Software Licenses - General

Software is usually licensed, not purchased. Under licensing agreements, organizations obtain no ownership rights, even if the organization paid to have the software developed. Rather, the software developer licenses an organization certain rights to use the software. Vendors typically grant license rights for a specific time period and may require annual fees to use the software. Vendors may also provide maintenance agreements that assure they will provide new versions or releases of the software.

The most important licensing issue is the definition of the precise scope of the license. Organizations should ensure that licenses clearly state whether software usage is exclusive or not exclusive, who or how many individuals at the organization can use the software, and whether there are any location limitations on its use. Before negotiating a license, organizations should accurately assess current and future software needs and ensure the license will meet their needs.

The license should clearly define permitted users and sites. If an organization desires a site license for an unlimited number of users at its facilities, it should ensure the contract expressly provides for this. If the organization requires other related entities to use the software, such as subsidiaries or contractors, they should also be included in the license. Organizations should also ensure they have an express license to retain and use backup copies of any mission-critical software that they may need to carry out disaster recovery or business continuity programs at remote sites.

Organizations should clearly understand the duration of the licenses to prevent unexpected license expirations. If an organization desires a perpetual license to use the software, it should ensure the contract explicitly grants such a license. Organizations should not assume the failure to specify a fixed term or termination date automatically provides them with a perpetual license. At a minimum, organizations should specify in their contract or license the time periods for a non-perpetual license and the minimum amount of notice required for termination.

 

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