Hi Brent,

The answer depends on two things: (1) what license was the open source distributed under (e.g., LPL, GPL, Apache, MIT BSD, etc.); and (2) how the source code was “embedded” into the product (e.g., simple library link, was the code modified and “mixed” with his own proprietary code, etc.).  You need to read the specific license and then make the determination whether the use of the code is “viral” – i.e., does it make the resulting product open source as well.  The best resource is the Website of the organization that authored the open source license the code was distributed under.   They usually have a lot of examples and hypotheticals.   

If you're asking about what happens when you sell the company  – then a potential buyer is most likely going to ask for warranties (in the sale documents) that he disclosed all open source code used in the company’s products and maybe even ask for indemnifications against any legal liability due to such use.

Thank you for the information, it is very helpful.