Software Licence Agreements

Developing your own software? Then you'll need a robust Licence Agreement to protect your intellectual property.

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No-one wants to spend hours developing proprietary software only to draw the short stick when they finally decide to sell it to customers. So if you create software that you intend to sell or distribute, you'll need a Software Licence Agreement to protect your intellectual property.

This guide explores what such an agreement would entail, how it protects you (and how it doesn't), and where to find online legal services.

What is a Software Licence Agreement?

A Software Licence Agreement ensures that you retain the rights to your work, and tells customers or users what they are and aren't allowed to do with the software. For example, whether they're allowed to redistribute it, if they can modify any of the code or design, and if they're allowed to copy any of the code or content.

With this type of legally-binding agreement, you can also stipulate where users are allowed to install the software and how many times they're allowed to install it.

When should I use a Software Licence Agreement?

If you're a software developer or a company that's working on software that you intend to distribute or sell, then you'll want to have it legally covered by a Software Licence Agreement.

This will protect you from copyright infringement by providing a legal contract between you and anyone who uses the software, which will back you in case you want to pursue legal action.

Without one in place, other people will be able to modify, resell, or do anything they want with your software and you'll have no legal support to keep them from doing so.

Software licence agreement

How a lawyer can help with your agreement

A lawyer isn't strictly necessary when it comes to drafting a licence agreement. You can create one yourself, but keep in mind that a standard agreement isn't one-size-fits-all.

If you feel that the agreement you drafted isn't covering all your bases to the extent that you need it to, or you're worried about whether some of the clauses will hold up in court, then it might be better to consult with a lawyer.

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What's included in a Software Licence Agreement?

These types of agreements can include various descriptions that limit use and protect the developer from liability, and they can be as extensive as you need them to be. There are also different types of Software Licence Agreements, each relating to a different situation.

Typically included

  • The scope of the software being licenced
  • How the software will be delivered and installed
  • Duration of the licence agreement
  • Licence fees
  • Warranties and licensee obligations
  • Limitation of liability
  • Confidentiality clause
  • Terms of use for intellectual property
  • Termination specifications.

Typically not included

A Software Licence Agreement cannot dictate what a customer does when using the software, within reason. For example, software that lets clients make 3D models cannot dictate what type of 3D models they're allowed to make. The agreement can make a claim to ownership of something developed using the software, but intellectual property is a tricky one, so it's best to consult with an Intellectual Property Lawyer when drafting this part.

Software Licence Agreement vs End User Licence agreement

Probably the biggest difference between a Software Licence Agreement and an End User Licence Agreement is that the former is typically used for business purposes, while the latter is used when software is distributed to a large number of users, often through a third party.

A developer will have a Software Licence Agreement in place with a company that is using or distributing their software, but the company will never own the software. These types of agreements usually include a finite number of days that the software can be used. End user agreements, on the other hand, normally stipulate that the user now has access to the software for life.

How do I write my own Software Licence Agreement?

When writing a software licence agreement, try to include:

  • Must-have information, like the scope of the agreement, the term of the contract and termination requirements, the liability of both parties, and any confidentiality clauses.
  • Clearly marked and labelled sections
  • Straightforward, plain language – always aim for explanations that are easy to understand.
  • Bullet points, where necessary, to break paragraphs down into smaller piece.

How effective is a Software Licence Agreement?

It can be very effective if it's created in the right way. After all, this is a legally binding document and will be strictly enforced by the law, binding both parties to the agreements set out in the document.

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