Being a software product company, you already have invested your time, efforts and money in developing your software.
Now, you might want to protect your software against its illegal sale or reuse after its launch in the market. That’s where you have the following questions.
If yes, this blog will clear your doubts.
To protect the intellectual property of your software, you need a software license agreement.
Being a leading software company in Toronto, we have come up with a dedicated article on what is a software license agreement.
By going through this blog, you will learn:
So, let’s get started.
Table of Contents
Software license agreement is a legal contract between you (you act as a company or business entity) and your end users (customers). Go through the following points to get a better understanding of a software license.
So, a license agreement divides the rights of you (the company) and your end users (customers). In short, end-users are able to use the software but don’t own it.
Before creating a software license, you might want to learn why to create a software license. Here are the reasons why a software license helps you.
If you have a software license for your software, it allows you to
As you might know, there are different types of software available, and so do the different software licenses. That’s why choosing the right software license agreement becomes important.
There are five types of software license agreements that are a must to know in the IT industry. Let’s start with the open-source license agreement.
The open-source software is free to use and modified as required without any restrictions or permissions. In addition, the licensed code of software applications is free to use in projects, make changes, reuse, or modify the software as per your requirements. And, upon modification of software requirements, there are no financial implications. Let’s know the benefits of an open-source license.
Here is an example of an open-source software application.
Proprietary licenses are a license model that gives complete control of the software application, its control, and maintenance. The proprietary software is not free to use. The publisher or creator of the software has complete rights to the software application. Most proprietary software has all the rights of software developers and publishers on the release of the software.
This way, users won’t be able to make any changes or modifications to the software if it is bound with proprietary licenses. In addition, to use the software, the end users need to agree on the terms of the software application. Violation of the terms needed can lead to legal implications for the user of the software application.
Want to Create a Custom Software for Your Business?
Being a software company in Toronto, we have a team of experienced software developers who have created over 300 custom solutions.
Copyleft licenses have restrictions to follow for making any modification, use or distribution of software. In this software license, the end user needs to take permission to create, distribute, and modify the code of the software application.
In short, it is a way to offer freedom to end users over copyright works to make changes. The software created with Copyleft needs to maintain the copyright conditions of the original work.
Any modification or update done in the software needs to be distributed on the original license. For making improvements in the software, the users need to take permission to do so.
Here are some benefits of a Copyleft license.
Under GNU public license, developers are free to use or modify LGPL compiled software. And, developers can license their code under any type of software license agreement.
The only important point to note here is that software built with LGPL code will be bound with the terms of original terms.
Here is an example of an LGPL software application.
The permissive license is somewhat like an open-source license but has a few limitations or restrictions on the modification or distribution of the software. This helps the original creators of software to have control over their intellectual property.
Although you can make modifications as much as you need, the changes must be acknowledged by the original license. There are two main types of permissive license agreements. Each of these permissive license agreements has its own specific terms and conditions. This license requires you to have copyright information in your software distribution.
In addition, companies developing a software from scratch based on the permissive license have to follow the structure of popular permissive software licenses. For example, Apache, BSD, and MIT have the finest permissive software license agreement which you can follow to create your own.
So, you know now the types of agreements. Let’s know the tips on creating a software license.
While creating a software license agreement, you must know about the things to consider in it.
Below are 12 things to consider in a software license.
As you have gone through software license definition, its types, tips, and things to consider, let’s know about the advantages and limitations of an agreement.
Let’s now know the advantages and limitations of the software license agreement from the following table.
Advantages | Limitations |
---|---|
Earn passive income through royalties by offering a software license to small businesses | Distributing your license to a small business is a risk if your licensee doesn’t operate the business in an ethical way, it might affect your reputation. |
Enter into foreign markets and distribute your software easily without facing any major issues. | Offering more liberty in your software license might become a threat to your business’s intellectual property. |
Market your software in the local areas by offering patterns to small businesses as they have better reach in small domestic markets | – |
To make your software license legally store, you should know which clauses should be in your agreements. That’s what our next section is.
To create a strong software license agreement, you need to have the following important clauses in your agreement.
A non-exclusivity is a term in which you as an owner of software allow the end-user to use their intellectual property. And, the mentioned intellectual property is not exclusive to a particular end user. The owner of the software has the right to sell software to other users as well for financial gain.
As the owner of the software, you have the right to restrict users to whom they can transfer the license right for using the software. So, being a licensor, you ensure that you have new customers coming to purchase your software and not from your customers.
The breach of contract clause allows the software owner to describe the consequences of the end-user license agreement if it gets violated by customers. Breaching the contract might result in termination or a financial penalty.
This clause states that even after the execution of the agreement the right of the software remains to the owner of the software. It includes the rights of the software, software name, copyright, intellectual property, and lastly, distribution rights. This clause of the software license allows the licensor of the software to save their software from being sold, distributed, or pirated copy of the software without permission.
This clause includes information on how the software should be modified if allowed. And, if allowed modification, describes the modification of the software with its scope and nature. The modification is always done in the software and not in the software license agreement.
Under this clause, the owner or developer of the software describes the extent of liabilities within the agreement. And, this clause should be accepted by the end users or customers of the software “as it is”. In addition, the clauses should be fairly written in the software license agreement.
In this clause, you need to describe whether your customer can install your software on multiple devices or not. Depending upon your choice, you can ask developers to restrict the installation of your software other than the required devices of the end users.
The termination clause of the software should be detailed and includes all the information on the termination process. In addition, the owner or developer has the right to terminate or revoke the software accessible from the end user without giving reasons. However, you need to take that such a clause does not offend the jurisdiction with unfair laws or rules and regulations.
This clause includes the details of governing law to resolve disputes if any. In this clause, it is advisable to choose the jurisdiction of your business country.
Want to Hire Software Developers for Your Project?
Discuss your requirements with us. We offer four different engagement modules to hire our software developers. Choose the most suitable model.
Do you still have questions about the software license? Check our next section which includes the answer to the most frequently asked questions on software licensing.
Generally, software license agreements contain the legal definitions between the licensor (business owner) and licensee (users). The license agreements provide rights to end users to install, use, and modify the software.
The price of a software license depends on the type of software, the type of license you choose, how many services it provides, and the pricing model of your software.
A software license helps developers to protect the intellectual property through which they are earning. So, no other parties can alter or use the software code and start earning unethically. In addition, it also protects developers from unbiased or unauthenticated claims against them.
A software license agreement has all the details on the rights and restrictions of using a specific software application. This way, users are able to know how they can use the software and if they can modify the software code or not. Certainly, a software license also allows users to avoid any copyright infringement and limit legal liability.
Software licenses are very important for your software distribution in the market. As you see, licenses protect your company from illegal implications as well as save your intellectual property rights. You have learned about the importance of software licenses, their types, their clauses and tips. Choose the right software license agreement for your software program. Create your legal agreement and release your software in the market without any fear.
Editor's Choice
Dedicated Development Team: Everything You Need to Know
A Nearshore Development Team: The Pillar of Scalable Software Solutions
Agile Software Development Life Cycle: A Comprehensive Guide
All our projects are secured by NDA
100% Secure. Zero Spam
*All your data will remain strictly confidential.
Trusted by
Bashar Anabtawi
Canada
“I was mostly happy with the high level of experience and professionalism of the various teams that worked on my project. Not only they clearly understood my exact technical requirements but even suggested better ways in doing them. The Communication tools that were used were excellent and easy. And finally and most importantly, the interaction, follow up and support from the top management was great. Space-O not delivered a high quality product but exceeded my expectations! I would definitely hire them again for future jobs!”
Canada Office
2 County Court Blvd., Suite 400,
Brampton, Ontario L6W 3W8
Phone: +1 (437) 488-7337
Email: sales@spaceo.ca