Definition
The "open source" label came out of a strategy session held in Palo Alto in reaction to Netscape 's January 1998 announcement of a source code release for Navigator (as Mozilla ). A group of individuals at the session included Todd Anderson, Christine Peterson, John Hall and Larry Augustin, Sam Ockman and Eric S. Raymond . They used the opportunity before the release of Navigator's source code to express a confusion caused by the word 'free.' Right after the strategy session, the 'open source' movement most notably begun. Many people, nevertheless, claimed that the birth of the Internet , since 1969 , provided the revolution for open source.

The Free Software Foundation (FSF), started in 1985 , intended the word 'free' to mean "free as in free speech" and not "free as in free beer." Since a great deal of free software already was (and still is) free of charge, such free software became associated with zero cost, which seemed anti-commercial.

The Open Source Initiative (OSI) formed in Feburary 1998 by Eric S. Raymond and Bruce Perens . With at least 20 years of evidence from pragmatic cases in closed development versus open development already provided by the Internet, the OSI presented the 'open source' case to commercial businesses, like Netscape. OSI hoped that the usage of the label "open source," a term suggested by Peterson of the Foresight Institute at the strategy session, would eliminate ambiguity, particularly for individuals who perceive "free software" as anti-commercial. They sought to bring a higher profile to the practical benefits of freely available source code, and they wanted to bring major software businesses and other high-tech industries into open source. Perens attempted to register "open source" as a service mark for OSI, but that attempt was impractical by trademark standards. Meanwhile, Raymond encouraged Netscape to adopt the "open source" label. Netscape released its Navigator source code as open source, favorably. Years later, the OSI finally obtained the trademark on "OSI Certified."

Critics said that the term "open source" fosters an ambiguity of a different kind such that it confuses the mere availability of the source with the freedom to use, modify, and redistribute it. Developers have used the term Free Open-Source Software ( FOSS ), consequently, to describe open-source software that is freely available and free of charge.

source: http://en.wikipedia.org/wiki/Open_source