Article by MarkRobert
Software License AgreementA software license agreement is a contract between the “”licensor”" and purchaser of the right to use software.
The agreement comprehends a number of different licensing models. It may be used where software is licensed on a concurrent user basis or a named user basis; it may also be used where software is licensed on the basis of a limited number of installations.
Features of AgreementsA good agreement must include clauses covering:1. licensor 2. licensee 3. grant of license 4. license 5. payment (including interest on late payment) 6. delivery 7. acceptance testing 8. term of license 9. licensee’s obligations 10. intellectual property 11. intellectual property indemnity 12. warranty 13. indemnity 14. limitation of liability 15. insurance 16. confidentiality 17. termination
Eight Points to Remember before making AgreementWhen negotiating significant software licenses, remember these eight points: 1. Make sure the license is broad enough for the intended use of the business and for anticipated growth or expansion 2. Make sure that there are clear representations and warranties concerning the expected functionality of the software 3. Make sure that the appropriate customer support exists, with prompt responses by the licensor to problems that arise 4. Make sure the licensor indemnifies you for any claims of infringement by third parties 5. Make sure the pricing for the software is clearly spelled out and favorable 6. Make sure that the licensor promptly makes available upgrades and error correction 7. Make sure the term of the license is appropriately long
Software License Agreement TermsA license agreement should state how the software may or may not be used:1. That the user may install the software on one machine or many, may make only one copy or many2. That the use is exclusive or non-exclusive (whether more than one party is granted a license)3. That the software and license agreement are transferable or assignable, or not4. That the software may only be used in certain countries5. That the user may not modify, reverse engineer, lease, rent or export the software
Acceptance and Installation of the SoftwareDepending on whether the software is customized or off-the-shelf, the agreement may have a provision stating what steps are necessary for acceptance and installation. As acceptance can be a tricky legal concept, agreeing to the procedures for testing and acceptance up front can often be very helpful.
Maintenance of the SoftwareSome licensors of software have maintenance programs available for annual purchase which provide bug fixes, updates and technical support paid at the beginning of each year. While the prices vary, typical annual fees are fifteen to twenty percent of the cost of the software license.
Ownership of the SoftwareThe agreement should state that the user agrees that the licensing entity owns the software, customizations and updates. This serves both to give notice of the ownership to the user and also gain the user’s legal agreement up front to this fact.
Sub-LicensingYou may sublicense the Software and your rights under this license to another party provided that: a. You understand and agree to the terms of license agreement. b. The Software is only sublicensed ONCE, to a single party. c. You are not using the Software after granting the sublicense. d. The sublicense is a valid, binding license. e. The sublicense contains terms that are no less restrictive than this agreement (or the same terms as this agreement) and does not contain this right to sublicense. f. The legal jurisdiction for the sublicense is defined as either that of the Vendor or that of your corporate head office. g. You do not make any representations or warranties on behalf of Vendor. h. You notify Vendor of the sublicense and any subsequent transfers by the sublicensed party.
PaymentThe agreement should set forth procedures, timelines and amounts for the software license and maintenance fees to avoid confusion and ensure prompt payment and performance of services.
WarrantiesWhat happens if your customer isn
