Here's a tricky situation that I didn't encounter before:
My company embeds a piece of slightly modified GPLv3 code into their otherwise proprietary application. They don't link a library or anything, they just compile the GPLv3 code straight into theirs.
They do not include a copy of the GPLv3 license text in the final package
They then sell that application, in both binary form AND with the original source code, to their customer. Those two parties are, by contract, the only ones who are allowed to see the code+binary; it is not for the world to see.
Is this legal?
Does distributing the source code like this count as "open source" in the eyes of GPLv3?
Would it be better if they link to a library made out of the GPL code instead of embedding it like this?