Software licences laws

This information will need to be provided for both parties. Terms of the agreement — In this section, you will find all of the terms of the agreement. This includes the price to be paid for the license, which you can define as a flat fee or a flat fee with yearly maintenance fees. You will also include information about whether you will be including the code along with the license and if it is a site license. A site license is another option that will allow your customer to use the software on more than one computer but only at one location.

This section will also include some information about maintenance, support, or refunds that will or will not be offered by your company through the agreement. Fine details — This section is the one that you will use to detail any specifics that are not covered by the other sections of the software license agreement. These terms tend to be more specific to your situation instead of broadly expected terms. Also in this section will be the location for signatures and dates. You can also add in the requirement to have it notarized if you wish to do so.

Important Clauses of Software License Agreements. Non-exclusivity — If you want to license your software to other companies, you will want to make sure that the software license agreement does not leave out a clause that details that the rights are non-exclusive.

This will allow you to license your software to other parties so you can continue to make a profit from it. Non-transferability — This is a clause that you will want to include if you are not allowing the license to be transferred to another party.

You do not want the license to transfer to another person or business because that will essentially take a customer away from you. That is the main reason why you will want this clause. Additionally, you do not want to end up in the situation where you do not have an enforceable agreement with the party the software is transferred to. Rights — You should detail that the rights to the software will remain your property even after execution of the agreement.

This includes the actual software, the name, the copyright, the distribution rights, and even the intellectual property rights. You do not want someone purchasing a license to then steal components of it from you for their own financial gain. This is a very important inclusion because it essentially protects your product for you.

Modification — If you are not allowing the software to be modified in any way on the back end, you should make that clear with a clause that says so and also details what the term "modification" means for this agreement.

Unless this is something you want to happen, it will likely only cause issues for you later on. If the licensor refuses, consider a source code escrow arrangement. Vendors of SaaS solutions are even less inclined to furnish source code than on-premise licensors. The availability of maintenance should be guaranteed for some minimum period, such as 3 or 5 years, with a fixed price, if possible — e. The licensee should have the right to disclose the software, or make it available, not only to its employees and agents, but also to independent contractors whom it retains, as well as advisors and perhaps directors, investors and acquirers subject to confidentiality in each case.

If possible, avoid being expressly liable for breaches of confidentiality by third parties particularly regulatory bodies and professionals with whom you are permitted to share the information. If you are required to obtain a written non-disclosure agreement from disclosees, review and approve the form in advance. Make sure that certain standard exceptions from the nondisclosure obligations apply, the most common being information that: was previously known, is public without fault , properly disclosed by third parties, independently developed, or required by law or judicial process.

Consider both a time limit e. If the licensor will learn or have access to confidential licensee information, the licensee must also agree to treat the information as confidential.

If that information involves customer data, such as personal, financial or medical data, consider whether the licensor must agree to special rules, such as compliance with Gramm-Leach-Bliley, HIPAA or the GDPR; at a minimum, they should agree to comply with all applicable laws.

If they will have access to sensitive information, be cautious about a residuals clause that benefits the licensor. If either party might develop new intellectual property e. Most software licensors insist on owning modifications and add-ons to their software products, even if you pay for the development and sometimes even if you perform the development.

Developers increasingly use open source components in their products. Now, let's introduce copyright law. The author of the software or their employer owns copyright in the software. Like this: Copyright a negative right. It gives the copyright owner the right to prevent all others from copying their work Copyright law grants the copyright owner a series of "exclusive rights" These exclusive rights define the "monopoly" of the copyright owner, and therefore what the copyright owner is entitled to prevent all others from doing with their copyright work.

I'll come back to these exclusive rights in a moment. Enter Contract Law contract-law Copyright owners need a way to grant those permissions to others to use their work. In this case, their copyright work. The licence grant also dictates the scope — the types uses to which the software can be put. More on that below. The Outcome outcome-please-sue-me When a licence is granted under a contract, use of the software within the terms of the contract is lawful use of the software.

Everything else isn't lawful. When use of the software is outside the terms of the contract ie the licence grant, or permission , it is: a breach of contract, because the use is not within the terms of the contract, and an infringement of copyright, because the use of the software is not within the terms of contract. If there was no contract at all, it would just be an infringement of copyright. Using Contracts to Licence Rights grant-license Software licences should be granted in writing so that: Everyone knows what is going on: what rights are licensed.

They're set out in writing, in the licence If there is a breach of the licence, there is a document that says what the terms of the licence are The document sets out the existence and scope of the grant of licence. Sure, there might be disputes about what the terms of the written licence actually mean. Words can often be read different ways, to mean different things. The Grant of the Software Licence grant-software-license The terms of the licence sought by a licensee depends on the requirements of the business in the present and in the future.

The licence grant is fixed once it is given, unless it is renegotiated. There are many more ways to limit use of software in the grant of a private software licence.

We come on to them now. Limitations to the Grant to use limitations-grant Amongst the most popular restrictions in software licences is time. But that's just the beginning of it. Other common restrictions which are used are: by machine: limit use to a particular device or machine geographical: imposing geographical restrictions, where use is not permitted outside the geographical area. Usually by country by purpose: restrict the purpose to which the software may be put.

For instance, the software licence may limit uses to a particular industry or speciality users: limit the number of users that may use the software, concurrently or by naming users multiple companies: licences can be given to an entire group of connected companies rather than one company volume of data: Limiting the volume of data handled by the software, measured by number of files, processor time or in say say megabytes by processors: inhibit use by the software by number of processors installed on the machine which hosts the software Conditions of the Licence Grant Software licences include ongoing obligations, usually to make the software licence work.

Mandatory Licences mandatory-licenses Some countries grant a series of statutory rights to lawful users of software. In the UK law, the rights are: Right to decompile the software: output the source code of the software application from an executable. This right can be avoided by the licensor if it is willing to make available information to the licensee to allow it to make the software inter-operable.

Accordingly, offer to provide information is often included in software licences Right to backup: the right to make backups applies where it is necessary to use the software lawfully Right to adapt the software: entitle the licensee to correct errors in the software.

The licensors can exclude the right by contract. It often is in licences where maintenance and support form part of the licensor's business model Right to observe, study or test the functioning of software: the right exists to permit lawful users to determine the ideas and principles which underlie the software.

This right cannot be excluded by contract. Sublicensing A sublicence is a grant of a permission to someone else, to licence the software to others. Types of Software Licences What are the types of licence? There are 3 types: 1. Exclusive licences: types-exclusive-license The licensee is authorised to perform some activity in respect to the software property to the exclusion of all others. This includes the software licensor itself When a copyright owner grants an "exclusive licence", the owner promises to the exclusive licensee not to grant a licence to any other person for any of the rights granted by the exclusive licence The licence must be in writing Only the owner has the right to grant an exclusive licence.

It may be also be granted through an authorised agent. The owner or their agent must sign the exclusive licence An exclusive licence can granted to distribute software within a named territory say England. The exclusive licensee is entitled to distribute the software in England to the exclusion of all others, including the owner of the rights licensed.

The Business Software Alliance and Software and Information Industry Association states that about 40 percent of installed software in the business realm and 23 percent of software overall in the US are illegally copied. Regardless of these statistics, software piracy is a serious criminal offense and may result in severe legal consequences for both businesses and individuals. In the US, copyright laws classify software piracy into three main categories. Infringement in any category may result in prosecution.

Whenever piracy occurs, the copyright holder loses their rightful profits. If the accused party is found guilty, they will be responsible for paying for any lost profits and damages, in addition to legal fees.

If the accused has shared the software with others, they can also be responsible for lost profits and damages associated with each installed copy.