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Author - Associate Aliza Abdin

A software license agreement is a legal contract between the purchaser of the software and the seller/licensor. Its primary use is to make the purchaser aware of its benefits and how and where it can be availed. It gives the purchaser a briefing of where, how, and the number of times it can be installed. It also protects the rights of both the licensor and the purchaser.

It is a full package of everything the purchaser needs to know about the software- ranging from its pricing details to the knowledge of the purchaser to be able to copy, change or redistribute it. It also includes all the restrictions on the use of the software.

What The Software License Agreement Includes:

· Information About The Agreement: The most important aspect of an agreement is the information that it carries. All the questions that the purchasers have for the licensor are answered here, in this section. They can find information like how and when the agreement will go into effect and how long the agreement will be valid.

· The Two Parties Entering The Contract:  The agreement also includes the names and details of both the parties, i.e. the licensor and the purchaser entering the contract. In case of any fraud or infringement, the contact details (contact number, address, etc) can be extracted from here.

· Terms And Conditions Of The Agreement:  Another very important part of the agreement that needs to be read thoroughly if you’re the purchaser. It covers almost everything such as the price (sometimes maintaining fees too), refunds offered by the licensor and whether the licensor allows the purchaser to use the software on more than one system.

 · Extra Details: This, being the last part of the agreement covers particular details that may be of use to the purchaser, this is also where both the parties sign and complete the agreement.

When was the law made?

When mainframe computers were first introduced the scope of software license agreement was less and thus contracts for this type of framework were few and the lawyers of both the parties would just discuss the terms and conditions of the agreement. But when personal computers were introduced in the market and available to all, a need for software license agreements arose. Since now the lawyers couldn’t do a face to face discussion so software license agreement was standardized. 

Laws Dealing With Software License Agreement In India:

The following laws govern the software license agreement in India.

 • Copyright’s Law: This law in India is coeval and competent and is framed accordingly by the changes required by TRIPS. It gives a detailed account of the activities that are regarded as copyright infringement.  

For example,

1. Making copies of a computer programme obtained from a non-commercial personal legal copy is not regarded as copyright infringement.

2. The study or testing of the computer programme so as to explore the content and principles of the elements is also not regarded as infringement.

3. The sale of the copyrighted programme without the licensor’s knowledge is however regarded as infringement.

4. If the purchaser introduces the disabling code in the software to make the software stop working then it is regarded as breach of software agreement.

• Contract Law: It deals with the breach of contract (under section 75). Any violation from the terms and conditions given in the contract are dealt with accordingly by this law, however, the violation is to interpretation of the terms and conditions and logic.

• Trade Secret Law: Although there is no proper trade secret law in India yet the breach of confidentiality is dealt with properly and accordingly with the help of the Indian Contract Act. 

• Income Tax: In India, the income that a licensor generates from allowing the purchaser to use its copyrighted software is in fact sale of the copyrighted article without the transfer of copyright and this is not royalty under Sec 9(1)(vi).

   Impact Of Software License Agreement:

The software license agreement has proved to be a big benefit for the licensors and to some extent to the purchasers as well. The agreement provides the licensor a safe and legal contract to protect its respective copyrighted software from various frauds and infringements. 

 In the United States of America, under Section 117 of the Copyright Act, the purchaser of a specific copy of the software has the rights to use it with a computer even if the use requires the modification and the production of incidental copies.  Thus, if the user of the software is the owner of the respective copy, then the user can lawfully use the software without a license.

 In India, the Software License Agreement includes man clauses such as non-exclusivity, just in case the licensor wants to give the software to other companies too, then it should make sure that the agreement mentions that it is non-exclusive and in this way the licensor can continue to make a profit from it. It has also included the clause of Non-transferability so that the purchaser may not be able to sell the software and transfer ownership to other parties.  It includes other clauses like restriction on modification and governing laws, whose help can be taken in case of any infringement.

All this has given a boost to the software developing companies and they have stable and better laws to protect their respective copyrighted software.