Licensing AgreementsLicensing Agreements

If you create software or a product for customers, or you use those created by others, then Licensing Agreements will help protect you and your business.  A Licencing Agreement:

It prevents your property being copied – and when it is, it gives you redress.

Allows you to license it without having to sell it – this means when users buy a license, they are buying a right to use, not own. So the property’s still yours.

Allows you to restrict your warranties – you can’t meet all your customers’ expectations all the time any more than you can guarantee there won’t be any bugs. So there’s no need to promise the Earth!

Limits your liability – this protects you if you’re sued.  For example, if your software crashes and causes a major problem for a customer, your liability can be capped. Equally, the types of loss that may be claimed can be restricted.

How to get the best software licensing deal

However, many businesses get this wrong. Whether by design or whether they’re not sure how to go about things, here’s a quick checklist of things to remember to get the best licensing deal.

  • Remember to make your licence non-exclusive – be careful not to tie yourself to one licensee, you may seriously damage your profits.
  • Make your licence non-transferable – you license to one person or one company. Allowing others to use it will take customers away from you.
  • The rights stay with you – so someone purchasing a licence doesn’t steal parts of it for their own gain, hold on to the rights – software, name, copyright, distribution and the intellectual property rights.
  • Do you allow modifications? – make clear what the term “modification” means –  it will cause you problems later on if you don’t. 
  • If users don’t comply, they’re in breach of contract – this is pretty clear but it has to be said.
  • How many devices? – you can authorise your software to be used on one device or on many devices. Set this out clearly in your agreement, you’ll avoid businesses using your program more than authorised.
  • Limit your liability – this will help you set out what your customer is getting and not getting. It makes for an honest commercial relationship and will stop you being sued for something you can’t guarantee.
  • Remember to specify governing law – we want to avoid disputes, but if there are any, you’ll want to make sure that any case is determined by English law.

In Summary

A lot of things to remember?  We have extensive experience in drafting licensing agreements for large and small organisations.

If you’d like help making sure you get it right, call 01904 899794 to get started. We’ll make sure you don’t forget anything and get the right agreement for you.