Software Program Licensing Overview

The licensee is often prohibited from transferring, sub-licensing, or providing third events with entry to the software program. For instance, can the licensee add more customers, machines, etc. upon discover and cost of licensor’s then current-fees?

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These choices are sometimes made by a licensee’s inside expertise staff who have a look at a company’s inside capabilities and current and future software program requirements holistically. In some circumstances, by negotiating a number of the definitions concerned, a licensee may be able to acquire rights to successor products without the cost of an additional payment. As famous above, licensees can gain flexibility by making certain that “licensee” is defined more broadly or that license rights with respect to the software program prolong to 3rd events outdoors of the licensed entity. The software license agreement typically supplies for a limitation on the licensor’s liability.

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One part limits the type of damages recoverable from the licensor, such as consequential, incidental, oblique or punitive damages. Another part will restrict the licensor’s aggregate liability, often to a set dollar determine, the amount the licensor has obtained from the licensee in a certain period of time or another method. In some software program licensing agreements, licensees will negotiate acceptance testing provisions with specific treatments if the software fails to conform or carry out according to designated standards. Licensors resist acceptance testing and sometimes take the place that their performance or conformance warranty is all that’s wanted.

In some transactions, solely components of what a licensee is paying are taxable and in different deals, a transaction is probably not taxable at all depending on the jurisdiction and the actual details and circumstances concerned. A licensee should make certain it is reviewing the software program license settlement in its entirety and never bits and items with schedules and exhibits omitted. These response and resolution occasions are sometimes tied to severity levels, with the licensor’s duties lowering with decrease severity ranges. In some cases, licensee’s cures beneath help and maintenance provisions are limited to obtaining limited financial credit score against future services. In these instances, a licensee may want review applicable termination provisions to find out if modifications are wanted to provide the licensee an exit right if there are repeated points that the licensor fails to resolve.