In the previous post, we described what a software license agreement is and what it essentially entails. Having discussed this, it is also very important to outline the standard provisions every standard software license agreement should ordinarily contain which is what we would be doing in this post.
What are these Essential Provisions?
Parties
Just like every agreement, a software license agreement must sufficiently identify all the parties involved and the capacity in which they are acting with respect to the agreement.
Terms and Conditions
This is perhaps the bulk of the agreement. This part may be defined as the operating manual of the parties determining the rights and obligations of the parties involved. These should be carefully worded to fully reflect Parties’ intent and avoid unintended consequences. Details such as device usage, mode of operation, etc must be provided.
Exclusivity/Transferability
This borders on the terms of use of the license itself. The duration of the license, the mode of license granted to the licensee must be well detailed. Whether or not the license is exclusive or non exclusive should be expressly provided. Also, whether the license can be transferred to a third party with or without approval need to be provided.
The Software Product
The software product for which the agreement was made must be sufficiently described in the form contemplated by the parties. This could be in the form of a design, source code, or any other product that can be validly classifiable as a software.
Intellectual Property
The software license agreement should identify the party in respect of which the IP in the product lie both during the pendency of the agreement and afterwards. This should be drafted carefully to ensure the party intended is the one with the IP right.
Termination
The terms and the mode of termination should be detailed in the agreement. Whether the termination should survive existing liabilities should also be stated. Other than the aforementioned, there are other standard provisions that should be included such as governing law, Damages for breach, etc. While there is no one size fit all approach to agreements as this depends on the particular case, the above generally provide the standard clauses a typical software license agreement should contain. Regardless, it is necessary to consult a lawyer for advisory and detailed drafting.
References
LegalNature, “The Basics of Software License Agreements” available at https://www.legalnature.com/guides/the-basics-of-software-license-agreements accessed on October 12 2023
Docue, “7 Essential Clauses to Include in Software Licensing Agreements” available at https://docue.com/en-gb/legal-hub/software-licensing-agreements accessed on October 12 2023