April 2010

Every software company should understand what the term ‘software license‘ actually means (i.e. what is a software license?).

As a software attorney that tries to keep it simple, let me briefly explain this: it is the right/permission to use the software from the owner. Remember that the user is not provided with ‘ownership’ to the software (as that is retained), but they do receive the right to ‘use’ the software.

Q: What are the boundaries of the right to use software?

A: Well, that depends on what the license agreement says…usually in the GRANT section… (e.g. x grants to y non-exclusive, non-transferable, license to operate the software on …….). There are literally thousands of possible license metrics (ways to measure usage), so a software company should communicate its license metric inside and outside of the license agreement (e.g. on the product webpage, in an FAQ).

• For example, here is a list of the Oracle license metrics: Oracle Licensing Basics

• Here is another example from another company: Licensing Guide.

So the key things to remember in defining your software license and metrics are:

1) Know what your license agreement says, as you are granting you users specific legal rights.

2) Grant the users the ‘correct’ usage rights (but not necessarily more), as that is what they are expecting.

3) It would be really great if your software operated 100% consistently with those license rights (i.e. if the license is limited to one …

How to Inspire your Lawyers to Write Better EULAs and SaaS Agreements?

It is not easy to inspire your lawyers to write better EULAs or SAAS agreements, but it is worth a try (I can say this as I am a eula attorney). Watch this short video about simplifying contracts; this speaker (a non-lawyer) did a great job of inspiring his audience (from the 2010 TED conference) and showing them that there is a better way to contract (hint: simplify, simplify, simplify). Did you get that? Hopefully I was clear enough.

As a software licensing attorney, I am always looking for great content for top software companies, and this is one of them. Try to inspire your lawyers to help you contract better, as software and SAAS companies need to find efficient ways to contract.

Watch Now

 

Disclaimer: This post is for informational and educational purposes only, and is not legal advice. You should hire an attorney if you need legal advice, which should be provided only after review of all relevant facts and applicable law.…

I find that most clients believe that they have an airtight software agreement and their liability is limited to the contract value. Well, from the perspective of a software copyright attorney, as a general matter they are right, but of course there are exceptions (at least from the perspective of a software licensing attorney). Once of the exceptions is fraud claims.

Fraud Claims: While there are many different flavors of fraud, essentially all of them are based on some type of ‘misrepresentation.’ Under certain strong legal theories no fraud claim/damages should be allowed when there is an underlying contract, but needless to say these claims are made to try to get around the contractual limitation on liability.

SAP is learning a lot more about this issue, as they are facing a fraud claim for over $500 million arising from a $30 million software deal with Waste Management (the contractual price)…yes the claim is more than 10 times the contract value. So even though SAP negotiated their contract well and had it reviewed by their lawyers, they are facing a claim for more than 10 times the contract value. Read more here.

Q: So what can a company do to avoid these claims?

1) Get Involved Early in Customer Problems. What I mean by this, is have someone in senior management work closely with the people on the ground to ensure that this gets worked out.

2) Use your Best People. This is not the time to use junior …

While this is a complex legal issue, as a software copyright attorney,  let me try to simplify it so it can be useful for software company or IT based company (i.e. do I need a software licensing agreement or not)

Essentially, one way to protect and provide information technology is via copyright law alone, which means that there is no contract and the IP owner is relying on federal copyright law to provide the buyer with their necessary rights (and to protect the owner).

– For example, if you buy a book you own the tangible book (that is what you bought), but the author/publisher still owns the copyright to the book. You can read the book, write on the book, tear up the book, and transfer the book, but you can’t copy, prepare derivatives works (e.g. movies), publicly perform, etc. the book. You have to look at copyright law for more answers.

– On the other hand, if you buy software and agree to a license agreement (=contract) then the contract and federal copyright law protect the owner of the software and determine your rights. If you want to use the software, you should read agreement first as it will explain what you can and can’t do. You probably can use it and destroy/delete it, but how you can use it, whether you can transfer the software and in general what your rights are depend on the contract and copyright law (you can see that this can get complicated).…