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Software license agreement
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A software license agreement is a contract between a producer and a user of computer software which grants the user a software license. Most often, a software license agreement indicates the terms under which an end-user may utilize the licensed software, in which case the agreement is called an end-user license agreement or EULA. When the software license agreement is between the software licensor and a business or government entity, it is often implemented as a specialized form of contract with many clauses unique to the license and the nature of the software being licensed.
end-user license agreements accompany shrink-wrapped software that is presented to a user sometimes on paper or more usually electronically, during the installation procedure.
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A software license agreement is a contract between a producer and a user of computer software which grants the user a software license. Most often, a software license agreement indicates the terms under which an end-user may utilize the licensed software, in which case the agreement is called an end-user license agreement or EULA. When the software license agreement is between the software licensor and a business or government entity, it is often implemented as a specialized form of contract with many clauses unique to the license and the nature of the software being licensed.
End-user license agreement
Some end-user license agreements accompany shrink-wrapped software that is presented to a user sometimes on paper or more usually electronically, during the installation procedure. The user has the choice of accepting or rejecting the agreement, often without reading it first. The installation of the software is conditional to the user accepting the agreement and thereby agreeing to abide by its terms. Once the user has installed the software, he or she then has the opportunity or option of returning to the agreement to read the license agreement in detail.
Many EULAs assert extensive liability limitations. Most commonly, a EULA will hold harmless the software licensor in the event that the software causes damage to the user's computer or data, but some software also includes limitations on whether the licensor can be held liable for damage that arises through improper use of the software (for example, incorrectly using tax preparation software and incurring penalties as a result). One case upholding such limitations on consequential damages is Some EULAs also include restrictions on venue and applicable law in the event that a legal dispute arises.
Some copyright owners use EULAs in an effort to circumvent limitations the applicable copyright law places on their copyrights (such as the limitations in sections 107-122 of the United States Copyright Act), or to expand the scope of control over the work into areas for which copyright protection is denied by law (such as attempting to charge for, regulate or prevent private performances of a work beyond a certain number of performances or beyond a certain period of time). Such EULAs are, in essence, efforts to gain control, by contract, over matters upon which copyright law precludes control.
In disputes of this nature, cases are often appealed and different circuit courts of appeal sometimes disagree about these clauses. This provides an opportunity for the U.S. Supreme Court to intervene, which it has usually done in a scope-limited and cautious manner, providing little in the way of precedent or settled law.
Free software license
Some license agreements grant considerably more rights than most EULAs provide. A free software license grants the right to modify and redistribute the licensed software for any purpose, both of which would ordinarily be forbidden by copyright law without prior consent from the copyright holder. In some cases only copyleft distribution rights are granted, only granting a license to distribute the software along with the complete source code or only with some specific form of attribution of authorship.
Shrink-wrap and click-wrap licenses
The term shrink-wrap license refers colloquially to any software license agreement which is enclosed within a software package and is inaccessible to the customer until after purchase. Typically, the license agreement is printed on paper included inside the boxed software. It may also be presented to the user on-screen during installation, in which case the license is sometimes referred to as a click-wrap license. The inability of the customer to review the license agreement before purchasing the software has caused such licenses to run afoul of legal challenges in some cases.
The legal status of shrink-wrap licenses in the US is somewhat unclear. At particular issue is the difference in opinion between the courts in and . Both cases involved a shrink-wrapped license document provided by the online vendor of a computer system. The terms of the shrink-wrapped license were not provided at the time of purchase, but were rather included with the shipped product as a printed document. The license required the customer to return the product within a limited time frame if the license was not agreed to. In Brower, the Supreme Court of New York ruled that the terms of the shrink-wrapped license document were enforceable because the customer's assent was evident by its failure to return the merchandise within the 30 days specified by the document. The U.S. District Court of Kansas in Klocek ruled that the contract of sale was complete at the time of the transaction, and the additional shipped terms contained in a document similar to that in Brower did not constitute a contract, because the customer never agreed to them when the contract of sale was completed.
Click-wrap licenses have met with more support in the courts, though notable counterexamples exist. In ProCD v. Zeidenberg, the license was ruled enforceable because it was necessary for the customer to assent to the terms of the agreement by clicking on an "I Agree" button in order to install the software. In Specht v. Netscape Communications Corp., however, the licensee was able to download and install the software without first being required to review and positively assent to the terms of the agreement, and so the license was held to be unenforceable.
Copyright
For the license to take legal effect, the licenser must be able to present proof that the presumed licensee has been willing to sign away the copy owner rights granted under copyright: The , , equates computer programs with literary works. Thus, computer programs are automatically placed under copyright, which grants the copy owner normal rights use, and others fair use of the computer material. The signing away of one's legal rights can normally only be done by a properly signed paper contract, or under some circumstances, orally if supported by witnesses or recordings, or, in even more restricted use, via electronic signatures issued by the local government, as a person charged with violating a license agreement otherwise can merely claim not to know who opened the box or clicked the agreement box in the install software, and it is not possible for the licenser to provide proof of who is the purported licencee, nor has a person accused of breaching a license agreement any obligation to provide such proof. In addition, legal rights can only be signed away if local law permits it; so a properly signed paper contract may not be enough to abrogate copy owners' rights, unless there are special legal provisions admitting it. The amendment of the United States Code, Chapter 17, codified as , permits the owner of a copy of a computer program to make copies necessary for the use or backup of a computer program.
Until USC 117 was enacted, the very act of copying computer software from a storage device into temporary memory (which is necessary to run the software) may have been prohibited in the United States. Typically, a proprietary software license agreement will interpret 117 in plain English.
For example: "You may use the software on one computer, and you may make an additional copy to be used only for backup or archival purposes. You may not otherwise copy, modify [...] the software."
However, a growing number of such licenses are taking advantage of the ambiguous wording within 117 to make a distinction between the "owner" of a copy and one who merely "possesses" a copy by purporting to create a rental agreement in which the publisher of the software retains ownership of the medium on which the software is shipped.
Product liability
Most licenses for software sold at retail disclaim (as far as local laws permit) any warranty on the performance of the software and limit liability for any damages to the purchase price of the software. One well-known case which upheld such a disclaimer is .
Patent
Some countries, such as the United States, allow the patenting of a generic computer that runs a novel algorithm.
A software license agreement (SLA) may grant limited non-exclusive rights under applicable patents that the publisher holds.
Trade secret
In an effort to protect trade secrets embodied within software, agreements may prohibit users from reverse engineering. This may also serve to make it difficult to develop third-party software which interoperates with the licensed software, thus increasing the value of the publisher's solutions.
Some licenses limit the user's right to release data on the performance of the software.
Enforceability
In the United States
The enforceability of an EULA depends on several factors, one of them being the court in which the case is heard. Some courts that have addressed the validity of the shrinkwrap license agreements have found some EULAs to be invalid, characterizing them as contracts of adhesion, unconscionable, and/or unacceptable pursuant to the U.C.C. —see, for instance, Step-Saver Data Systems, Inc. v. Wyse Technology (939 F.2d 91), Vault Corp. v. Quaid Software Ltd. () and Rich, Mass Market Software and the Shrinkwrap License (23 Colo. Law 1321.17). Other courts have determined that the shrinkwrap license agreement is valid and enforceable: see ProCD, Inc. v. Zeidenberg (), Microsoft v. Harmony Computers (846 F. Supp. 208, 212, E.D.N.Y. 1994), Novell v. Network Trade Center (), and Arizona Cartridge Remanufacturers Association Inc. v. Lexmark International Inc. may have some bearing as well. No Court has ruled on the validity of EULAs generally; decisions are limited to particular provisions and terms.
The 7th Circuit and 8th Circuit subscribe to the "licensed and not sold" argument, while most other circuits do not . In addition, the contracts' enforceability depends on whether the state has passed the Uniform Computer Information Transactions Act (UCITA) or Anti-UCITA (UCITA Bomb Shelter) laws. In Anti-UCITA states, the Uniform Commercial Code (UCC) has been amended to either specifically define software as a good (thus making it fall under the UCC), or to disallow contracts which specify that the terms of contract are subject to the laws of a state that has passed UCITA.
Recently, publishers have begun to encrypt their software packages to make it impossible for a user to install the software without either agreeing to the license agreement or violating the Digital Millennium Copyright Act (DMCA) and foreign counterparts.
The DMCA specifically provides for reverse engineering of software for interoperability purposes, so there was some controversy as to whether software license agreement clauses which restrict this are enforceable. The Eighth Circuit case of Blizzard v. BnetD () determined that such clauses are enforceable, following the Federal Circuit decision of Baystate v. Bowers.
See also
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