Not For Keeps

You paid for your software, but it doesn't belong to you.
Magazine Contributor
2 min read

This story appears in the May 2000 issue of Entrepreneur. Subscribe »

Buy off-the-shelf software, and it's yours to do with as you please, right? Wrong. You didn't actually purchase the software, but rather a license to use it. "A software license is a contract under which the owner of the copyright of the software authorizes the end user to use the software in a particular way," says Allan P. Weeks, an attorney and partner with Shipman & Goodwin LLP in Hartford, Connecticut. "The use is constrained by the terms of the license and U.S. copyright law."

Weeks says two types of software license agreements are currently in use: a bilateral agreement and a shrink-wrap or click-wrap license. In a bilateral agreement, the parties negotiate the terms of the license. The shrink-wrap (for packaged software from a store or catalog) or click-wrap (for software downloaded from a Web site) license is a standard form that typically limits the number of computers on which you can load the software, limits copying the program, forbids making it part of a network unless you buy a network license, and sets conditions relative to liability, indemnifications and warranties.

If you don't get the appropriate license and pay for it, you could face charges of U.S. copyright law violations. Also keep licensing in mind when you have software created especially for your company. Unless you have a contract that states otherwise, the author of the software owns it-even if you've paid that person to develop the software for you. Have contracts for software development reviewed by an attorney with expertise in intellectual property before you sign them.

For more information, contact the Software and Information Industry Association, 1730 M St., NW, #700, Washington, DC 20036-4510, (202) 452-1600, www.siia.net.

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