Software Licensing

What Is A Software License?

Why Are Software Licenses Important?

How Does A Software License Agreement Work?

What Can A Software License Cover?

How Can An Attorney Help With The Licensing Of Software?


What Is A Software License?

A software license is usually an agreement that grants a right to use software code to someone else. A license usually grants less rights than a sale of a copy of the software. The rights to use the code are defined by the terms of the license.


Why Are Software Licenses Important?

Software is important; therefore software licenses are important. Today's businesses rely upon software to perform many critical functions. Software makes machines and systems work in every sector of the world economy - everything from applications that control advanced medical devices to programs that analyze the behavior of financial markets.

Software developers may want to make code available to other developers in order for applications to be more widely used in the market. Manufacturers and publishers may want to acquire rights to software that can make their products work in new ways or in ways compatible with customers' existing computer systems.

In order to have the legal right to use software to achieve the required needs, the rights and limits in the associated software license take on critical importance.


How Does A Software License Agreement Work?

The author of the software code frequently owns the code. In cases where the developer of the software is an employee of a company, the company is usually the author. The owner of the code controls who gets to use the code and how the code is used. The software license may define who can use the code and in what circumstances.

Standardized "end user license agreements" (EULAs) are common for most consumer and commercial mass produced software. When someone "purchases" software, the owner of the software typically requires the user to agree to license terms by clicking to indicate agreement to a set of terms that is required before the software can be installed or operated on a computer. The user is not really "purchasing" the software, but is licensing the software.

When specialized or customized software is involved, the license is often a signed written agreement that includes terms that are customized to fit the needs of the parties to the license agreement.


What Can A Software License Cover?

A software license can address a wide range of issues regarding the use of the software. It can specify how and where the software may be distributed and installed on the licensee's computers, and who may use the software.

For example, the software license may specify...

  1. how long the software may be used,
  2. under what conditions or in what systems the software may be used,
  3. the support for the software (updates, upgrades, or technical assistance),
  4. the cost of the rights to use the software,
  5. the warranty terms, if any,
  6. the liability of each party for damages that result from the licensee's use of the software,
  7. ownership rights in the software, and any product that is developed using the licensed software,
  8. how and where any disputes will be resolved,
  9. the user's rights to obtain access to the source code from an escrow under certain circumstances, and
  10. any other issues important to the parties.

How Can An Attorney Help With The Licensing Of Software?

One of the most complicated issues in software licensing is who owns software that is developed for a customer. The attorney can help so that substantial sums of money are not spent on software that the developer does not have the right to license or the customer does not get the right to own or appropriately use.

The attorney can help a client identify how the software will be used and, using that information, counsel the customer on legal issues that can arise in developing, sharing, and using software for the necessary purposes.

The attorney can help the client in developing audit procedures to comply with terms of an existing or proposed software license.

The attorney can help the client to avoid unwanted or uninsured liability.

The attorney can help the client achieve the optimum use of and value for existing software and code that may be developed in the future.

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