is furnished to do so, subject to
the following conditions:
The above copyright notice and this permission notice shall be
included in all copies or substantial portions of the Software.
The Rails License is known as The MIT License, and is the licence which gives you the right to use Rails.
Ruby’s licence is available here http://www.ruby-lang.org/en/LICENSE.txt
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category: Glossary