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.
DSpace is a reputed open-source software to help an organization build open and free digital repositories. Since DSpace is open-source it helps organizations to use, modify, and update their code. DSpace and Fedora combined to build software platforms repositories in more than 1000 organizations in 100+ countries.
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.
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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.
FreeCAD is an open-source 3D design software that allows users to create informational modelling. This software is written in C++ and Python programming language. As a result, the software is durable for future requirements and its customers have the freedom to use this application for creating designs without paying any subscription fees.
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.
