Software Transfer Agreement

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    Intellectual property is under attack from an unexpected side. Who could have imagined that Midwestern grandmothers would exchange pirated copies of knitting instructions on the Internet? ”

    Linus Torvald

    The Linux founder is right. Software is most at risk of non-legal use among all intellectual property products. So it’s time to protect yourself and your business. If you want to transfer a software agreement, we will tell you how to do it.

    What is software license agreement

    Companies spend huge amounts of money on R&D, creating extremely valuable software. When considering the release of its software product, the right holder chooses the most attractive way for him.

    One way is to provide the development for use by others for a license fee. The owner wants to feel as protected as possible. And this is true because he pays for his development accordingly.

    The Software License transfer Agreement is a contractual way of protecting both the copyright holder (licensee) and the user (licensee). That is why the right holder and the user should stipulate at the stage of the software copyright transfer agreement the terms and conditions for the use of the software, which can reduce all potential business risks.

    First of all, the role of “contract architect” is assigned to the right holder (he is also the licensor), since: a non-exclusive license is usually a standard (template) legal construction that allows you to scale your business.

    The less initiative the licensee has, the more protected the owner is.

    Atrium Business Solutions

    Types of software licenses

    Types of software licenses

    The programs are divided into two large groups – free use (free and open license) and non-free (commercial license). Different types of licensing apply to each type of software product.

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    Let’s briefly understand what each license type is:

    • OEM. Installed software is one of the cheapest options. It consists in the fact that the user purchases the software together with the computer or server and can only use it on a purchased PC.

    • Full Package Product. The “box” product is used mainly for retail trade and is convenient for individuals or small businesses. Permission to use the software on a single computer is provided by the purchase of one “box” and no matter how many people will use this PC.

    • Volume Licensing. A corporate license is convenient for companies that have many employees, computers, and therefore need to buy many licenses. In this case, the company receives a single license for the software, which contains information about the customer (name, address, etc.), a list of software and keys for its installation.

    • Subscription. A software license subscription requires monthly or annual payments. This scheme is useful for companies that purchase more than 10 licenses.

    How transfer a software license agreement?

    The Software transfer agreement must specify how the user may use the software and other restrictions. The use of the licensed software by a user outside the scope of the license is a violation of the rights of the copyright holder. If the user violates the limits specified in the software copyright transfer agreement, then he risks suffering adverse consequences, including the financial liability to the right holder and early termination of the license or technical termination of use of the software. Therefore, determining the type of license in the contract and specifying the mutual rights and obligations of the parties is an important aspect of the parties’ agreement.

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    It is also important to identify who will use the software. The software license may limit the total number of users, or restrict the use of the software by certain persons, or limit the maximum number of concurrent users, etc.

    In the case of cloud services, the login and password of access under the ban to provide to third parties. In this case, the software is not always installed on the device, which can lead to abuse if such a password is passed on to third parties.

    The goals, territory, and length of licensed software use are just as important.

    Legal obligations

    To prevent the use of licensed software that exceeds the scope of a license, it is important in the software transfer agreement to provide for the use of license management technologies (such as time-limited or special license keys, their upgrades, or additional verification).

    Of course, some types of licensing restrictions and requirements cannot be controlled by technological means, and in such circumstances, the right holder can only hope on the honesty of the user. Alternatively, provide for:

    1) the obligation of the user to provide the owner with reports at some intervals on the use of the software (number of installations and consumers);

    2) the right of the right holder to audit the software (verification of unauthorized use).

    Therefore, it is important to pay sufficient attention to the issue of programmatic audits. In particular, it is important to prescribe the policies and procedures, methods and tools, confidentiality, and, of course, the commercial aspects of the audit.

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    Developing a license agreement has no template solutions. So, to summarize, you should be “disappointed” about the absence of universal tips. Therefore, first, the business model of the software developer, his software product, a portrait of the “user” (licensee) is studied, and only then the client is offered an individual approach in legal support and development of the license agreement.

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