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Published by Enhelion, 2019-12-10 09:24:09





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5.1 SOFTWARE purchase their products. But what is a Software
License Agreement? Generally we can define
Software could cover various things within its ambit Software License Agreement or End-User License
ranging from computer programmes to computer Agreement (EULA) as a contract between licensor of
database and may extend to things produced by software and purchaser, defining purchaser rights to
operation of computer programme such as use and to purchase the software. A software license
documents, drawings and other works stored or agreement is something you want to have in place to
transmitted electronically or even printed out on prevent or protect you from infringement of
paper. Software is embedded in a wide range of copyright law. There are a variety of different types
consumer products and provides the means of of software licenses. Some are based on the number
managing complex processes in the financial and machines on which the licensed program can run
business worlds and in scientific research. whereas others are based on the number of users
that can use the program. Most personal computer
5.2 SOFTWARE LICENSING AGREEMENT software licenses allow you to run the program on
only one machine and to make copies of the software
At the core of software and software contracts is the only for backup purposes. Some licenses also allow
legal concept of copyright.i Copyright is the right for you to run the program on different computers as
the owner or licensed proprietor to prevent anyone long as you don't use the copies simultaneously.
from copying their software without paying anything After a software company develops a software
for it. Since the use of software requires copying to product, the company will generally attempt to
occur, then any user of software must have capitalize on its efforts by licensing the software to
permission to use and thereby copy such software. others. These transactions may take a variety of
Hence it is important to use software license
agreements for software owners and licensees to

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forms. The typical software license provides that the These terms may include various privileges to
software company will deliver a "finished" software share, alter, dissemble, and use the software
product to the user. In many cases, the software and its code.
company also agrees to correct any software defects 2. Free software license: It is a software license
or "bugs" that are discovered, and to periodically which grants recipients rights to modify and
provide the user with improved, updated versions of redistribute the software which would
the software. The software user, in return, pays one otherwise be prohibited by copyright law. A
fee for the software, and may also agree to pay an free software license grants, to the recipients,
additional fee, or royalty, if the software he licenses is freedoms in the form of permissions to
incorporated into one of the products he (the user) modify or distribute copyrighted work.
manufactures. In addition, the software user often 3. Open source software: It refers to any
promises that he will not: program whose source code is made available
for use or modification by users and is made
i) disclose any of the confidential information freely available. Open Source enables the
the software company provides to the user users to view and modify the source code.

ii) reproduce or otherwise copy the software, 5.2.2 CLASSIFICATION OF SOFTWARE LICENSING

iii) assign or sublicense the software without the There are various kinds of software licensing
consent of the software company.ii agreements but most commonly used agreements
Software licenses can generally be fit into the 1. Click wrap agreements
following categories: proprietary licenses, free Click-wrap agreements are those whereby a
software license, open source licenses. The features party after going through the terms and
that distinguish them are significant in terms of the conditions provided in the website or
effect they have on the end-user's rights. program has to typically indicate his assent to
the same, by way of clicking on an "I Agree"
1. Proprietary software: It is computer icon or decline the same by clicking "I
software which is the legal property of one Disagree". These types of contracts are
party. The terms of use for other parties is
defined by contracts or licensing agreements.

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extensively used on the Internet, whether it even if the user has not reviewed the
be granting of a permission to access a site or
downloading of software or selling something electronic contract. Browse-wrap
by way of a website.
2. Shrink-wrap agreements agreements are typically found at the bottom
Shrink-wrap agreements have derived their
name from the "shrink-wrap" packaging that of a webpage in the form of a link to another
generally contains the CD Rom of Software’s.
The terms and conditions of accessing the page on which the terms and conditions are
particular software are printed on the shrink-
wrap cover of the CD and the purchaser after posted. The user is not required to review the
going through the same tears the cover to
access the CD Rom. Sometimes additional contract, much less access the page where it’s
terms are also imposed in such licenses which
appear on the screen only when the CD is located, in order to proceed.
loaded to the computer The user always has
the option of returning the software if the 4. Network licensing agreements
new terms are not to his liking for a full
refund. License agreements and related pricing must
3. Browse wrap agreements
There are many contracts posted on internet be consistent with current network
websites that do not require any affirmative
act or assent before the licensed use of the environments. The proliferation of networks
software. Browse-wrap agreements set out
the terms somewhere within the site but do is causing licensing practices to evolve even
not require the user to review or agree to the
terms prior to use of the program. Acceptance faster to accommodate both users' and
of a browse-wrap is implied from the user’s
browsing or other activity on the web site, vendors' needs. Current primary network

licenses are applicable for concurrent use,

site, enterprise, and nodes. Concurrent use

licenses authorize a specified number of users

to access and execute licensed software at

any time. Site licenses authorize use at a

single site but are losing favor to enterprise

licenses that cover all sites within a

corporation because of more virtual

computing environments. Node licenses are

becoming less appropriate in the

client/server environment, since the licensed

software may be used only on a specified

workstation which a user must log on to in

order to access and execute the application.

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5.2.3 NEED FOR SOFTWARE LICENSE bugs, no downtime, or other such
AGREEMENT expectations. One can include terms in the
software license agreement that will include a
A software developer spends a lot of time and money disclaimer of warranties which will require
developing the software which it wishes to license the user to accept it as is or as available. This
and count on it to bring some income as a result and disclaimer can come in handy if the software
at the same time protect it. That is where a software servers go down and the users cannot use it
license agreement comes into play. These are the five for some time as it will prevent them from
main reasons you should have a software license trying to blame the company for their lost
agreement: data.

1. Prevents abuses of software: Getting 4. Limit the liability: This is a very important
software license agreement signed from component because if one does not limit his
customers prevents them from trying to liability as a software developer, then one
replicate it or copy it for their own benefit. could potentially be exposing itself to
lawsuits. These lawsuits not only take up your
2. Licensing and not sale: When you allow users valuable time, but they also can create some
to purchase a license of your software, you financial issues. By limiting your liability, one
still retain all rights to it. This allows you to essentially prevents customers from suing
license it to others and also allows you to because they agreed to your terms before
place restrictions on its use. This helps in they gained access to even download it.
more control of the usage as well as the
distribution of it. Instead of selling the 5. Terminate use at any time: There should be a
software and the rights, you will keep them so portion of the agreement that states that you
you can continue to license it to others and can revoke licenses at any time. This also
make more money in the long run. gives you the freedom to do so for any reason.
Not only can you terminate them, but you can
3. Disclaiming warranties: No matter what also suspend them if you need to. This is part
owner of software does, a customer who of being able to maintain complete control
installs the software will have expectations over the software at all times. If you do have
that cannot be met all the time. This can be
something such as a guarantee of no software

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to revoke a license and your customers try to contract law and Trade secret laws.
start a dispute, all you will need to do is refer
them to this clause. 1. COPYRIGHT LAW

5.2.4 BREACH OF SOFTWARE LICENSING India’s copyright law is contemporary and
AGREEMENT adequate. Moreover the copyright law has
been framed according to the changes
Breach of licensing agreements can be done in two required by TRIPS.
i) the doing of any act necessary to
1. Exceeding the scope of the licensed rightiii: obtain information essential for
Since a license is a grant of rights to the operating inter-operability of an
licensee to engage in a conduct which would independently created computer
be violation of the licensor’s intellectual programme with other programmes
property rights, any conduct of the licensee by a lawful possessor of a computer
which exceeds the rights granted under the programme provided that such
license will be both the breach of breach of information is not otherwise readily
the licensing agreement and one or more available;
intellectual property right infringement.
ii) the observation, study or test of
2. Use of disabling code in the softwareiv: there functioning of the computer
have been instances where the software programme in order to determine the
vendor has implanted the code in the ideas and principles which underline
software which would cause the software to any elements of the programme while
cease working under certain circumstances- performing such acts necessary for
most often licensee’s failure to pay. the functions for which the computer
programme was supplied;
LICENSING AGREEMENTS IN INDIA iii) The making of copies or adaptation of
the computer programme from a
Software licensing agreements are basically dealt personally legally obtained copy for
under three laws in India. They are copyright laws, non-commercial personal use; are not
regarded as copyright infringement.

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2. CONTRACT LAW agreement will be active for, and the type of
Breach of contract under section 75 can very agreement. While this is very general
well protect the violations under software information, it is important because it sets the
licensing agreements. The violation of the tone for the entire agreement.
conditions of license is however subject to
interpretation and logic. The licensor 2. Parties involved: This section is important
however can protect such license by because it defines who the parties are that are
expressly providing the terms and conditions entering into the agreement. It will not only
under the agreement relating to the rights detail the company offering the license, but
and liabilities of the licensee and licensor will also include the details of the person or
himself. Only problem prevalent in the company that is purchasing the license.
practical market is the “standard terms” of the
license which the licensee often ignores while 3. Terms of the agreement: This section
accepting the license before downloading the contains all of the terms of the agreement.
software. The Indian courts have a fractured This includes the price to be paid for the
opinion regarding these standard terms. license, which can be defined as a flat fee or a
Some have favoured the vendors and some flat fee with yearly maintenance fees. This
have favoured the licensee. section will also include some information
about maintenance, support, or refunds that
3. TRADE SECRET LAW will or will not be offered by your company
There is no proper trade secret law in India but through the agreement.
breach of confidentiality can very well be
dealt with according to the Indian Contract 4. Non-exclusivity: If the software is being
Act. licensed to other companies, the software
license agreement needs to contain a clause
5.2.6 IMPORTANT CLAUSES OF SOFTWARE that details that the rights are non-exclusive.
LICENSE AGREEMENTS This allows you to license your software to
other parties and continue to make a profit
1. General information: This contains from it.
information about when the agreement will
go into effect, how long the terms of the 5. Non-transferability: This is a clause is
required to be included if you are not allowing

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the license to be transferred to another party software on one single computer or on
since the transfer of license to another person multiple computers in the same location, such
or business because that will essentially take as the business location. This prevents
a customer away from you. That is the main companies from taking advantage of software
reason why you will want this clause. and trying to get more for the price they paid.

6. Rights: This part of the agreement states that 10. Limitation of liability: This clause detail the
rights to the software will remain property of fact that the licensee will be accepting the
the developer even after execution of the software as it is and will not be able to sue for
agreement. This includes the actual software, damages, and that you make no warranty for
the name, the copyright, the distribution the software and the usage.
rights, and even the intellectual property
rights. This is a very important inclusion 11. Terms of termination: This clause will detail
because it essentially protects the product for the actions that must be taken by the licensee
you. in case of termination. This is generally
something like destroying the software on
7. Modification: If you are not allowing the site or uninstalling it from the device.
software to be modified in any way on the
back end, you should make that clear with a 12. Governing law: This clause details the
clause that says so and also details what the governing law for settling any disputes and
term "modification" means for this which court will have the jurisdiction.
8. Breach of contract: You need to include a
clause that states that if any terms are not The owner of the copyrights of any work may grant a
followed then it will result in a breach of license under the Copyright law to authorize a third
contract where you can revoke the license as party to use and distribute the copyrighted work. A
a result. copyright license may be exclusive or nonexclusive.
The term Exclusive License is defined in section 2(j) of
9. Device usage: Depending on how you license the Copyright Act to mean and include a license
the software, you will want to include which confers on the licensee and the persons
whether the licensee is allowed to use the authorized by him, to the exclusion of all other

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persons, any right comprised in the copyright of a In the non-exclusive license, the owner of the
work. A license is nothing but an authorization from copyright is not deprived of his right to grant a license
the copyright owner to exercise certain acts, without to persons other than the licensee. He may use the
which the acts are considered as infringement. copyright himself as well.
Therefore, no transfer of ownership happens in cases
A Copyright Licensing Agreement is a contract under An existing copyright owner or a prospective
which a copyright owner allows another person or owner of the copyright in future may grant
company to use their copyrighted material in several any interest in the right by way of licence.
ways such as to: However, in case of a licence relating to
copyright, such a licence will take effect only
a. To re-print. when the work comes into existence. If a
b. To distribute it; and person to whom a licence relating to
c. To use it for a separate amount of time. copyright in any future work, dies before the
work comes into existence, his/her legal
In simple terms a copyright licensing agreement representative shall be entitled to the benefit
defines in details as to how, where, and when the of the licence.
copyrighted work may be used. A Copyright owner
of any work can grant a licence to authorise a third 2. COMPULSORY LICENSINGvii
party to use and distribute a Copyrighted work. This Compulsory licensing in regards to Indian
licence may be either exclusive or non-exclusive. work will be granted by the Copyright Board
An exclusive license means a license which confers on in the following circumstances.
the licensee or the licensee and the person
authorized by him to the exclusion of all other If a copyright owner of any Indian work has
persons (including the owner of the copyright), any published or performed in public has:
right comprised in the copyright in work. An exclusive
licensee is one who has got such a right.v i) Refused to republish or allow
republication of work.

ii) Refused to allow communication of

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work to the public by broadcast or 1. Compulsory licenses for works withheld
sound recording. from the public: According to this provision,
iii) Refused to allow performance of work any person may approach the copyright
in public and in case the work is board, for issuance of a compulsory license to
withheld from the public publish a work that is withheld from the
public by the copyright owner. However,
Indian work includes: before approaching the Copyright Board, the
complainant should have approached the
i) Artistic work, the author of which is copyright owner first for a license to
citizen of India republish or perform the work and the
copyright owner should have unreasonably
ii) A cinematographic film or sound rejected the request of the complainant.
recording made or manufactured in
India. 2. Compulsory licenses for unpublished works
of unknown authors: In case of unpublished
The primary objective of compulsory works of unknown or dead authors, any
licensing is to make available the copyrighted person may apply to the Copyright Board for
work to the general public. The copyrights a license to publish or communicate to the
give protection to the work of writers, artists, public such works or translations thereof.
etc. so that they can benefit from the results However, before making such an application,
of their hard work and creativity. However, the applicant is required by law, to publish his
such work should be available to the people proposal to do so in a national newspaper.
for access. Sometimes, the owners of
copyright are not willing to part from their 3. Compulsory licenses for the benefit of the
work so in such a case, in order to make the disabled: Any person or non-profit
work available to the people, compulsory organization working for the benefit of the
licenses are granted by the Registrar of disabled may apply to the Copyright Board
Copyrights for a compulsory license to publish any work
in a format suitable for their accessibility.
Chapter IV of the Copyright Act discusses licensing of
copyrighted works. This chapter discusses seven
different types of licenses issued by the Copyright

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4. Statutory licenses for Cover 7. License to reproduce and publish works for
Version: Section 31C of the Copyright Act limited purposes: The Copyright Board
provides for the grant of statutory licenses for may issue licenses to publish a work in India if
making cover versions of any sound the editions of such literary, scientific or
recordings. This section specifically requires artistic works are not made available in India.
the Copyright Board to fix the minimum The Copyright Board, in case of such
amount of royalty to be paid for the creation applications, may issue the license after
of such a version. determining the royalty to be paid to the
copyright holder.
5. Statutory licenses for Broadcasting literary,
musical works and sound recordings: This 5.4.2 TEMPLATE FOR COPYRIGHT LICENSE
license is issued by the Copyright Board in AGREEMENT
favour of any broadcasting organization
desirous of broadcasting to the public any COPYRIGHT LICENSE AGREEMENT
literary, musical work or sound recording
which is already published by the copyright This Copyright License Agreement (the
holder. Although the Copyright Board is “Agreement”) is entered into by and between
authorized to determine the royalties payable
under this license, the Board is yet to convene [●] having its registered office/residence at [●],
and determine these royalties. (“Owner”)

6. License to produce and publish AND
translations: This license issued by the
Copyright Board permits the applicant, after [●] having its registered office/Residence at [●],
the applicant pays a determined royalty to (“User”)
produce and publish a translation of literary
or dramatic work, after seven years of Hereinafter referred to as ‘Party’ individually’ and
publication of said work. It is pertinent to note collectively as ‘Parties’.
here, that this licensing is not applicable to
cinematographic films and sound recordings. This Agreement will commence on the [EFFECTIVE
DATE] and continue until the [TERMINATION
DATE] or until either party provides written notice of
termination to the other party with a 30 days’ notice.

In this Agreement, the party granting the right to use

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the licensed property, [OWNER], will be referred to only to the following described geographical
as the “Owner” and the party who is receiving the area:
right to use the licensed property, [USER], will be
referred to as the “User.” 2. RIGHTS AND OBLIGATIONS. User shall be
the sole owner of the Work and all
1. Owner owns all proprietary rights in and to proprietary rights in and to the Work;
the copyrightable and/or copyrighted works however, such ownership shall not include
described in this Agreement. The ownership of the copyright in and to the
copyrighted works will collectively be Property or any other rights to the Property
referred to as “Work.” not specifically granted in this Agreement.

2. Owner owns all rights in the Work and retains 3. PAYMENT. User agrees to pay Owner a
all rights to the Work, which are not royalty which shall be calculated as follows:
transferred herein, and retains all copyrights. The royalty will be paid by [DATE ROYALTY
3. User desires to obtain, and Licensor has
agreed to grant, a license authorizing the use 4. MODIFICATIONS. Unless the prior written
of the Work by Licensee in accordance with approval of Owner is obtained, User may not
the terms and conditions of this Agreement. modify or change the Property in any manner.
Licensee shall not use Licensed property for
The parties agree to abide by the terms as follows: any purpose that is unlawful or prohibited by
these Terms of the Agreement.
1. GRANT OF LICENSE. Owner owns
In accordance with this Agreement, Owner abide by the obligations of this Agreement,
grants User a non-exclusive license to Use or including the obligation to make a royalty
Sell the Property. Owner retains title and payment when due, Owner shall have the
ownership of the Property. User will own all option to cancel this Agreement by providing
rights to materials, products or other works 30 days written notice to User. User shall
(the Work) created by Owner in connection have the option of taking corrective action to
with this license. This grant of license applies cure the default to prevent the termination of

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this Agreement if said corrective action is indemnifying party is promptly notified of any
enacted prior to the end of the time period such claims. The indemnifying party shall
stated in the previous sentence. There must have the sole right to defend such claims at its
be no other defaults during such time period own expense. The other party shall provide, at
or Owner will have the option to cancel this the indemnifying party’s expense, such
Agreement, despite previous corrective assistance in investigating and defending
action. such claims as the indemnifying party may
reasonably request. This indemnity will
6. WARRANTIES. Neither party makes any survive the termination of this Agreement.
warranties with respect to the use, sale or
other transfer of the Property by the other 9. AMENDMENT. This Agreement may be
party or by any third party, and User accepts modified or amended, only if the amendment
the product “AS IS.” In no event will Owner be is made in writing and is signed by both
liable for direct, indirect, special, incidental, or parties.
consequential damages, that are in any way
related to the Property. 10. TERMINATION. This Agreement may be
terminated by either party by providing 30
7. TRANSFER OF RIGHTS. Neither party shall days written notice to the other party. This
have the right to assign its interests in this Agreement shall terminate automatically on
Agreement to any other party, unless the [TERMINATION DATE].
prior written consent of the other party is
obtained. 10.1. Upon termination or expiration of this
Agreement, Licensee User shall cease
8. INDEMNIFICATION. Each party shall reproducing, advertising, marketing and
indemnify and hold the other harmless for any distributing the Work as soon as is
losses, claims, damages, awards, penalties, or commercially feasible. Licensee shall
injuries incurred by any third party, including have the right to fill existing orders and
reasonable attorney’s fees, which arise from to sell off existing copies of the Work
any alleged breach of such indemnifying then in stock. Owner will have the right
party’s representations and warranties made to verify the existence and validity of the
under this Agreement, provided that the existing orders and existing copies of the

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10.2.Work then in stock upon reasonable provision shall be deemed to be written,
notice to Licensee. construed, and enforced as so limited.

10.3.Termination or expiration of this This Agreement contains the entire
Agreement shall not extinguish any of agreement of the parties and there are no
Licensee’s or Copyright Owner’s other promises or conditions in any other
obligations under this Agreement agreement whether oral or written. This
including, but not limited to, the Agreement supersedes any prior written or
obligation to pay royalties which by their oral agreements between the parties.
terms continue after the date of
termination or expiration. IN WITNESS WHEREOF, the Parties have
executed this Agreement effective as of the
11. SEVERABILITY. If any provision of this date first written above.
Agreement shall be held to be invalid or SIGNED AND DELIVERED by [●]
unenforceable for any reason, the remaining SIGNED AND DELIVERED by [●]
provisions shall continue to be valid and In the presence of
enforceable. If a court finds that any provision 1. [●]
of this Agreement is invalid or unenforceable, 2. [●]
but that by limiting such provision it would
become valid or enforceable, then such

i Robert T. J. Bond, Software Contract Agreements: Drafting iv Id
v [Sec 2(j)] of the Indian Copyright Act, 1957.
and Negotiating Techniques and Precedents, p. 58 (2004) vi Section 30 of the Indian Copyright Act, 1957.
ii Terence W. Thompson, Software Licenses as Personal Service vii Section 30 of the Indian Copyright Act, 1957.

Contracts, 9 Computer L.J. 491, p. 492 (1989) Page | 4
iii Michael D. Scott, “Scott on Information Technology law”,

Vol. 2 (Volters Kluwer, 3rd edition) pg. 12-55

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