With society’s increased reliance on technology and our growing dependence on the applications it provides, a great majority of the population would have encountered an End User Licence Agreement at one stage of their lifetime by now. If you have clicked ‘I Agree’ after installing any mobile application recently, you would have been agreeing to the terms and conditions of a EULA.
What is an End User Licence Agreement?
As the name suggests, a EULA is the combination of an agreement and a copyright licence. It is an agreement between the developer of the software and its ‘end-user’ which is the term used to describe a person using the software. The agreement outlines the extent to which the software can be used. It also acts as a copyright licence as it permits the end users to download and use the software without transferring any of the software developer’s intellectual property rights.
EULAs are far more common than one would think. In fact, any application that you download on the App Store or Google Play will have its own EULA that you will need to agree to in order to use the application.
Features of a EULA
The terms and conditions of a EULA will vary depending on the type of application your providing and your method of distribution. We have listed a few of the fundamental features that appear in the majority of EULAs that you encounter.
When consumers purchase software, they are also buying the licence to be able to use that software. It is therefore crucial that your EULA outlines the extent to which consumers are able to use the software and any prohibitions or restrictions on that use. If your EULA fails to adequately articulate how consumers are able to use the licence to your software, the ramifications on your intellectual property rights as the developer can be harmful.
Terms that you should consider including:
- Whether the licence is transferable to other users
- How the licence can be renewed and/or cancelled by both parties
- Where is the licence available (e.g., only in Australia or worldwide)
- How many people can have access to the licence at one time
Restrictions on the licence that you should consider including:
- Prohibitions on users reverse engineering on your software
- Restrictions on the copying on your software
- Limitations on the modification of your software.
There are many other considerations that you will need to think about when drafting your EULA. To ensure that you are covered comprehensively, it is highly recommended to seek the advice from a qualified solicitor who can assist you in ensuring that your rights are protected
Intellectual Property Rights
Similar to other IT-based contracts, your intellectual property rights in your software are highly valuable and therefore, it is necessary to include clauses to protect those rights. Generally, these clauses can be quite simple and straight-forward by stating that all intellectual property rights belong to the developer. However, if there is more than one developer, things can become complex.
Oftentimes, the intellectual property rights clause will be accompanied by an acknowledgement clause from the end user. This clause typically states that the user acknowledges that no intellectual property rights have been issued, assigned, or transferred to them by accepting the terms and conditions of the EULA.
EULAs are used for a variety of software products and therefore, they will be accepted by people for a range of purposes – some will use it for personal use and others will use it for businesses. Regardless of their purpose, you will require a clause that limits your liability if your software negatively affects the user after downloading and using your software.
This clause also requires consideration with regards to the extent to which your liability extends to. Will you be liable to pay for damages up to a certain amount? Or, will you be liable for an amount that is equal to the monetary value of 3 months of subscription fees? Depending on how your software is distributed and the pricing scheme it uses, this will vary from EULA to EULA.
Like SaaS contracts, you will need to include a clause which states the jurisdiction that applies to the interpretation of your EULA. The jurisdiction that you choose will be the jurisdiction in which disputes arising out of your EULA will be resolved. Therefore, it may be advantageous for your EULA to have a foreign jurisdiction is your primary demographic of end-users are located in that foreign country.
How do end-users accept EULAs?
As with all legal contracts, a EULA will not be binding upon the end-user until the end-user accepts the terms of the agreement. As a software developer, you will need to consider at what stage a user will be accepting these terms. Depending on how you are distributing your software, this will vary. A few options include:
- Making the user click ‘I accept’ prior to the payment section for your software.
- Making the user click ‘I accept’ prior to the installation of your software.
Consumer Protection Laws
Consumer Protection Laws will still apply in a EULA and therefore, it is important to remember that you cannot contract out of these laws. You will need to consider how Consumer Protection Laws work in order to protect consumer’s interests when drafting your agreement. If your terms and conditions are purported to contract out of the Consumer Protection Laws, then those terms and conditions will be unenforceable against the end-user.
It is highly recommended to seek the advice from one of our qualified lawyers who are familiar with consumer protections laws to assist you in drafting your EULA to ensure that you do not draft terms which breach Consumer Protection Laws.
Depending on how you are distributing your software, the requirements of your EULA will vary. For example, if you are a software developer distributing a new application on Google Play, your EULA will need to consider Google Play’s own terms and conditions it imposes on end-users. No matter what your method of distribution is, the drafting guidance from a qualified solicitor is a necessity when creating a EULA.
Our qualified team of solicitors at GLG Legal are happy to assist you in drafting and checking your EULA to make sure that it protects your rights and the rights of your consumers.