Software License & Services Agreements
One of Walker & Jocke's lawyers is a recognized international authority on the patenting of software and business methods.
What is a Software License and a Services Agreement?
A software license is usually an agreement that grants a right to use a copy of software code, to someone else.
A license grants the user less rights than a sale of a copy of the software. The rights to use the software code are defined by the terms of the license.
Software services agreements are similar. However, under such agreements the provider of the services operates the software. The user has the right to utilize the capabilities of the software that is operated by the provider.
Why Software Licenses & Services Agreements are Important
Software is important; therefore, software agreements are important. Business today relies on software to perform many critical functions. The availability of software functions may be critical to the continued operation of a business. Software makes machines and systems work in every sector of the world economy - everything from applications that control advanced medical devices to programs that analyze the behavior of financial markets.
Software developers may want to make code available to other developers in order for applications to be more widely used in the market. Manufacturers and publishers may want to acquire rights to software that can make their products work in new ways or in ways compatible with existing computer systems. In order to have the legal right to use software to achieve the required needs, the rights and limits in the associated software agreements take on critical importance.
How Does a Software License & Services Agreement Work?
The author of the software code frequently owns the code. In cases where the developer of the software is an employee of a company, the company is usually the author. The owner of the code controls who gets to use the code and how the code is used. The software license may define who can use the code and in what circumstances.
Standardized "end user license agreements" (EULAs) are common for most consumer and commercial software that is widely distributed. When someone "purchases" software, the owner of the software typically requires the user to agree to license terms by clicking to indicate agreement to a set of terms before the software can be installed or operated on a computer. The user is not really "purchasing" the software, but is licensing the software under the specified license terms.
When specialized or customized software is involved, the license is often a signed, written agreement that includes terms that are customized to fit the needs of the parties to the license agreement.
Software services agreements under which a user is authorized to access functions of software that is operated by a services provider often include terms similar to software licenses. However, software services agreements address other issues such as the guaranteed availability of the software functions to the user and the rights of the user to access and recover the user's data upon termination of the services.
What Can a Software License & Services Agreement Cover?
A software license may address a wide range of issues regarding the use of software. It can specify how and where the software may be distributed and installed on the licensee’s computer, and who may use the software.
For example, the software license may specify:
How many users may use the software
How long the software may be used
Under what conditions or in what systems the software may be used
The support for the software (updates, upgrades and/or technical assistance)
The cost of the rights to use the software
The warranty terms, if any
The liability for damages that result from errors in the software
Ownership rights in the software and restrictions on work product that is developed using the software
How and where any disputes will be resolved
The user’s rights to obtain access to the source code from an escrow under certain circumstances
Any other issues important to the parties
A software services agreement will usually address many of the same issues as a software license. However, because under a services agreement the provider operates the software, other issues such as availability of access to the software, up-time, security, access to data and other issues often need to be addressed.
How Can an Attorney Help with
Software Licenses & Services Agreements?
One of the most complicated issues in software licensing is who owns software that is developed for a customer. The attorney may help so that substantial sums of money are not spent on software that the developer does not have the right to license or the customer does not have the right to own or appropriately use.
Software services agreements may involve entrusting the operation of critical aspects of a business to a third party to be carried out through use of the third party's systems. Appropriate safeguards should be in place to assure that the services agreements address the issues that are important to both parties.
An attorney experienced in software licensing may help a client:
Identify how the software will be used and advise the client on legal issues that may arise in developing, sharing, and using the software for the necessary purposes
Develop audit procedures to comply with the terms of an existing or proposed software agreement
Avoid unwanted or uninsured liability
Achieve the optimum use of and value for existing software and for the code that may be developed in the future