Software licence agreements are essential for any iPhone or Android application developer. It provides protection for both the supplier and the user of the software by outlining the contractual indemnities protecting them against claims of third-party intellectual property rights owners. Often, a software licence agreement will be incorporated or will accompany an End User Licence Agreement.
What is a Software Licence Agreement?
A software licence agreement is a legal contract between the supplier of software and the user of that same software. It outlines how the software can be used by the user, defines the rights and obligations of both parties, provides restrictions on how the software can be used, and outlines who owns the intellectual property rights of the software.
As software is generally always protected by intellectual property rights (i.e., copyright and patents), a software licence agreement will enable users to legally use the software without infringing on any of these rights. Without such a licence, users of the software may be found in breach of copyright laws as downloading the software involves copying the software onto their device.
Features of a Software Licence Agreement
The terms and conditions of your software licence agreement will vary depending on the type of software you are providing and your method of distribution (i.e., iPhone, Android, etc.). We have listed a few of the fundamental features that we commonly come across when reviewing and drafting software licence agreements.
When users purchase or download your software, they require a licence in order to be able to use it. It is very important to accurately define and scope your licence in this clause to prevent any interpretation issues with the use of the software.
Some considerations that you may need to think about when drafting this clause include:
- Whether the licence is non-exclusive or exclusive
- The duration of the licence
- Where the licence is available to be used (e.g., only in Australia or worldwide)
- Whether the licence can be renewed and how it can be renewed
- How many people can have access to the same licence at one time
This clause will always outline the prohibitions imposed on the user when using the software, common considerations are:
- Whether users can modify the software and to what extent
- Restrictions on copying the software
- Restrictions on reverse-engineering the software
To ensure that you have comprehensively scoped your licence and protected your intellectual property rights, it is highly recommended to seek the advice from one of our expert lawyers at GLG Legal.
Depending on how you decide to distribute your product, you will often need to include a provision that outlines the fees for using the software. Fees may be taken as a one-off, periodically through a subscription-based payment system or through a combination of both of these methods. Should it be relevant to the software, this provision may also provide for fees associated with upgrades or installation assistance.
Suppliers choosing to adopt a subscription-based payment method should also consider the implementation of a review on fees in this provision.
Intellectual Property Rights
This clause will outline who owns the intellectual property rights in the software – it is a particularly important clause if the supplier is not the owner of these rights. Oftentimes, the supplier will undertake to defend its users if a third-party commences an action against the third party for infringement of intellectual property rights.
It is recommended to seek the advice from our commercial team when drafting this clause as many considerations are involved when it comes to protecting intellectual property rights on a global scale.
Termination and Duration of Licence
Depending on which payment method you have selected for your software, how your licence is terminated and the duration of your licence will vary. Those supplies who provide their software using a subscription-based method of payment will generally have the licence terminate if such subscription or payment ceases.
Software Licence Agreement requires careful consideration as to how your software can be used and how both parties will be protected in the event of a third-party claim. It is important that your software licence agreement accurately describes your software, its capabilities, and restrictions as well as the obligations of both the supplier and user.
Whether you are a developer that requires a software licence agreement drafted for a new application or if you are seeking review of a drafted software licence agreement, please contact our commercial team who will provide legal advice unique to your software and interests.