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Keeping it legal.

Byline: By Andrew Scott

How fit for purpose is your software licence? Despite appearances to the contrary, software is not like other products and the agreement governing its use is very different from a contract of sale or supply.

Developers protect their revenue by granting licences to use software. If you act outside the terms of your licence, the chances are you will be in breach of contract and infringing copyright, with the civil and criminal liability that may involve.

Software is licensed in a variety of ways, from duration of the licence to the scope of use, for example, limited to a particular computer, location, end user, or number of records processed using the software.

Generally, the more use you want to make of the software, the more expensive the licence will be. Even where you have engaged someone to write software for you, if you have not agreed anything to the contrary, then unless you obtain an assignment of the intellectual property rights, those rights will be owned by the developer and you will only have a licence to use the software.

Commonly, licence agreements permit a back-up copy of the software to be made, but other rights are more contentious (or at least the grant of them without any increase in the licence fee).

This is not just important in relation to outsourcing. Some software is difficult to implement and so consultants are engaged to help.

The licensee's ability to do so should be taken into account in deciding to sign up to the agreement.

A licensee's statutory rights to support the use of software are usually insufficient and so ongoing maintenance and support services are needed.

Software licence agreements are complex and sometimes long. They typically deal with other issues, such as duties of confidentiality, warranties, indemnities against infringement of third party rights and limitations of liability.

Although licence agreements are not yet commoditised, there is an industry practice on what certain provisions look like before they have been negotiated and whether any movement from the supplier is likely. Negotiating software licence agreements is a specialist field. Getting the agreement right at the outset can save a great deal of time, effort and cost later.

Andrew Scott is partner and head of the information technology group at Newcastle law firm Dickinson Dees.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2007 Gale, Cengage Learning. All rights reserved.

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Publication:The Journal (Newcastle, England)
Date:Feb 20, 2007
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