This research article explores a new way of innovation found in open source communities. No longer is innovation closed where research and development is kept internal to the firm. Instead, it is becoming more open, where ideas, inventions, and intellectual property are readily traded in a global marketplace. Our research observed open source communities as something different from the received view on open source. We observed open source communities as highly organized platforms for strategic innovation where profit-seeking firms are actively involved in governance, strategic direction, and technology development. We explore the evolving relationship between firms and communities and provide insight into how these communities are organized. Our research depicts Open Innovation and open source in a new light - Federated Innovation - where open source communities are now acting as platforms to drive for strategic innovation.