Understanding a licensing agreement
General Terms
People tend to think of software as a commodity something you buy off the shelf from a retailer, like a computer or a television. When you buy a commodity, you own the physical object, and all or most of the commodity’s value is essential to that object. However, when you acquire software, its value comes not from an object (such as the disk it is stored on) but from the knowledge of the programmers who wrote the software. You do not own that knowledge; you are merely acquiring a limited right to use it. In other words, software is an Intellectual Property and a licensing agreement between developer and customer, much like books or music. When you buy a book, you own the ink and the paper, but not the words and thoughts of the author. The same holds true for music, software, and all other intellectual properties.
Intellectual property includes ideas and creative expressions that have commercial value. By definition, these items are intangible and not easily defined or identified by their physical parameters. Hence, they are copyrighted. A copyright is an Intellectual Property Right (IPR) and is protected by international copyright laws. Intellectual Property Rights include copyrights, trademarks, and patents. These enable the owners of the intellectual property to decide who may access and use their property, and to protect it from unauthorized use.
A software license is usually a licensing agreement that grants a right to use software code to someone else. A license usually grants less right than a sale of a copy of the software. The rights to use the code are defined by the terms of the license.
Software is important; therefore software licenses are important. Today's businesses rely upon software to perform many critical functions. Software makes machines and systems work in every sector of the world economy - everything from applications that control advanced medical devices to programs that analyze the behavior of financial markets.
Software developers may want to make code available to other developers in order for applications to be more widely used in the market. Manufacturers and publishers may want to acquire rights to software that can make their products work in new ways or in ways compatible with users' existing computer systems.
In order to have the legal right to use software to achieve the required needs, the rights and limits in the associated software license take on critical importance.
The author of the software code frequently owns the code. In cases where the developer of the software is an employee of a company, the company is usually the author. The owner of the code controls who gets to use the code and how the code is used. The software license may define who can use the code and in what circumstances.
Standardized "end user license agreements" (EULAs) are common for most consumer and commercial mass produced software. When someone "purchases" software, the owner of the software typically requires the user to agree to license terms by clicking to indicate agreement to a set of terms that is required before the software can be installed or operated on a computer. The user is not really "purchasing" the software, but is licensing the software.
A license agreement for software can address a wide range of issues regarding the use of the software. It can specify how and where the software may be distributed and installed on the licensee's computers, and who may use the software.
For example, the software license may specify:
· How long the software may be used
· Under what conditions or in what systems the software may be used
· The support for the software (updates, upgrades, or technical assistance)
· The cost of the rights to use the software
· The warranty terms, if any
· The liability of each party for damages that result from the licensee's use of the software
· Ownership rights in the software, and any product that is developed using the licensed software
· How and where any disputes will be resolved
· The user's rights to obtain access to the source code from an escrow under certain circumstances, and
· Any other issues important to the parties
The Developer or Publisher
When the publisher's programs are pirated, they do not receive any money for their product. Software development can be very expensive, so the cost needs to be recouped in the shear bulk of sales. Without turning a large profit (not even just breaking even), they cannot afford to fund another round of research and development, and cannot create new and improved versions.
The Average Law-Abiding Consumer
In order for the company who makes the software to offset the effects mentioned above, they have to increase the per-copy price of the software. Even Microsoft is not immune to this; that's why they created a $300 version of Windows Vista, even though XP Professional only cost perhaps $200. The consumer also has to deal with the increased anti-piracy safeguards, such as entering a key code, or product activation, and sometimes even a special dongle one must plug into their computer.
The Pirate
A pirate is very susceptible to downloading a Trojan or spyware, both due to the fact that he / she likely does a lot of downloading in general, and because many supposed cracks and key gens are actually malware in disguise. The pirate can lose passwords to his email, MySpace, and even his bank account. Plus, a pirate also faces stiff fines and prison time if he is caught and the company decides to press charges.
Some other facts and drawbacks of the unlicensed versions of software are:
· Using Pirated copies of software license is Unethical act which should be discouraged
· Software developers discouraged
· Breach of intellectual Copyright Laws
· System might crash due to insecure environment
· Often Reinstallation required
· Might be cause to damage to your valuable data
· Users will not get any updates
· System Support will not be provided
Types of Licensing Agreements
Software licenses can have different types. They can be either perpetual or non-perpetual:
Perpetual Licenses
This is a license to use the software for an unspecified period of time. The license is paid for once and does not need to be renewed.
In other words, we can say, a perpetual license is a license that does not have a finite term, with a perpetual license the user owns the license and can use the software throughout the term of the licensing agreement and forever afterwards.
Non-perpetual licenses, or subscription licenses, are temporary and provide the right to use a particular licensed product until the end of the license-agreement term. ‘Defined end date.
With a non-perpetual license, like a rental agreement, the user can only use the software throughout the term of the licensing agreement.
Software licenses, however purchased, are an organization’s software assets. The management of these is called Software Asset Management (SAM).
Good SAM practices can help companies not to overspend on licenses, avoid fines and corrective license fees, to reduce the installation of illegal or infected software.
