Software License An Introduction By Vishnu Kesarwani

Software License: An Introduction


Written by:

Vishnu Kesarwani
MS in Cyber Law and Information Security (2007‐2009)
Indian Institute of Information Technology‐Allahabad

Note: This article has been published in B’cognizance, an e‐magazine of IIIT‐Allahabad, in
two parts available from:
Part‐1: http://bcognizance.iiita.ac.in/Apr‐Jun09/index_files/Page5916.htm
Part‐2: http://bcognizance.iiita.ac.in/Jul‐Sep09/technova_part_2.html


Moving towards the click world the concept of software piracy has shaken the IT world and
has emerged the need of software licensing to protect the originality and the right of
owner.  This article is an effort to bring forth the concept of what software licensing is and
to develop an understanding to various types of software license.

A software license is a legally recognized agreement that governs the usage or
redistribution of copyright protected software between the license issuer (software
publisher) and the license receiver (end user). Sometimes it is also referred as the End User
License Agreement (EULA). Through this some restrictions are placed on the end user in
relation to the software. Restrictions can include installation of software more than the
license given to user, duplication and modification of software, editing the code, reverse
engineering etc.

This legal instrument can be on paper but it is most often imbedded in the software itself as
part of the installation process. If the user does not agree to the terms and conditions of the
software license, (S)he can click on “Disagree” or “No” button and come back from
installation process.

Software License and Copyright

The copyright concerns with protecting the human intellect and provides an exclusive right
to the owner of the work. Copyright provides the owner of software to reproduce the work,
to issue copies of the work to public, to sell or give on hire the software, to do any
derivative work, to modify the software and so on. Copyright owner can give these rights to
any other person through assignment or license and can take any consideration from that
person. The copyright holder can give the assignment or license for a certain period of time,

Written by: Vishnu Kesarwani Page 1


or for a particular country, region or throughout the world. Through these copyright holder
protects his right and makes profit and also provides benefit to the world through his work.
Thus software license is one of the mean through which the owner’s right gets protection
and copyright enhanced the boundary of such intellectual property.

Types of Software License

Every software contains a license agreement and license agreement contains various terms
and conditions as per the legal requirements of the concerned country. But software
license can be classified into following three categories:

1. Based on the mode of contract

We can categorize the software license based on its mode to enter into a contract. We
can enter into a contract in two ways:

1.1. Negotiable

It is a traditional form of contract in which one party offers the other party for a
contract to sell or buy software and other party accept this offer and
communication it to the first party and thus, both parties make a free consent to
enter into the contract for a valid consideration. In this mode of contract, both
parties have the same possibility to negotiate for the terms and conditions and
consideration of the contract. Thus, both parties come into a valid contract.

1.2. Nonnegotiable

Non‐negotiable contract is also known as Standard Form of Contract in which a
dominant party sales their goods or services on a predefined terms and conditions
and consideration. Software companies cannot negotiate to each end‐user of their
software. So, they launch their software for sell into the market on predefined
terms and conditions and a consideration and the end‐user bind to buy the
software on the said terms and conditions and price. There are its two categories:

1.2.1. Shrinkwrap License

Shrink‐wrap license is a software license in which license agreement in
printed on or enclose within the software package and shrink‐wrapped with
a transparent plastic that is accessible when the customer purchases it. The
terms of license agreement are printed on a paper included inside the plastic
sealed box of the software package. When the end‐user breaks the plastic
seal which is tightly fits the software, it regards that (s)he has given his or
her consent to the licensing terms and conditions.


The lawfulness of shrink‐wrap license is unclear. In ProCD v. Zeidenbergi, the
court held that “shrink‐wrap licenses are enforceable unless their terms are
objectionable on grounds applicable to contracts in general (for example, if
they violate a rule of positive law, or if they are unconscionable).” But this
case does not solve many questions regarding shrink‐wrap license. It is
submitted that the court erred in three significant respects:ii

(a) It failed to make the requirement of notice as a precondition to enforce
the contract;

(b) It didn’t to take into account the intangible nature of the subject matter of
the case; and

(c) It may have given excessive control to the manufacturer of software.

In another case, Klocek v. Gateway, Inc.iii, the court decided that shrink‐wrap
licenses are unenforceable. But in Brower v. Gateway 2000, Inc.iv the court
found that a shrink‐wrap contract formed when the plaintiffs retained the
software form longer than the 30 day “approve or return” period. But certain
contract terms relating to the arbitration provision at issue were not
enforceable.

1.2.2. Clickwrap License

Click‐wrap license is, basically, internet based agreement which requires the
consent of the party by the way of clicking the button “I accept”, “I agree” or
“OK” on the predefined terms and conditions. This can be found during
installation of any software downloaded from the Internet.

The terms and conditions of license or service don’t always appear on the
same window or webpage but these are always accessible to the end‐user
before acceptance, such as through scroll bar end‐user can access the whole
terms and condition during the installation of software or through clicking on
the hyperlink dedicated to terms and conditions embedded in the webpage of
the software. If the end‐user wants to reject these, (s)he can click on “Cancel”
button.

It is notable that though courts have held that click‐wrap licenses are
enforceable but every terms and conditions of click‐wrap license is not
enforceable. It must meet the enforceability criteria of contract law.



2. Based on the relationship between the parties

Another type of software license is based on the relationship between the parties. This
type includes following licenses:

2.1 DeveloperPublisher License Agreement

This license agreement has been done between the developer and publisher of the
software. For this license, negotiation between them is very important. The terms
and conditions of this license include clauses of royalty, geographical scope and
further development of software.

2.2 PublisherDistributor License Agreement

As above, this license agreement has been done between the publisher and
distributor of the software. The terms and conditions include the clauses for
distribution of the software in domestic country and foreign country or may also
include a region. Mostly parties put this clause for maximizing the profit and market
penetration. License may provide exclusive right to distributor regarding the
software.

3. Based on freedom

This categorization grants the end‐user freedom regarding the software that includes
right to use, modify, redistribute, improve the software, right to do reverse engineering
on the software and others rights also.

3.1. Proprietary Software License

Proprietary software is a type of software in which end‐user has the right to use it
only and has not been gotten source code of the software. So the end‐user has no
right to read, modify and redistribute its source code. Thus computer software
remains one’s legal property and one has all rights regarding the software. Due to
this reason, it can also be called as closedsource software. It usually can be
distributed for a fee or at no cost. In proprietary software license, license issuer
grants a license to end user to use one or more copies of software, but the
ownership of those said copies remains with the copyright holder of that software.
Consequently, all rights regarding the software are reserved to the copyright
holder and only limited but well defined rights regarding the software are provided
to the end‐user.



3.2 Free Software License and Open Source Software License

Free Software License

A free software license is a license for software in which end‐user gets more
freedom than the proprietary software. This freedom includes the right to use,
modify, and redistribute the software and so on that end‐user cannot get under
copyright law. Thus “Free software” is the matter of freedom instead of price.

Free Software Foundation defines the “Free Software” as:

“Free software is a matter of the users' freedom to run, copy, distribute, study, change
and improve the software. More precisely, it refers to four kinds of freedom, for the
users of the software:

• The freedom to run the program, for any purpose (freedom 0)
• The freedom to study how the program works, and adapt it to your needs (freedom
1). Access to the source code is a precondition for this.
• The freedom to redistribute copies so you can help your neighbor (freedom 2)
• The freedom to improve the program, and release your improvements (and
modified versions in general) to the public, so that the whole community benefits
(freedom 3). Access to the source code is a precondition for this.”v

If any software provides above freedom to the end user, that software comes into
the regime of free software.

Open Source Software License

Open Source Initiative (OSI) is an organization that promotes the open source
movement. This organization manages and promotes the Open Source Definition
(OSD) and it certification mark for open source products and licenses.

Open source software license is based on the thought that if the users including
programmers can read, modify and redistribute the source code of software,
software shall develop. Users of software will also help to improve the software and
try to fix bugs in it.

According to OSD, the distribution terms of open source software must comply with
the following criteria:

1. “The license shall not restrict any party from selling or giving away the
software as a component of an aggregate software distribution containing



programs from several different sources.
2. The program must include source code, and must allow distribution in source
code as well as compiled form.
3. The license must allow modifications and derived works, and must allow them
to be distributed under the same terms as the license of the original software.
4. Integrity of the Author's Source Code must be maintained.
5. The license must not discriminate against any person or group of persons.
6. The license must not restrict anyone from making use of the program in a
specific field of endeavor.
7. The rights attached to the program must apply to all to whom the program is
redistributed without the need for execution of an additional license by those
parties.
8. License must not be specific to a product.
9. The license must not place restrictions on other software that is distributed
along with the licensed software.
10. No provision of the license may be predicated on any individual technology or
style of interface.” vi

Categories of Free/Open Source Software License

A. Copyleft

Traditionally, in proprietary software copyright holder has all exclusive right
regarding the software and says “copyright, all right reserved”. Whereas, Copyleft is
a general method for making a program or other work free, and requiring all
modified and extended versions of the program to be free as well.vii Copyleft license
provides more freedom than copyrighted work. Through copyleft license, author of
the software gives the end‐user who receives the copy of a software permission to
modify, redistribute, derivate the work, reverse engineering and other rights as long
as any resulting copies or derivative work are also bound by the same copyleft
licensing scheme. GNU GPL (General Public License) is the example of copyleft
license.

This is a scheme of copyright licensing in which author of the work surrenders his
rights but not all. It is also different from the works in Public Domain in which there
is no copyright restriction in the work. Under copyleft, there are only some
restrictions such as any modified or derivative work will also follow the copyleft
scheme. The author, who makes their software free, simply can disclaim their rights
as a copyright holder. This will help the author to protect their work being
privatized and closed again. Thus copyleft license says “copyleft, all right reserved”.



B. Permissive Free Software License

The permissive free software license is a type of free software license for a copyright
protected work. This license provides more freedom than freedom provided by
copyleft license. It is close to a public domain work because it offers many of the
same freedoms as a work released in public domain. It grants the end‐user
permission to do anything with the source code which they wish. The permissive
license goes one step more and grants the end‐user the right to take the code and
use it as a part of proprietary software. The examples of permissive software license
are BSD license and MIT license.

Thus, above are certain types of software license. These are being seen different but some
time software can be issued one or more licensing terms that is called multiple licensing.
Example of this license is MySQL that is issued in both GNU General Public License and
commercial license. Above three category of the software license are also interrelated to
one another.

Conclusion

On the basis of above discussion, we can say that there is the license provision exists for
software. But the ultimate objective of the license is to protect the right of the owner and to
impose certain liabilities on the end user. The owner cannot go beyond the written
agreement and end‐user cannot violate the terms and conditions of license.

********

i
86 F.3d 1447 (7th Cir., 1996)
ii
Finkelstein, Thomas "Shrinkwrap licenses: Consequences of breaking the seal". St. John's Law Review.
FindArticles.com. available from  http://findarticles.com/p/articles/mi_qa3735/is_199710/ai_n8778077 accessed
on 25 Mar, 2009
iii
2000 U.S. Dist. Lexis 9896, 104 F. Supp.3d 1332, available from
http://www.internetlibrary.com/cases/lib_case209.cfm accessed on 05/04/2009
iv
676 N.Y.S.2d 569, available from http://www.netlitigation.com/netlitigation/cases/brower.htm accessed on
05/04/2009
v
The Free Software Definition, available on http://www.fsf.org/licensing/essays/free‐sw.html accessed on
02/04/2009
vi
The Open Source Definition, available from http://www.opensource.org/docs/osd accessed on 01/04/2009
vii
What is Copyleft? Available from http://www.fsf.org/licensing/essays/copyleft.html accessed on 05/04/2009


Software License An Introduction By Vishnu Kesarwani

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