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: Software Investment Guide.
- 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 module, then don’t allow them to use other modules; if the license is limited to one user, then don’t allow more users access; maybe have a counter in the software so the user can tell if they are within their license rights or exceeding them).
Of course this summary only addresses one type of legal definition of a license, as there are other legal uses of the term ‘license’ (government license, professional licenses, license to enter property, etc.).
While defining software licenses can get very complicated, this is a simple summary from a software attorney, that may help you understand what is a software license and how they are measured.