An end user licensing agreement is also known as a software licensing agreement. It is used by the licensor, who is usually the distributor of the software or product. It will then need to be agreed to by either the purchaser or the user of the software. Most end user licensing agreements are used in a digital format.
There may be different versions of the licensing agreement for different types of users. For example, you may want to have one specifically for individual users and one for government entities or other large corporations.
A EULA, or end user licensing agreement, should include information about the product, the ways that a user is allowed to use the software, and any important disclaimers. The agreement may need to be updated over the course of the product's lifespan with new information and details.
Copyright License Agreement
Know-How License Agreement
Intellectual Property License Agreement
Patent License Agreement
Patent and Know-How License Agreement
Service Mark License Agreement
Software License Agreement
Trademark License Agreement
Trade Secret License Agreement
Trademark and Service Mark Agreement
A licensing agreement is needed if:
You have a patent, copyright, or trademark and want to make money off that item while protecting your proprietary rights
You want to provide usage rights to your intellectual property (IP) to another person or entity
You need to create an exclusive or non-exclusive agreement for the use of your property
You want to provide usage rights for a specific geographical location
You want to provide usage rights for another entity to manufacture your product
You want to set up a royalty agreement for the use of your property
You want to specify who owns the IP, who can use the IP, and how much the license for the IP costs, and how long the licensee can use the IP
Common scenarios for needing a licensing agreement include:
An advertiser wanting to use a popular trademarked slogan in a campaign
A hotel wanting to use a photographer’s pictures in a brochure
A company using a patented part in their equipment
A tech company wanting to post a blogger’s content on their website as a testimonial
Types of licenses include:
Exclusive License - An exclusive license give the licensee the exclusive right to use the IP. Not even the licensor is permitted to use the IP. Once the licensor grants one exclusive license, no other licenses can be granted.
Non-Exclusive License - A nonexclusive license grants a licensee the license to use IP, but the licensor remains free to use the IP or grant licenses to other parties. Many parties can hold non-exclusive licenses to the same IP at the same time.
Sole License - A sole license grants the licensee an exclusive license, but allows the licensor to also use the IP. No other licenses will be granted.
Co-exclusive license - A license may also specify that licenses will only be given to a limited group of other licensees, who could be specified by name, description, or number. This form of license is sometimes known as a co-exclusive license.
If you need a licensing agreement, you should look at a sample license agreement online. When creating a licensing agreement, you should consider including the following parts:
Names of licensor and licensee
Duration of contract and termination terms - Decide when the contract begins and ends and what actions might terminate the contract between the parties.
Exclusivity - Decide whether to grant an exclusive, non-exclusive, co-exclusive, or sole license.
License Terms - Here is where you would indicate if a licensee is only allowed to use the IP for a particular purpose. Also indicate whether the licensee is allowed to grant sub-licenses.
Geographical restrictions - Some licenses restrict the geographical area where a license can be used. This is done to prevent competition and is often done in franchise license agreements.
Royalty payments - Determine whether you will take a lump sum payment as valuable consideration or a per item fee or a percentage of net sales. This clause may also include a performance agreement that specifies that the licensee must achieve a certain level of performance or be in danger of losing their rights.
Property modifications - Decide whether to give the licensee the right to improve or modify your property. You can specify what types of changes you will allow and who will own the rights to the new and improved version.
Dispute resolution - Select the governing law and method of dispute resolution, should any conflicts arise. Many parties will choose to have a mediator or binding arbitration.
Warranties - This section guarantees what you promised to deliver. Typically you will warrant that the property that you provide will be error-free, and in good, final condition.
Confidentiality agreement and NDA - The licensee promises to protect the licensed property and confidential information.
Transferability - Indicate if this is a nontransferable license.
Most business property can be licensed. The most common types of licensed property include: trademarks, digital assets, copyrights, and patent licenses.
To license a property to another, you must first have the rights to the license. Typically this is done by having an original idea and then applying for the appropriate intellectual property protection: a patent, trademark, or copyright.
If you have an idea that you think others may want to use, it is advisable to seek legal counsel. A lawyer can assist you with making sure that you are protected and with drafting a fair licensing agreement that protects all parties. If you are negotiating a license with another company, they will typically be represented by an attorney. If the other party has an attorney, it makes sense to retain your own attorney to protect your interests.
If you do not have a licensing agreement, the owner of IP will be unable to make money off of it or control its usage. Parties who wish to use that IP might not have access to it or be unable to make money from it because too many other parties have access to it.
Without a licensing agreement, licensors suffer from lost time preventing others from using their IP, lost money for businesses using IP without paying for it, and loss of goodwill by having their trademark diluted.
Licensees suffer because they lose time defending their right to use the IP, the lose money because they are unable to capitalize on the goodwill of the IP, and they may have to deal with cease and desist letters and lawsuits from the IP owner.
An End-User License Agreement (EULA) is an agreement initiated between a person who purchases, installs, or downloads software, and the software developer/copyright owner or vendor; it conveys an end user license. A EULA is an important agreement for a software developer; it maintains control over how the software will be used. When a user/buyer installs, downloads, or uses copies of the software application, as computer software or a mobile app, they are, in reality, making a copy of the developer's copyrighted software; an end-user license agreement protects the copyright owner/licensor from copyright infringement and/or other misuse of the software.
A EULA details the rights and restrictions that apply to the use of the software and is often in digital form, presented to the user as a click-through the user must "accept." It is employed by a software developer to detail how the software can be used, cannot be used, and the rights the user/buyer of the software may or may not have. It is generally introduced to the user/buyer during the installation or set-up stage of the software; to complete the installation, the user/buyer must read and agree to the EULA.
An end-user license agreement, therefore, gives the user/buyer the right to use an application, but only as defined in the agreement; it imposes limits and liabilities that accompany the use of copyrighted software. Most end-user license agreements prohibit the user/buyer from sharing or distributing the software in any way that benefits the user/buyer instead of the original software/application developer.
Colloquially, a shrink-wrap license refers to a software license agreement that is contained in a software package and is not accessible to the user/buyer until after purchase. The license agreement is included inside boxed software or presented to the user on-screen during installation; the latter scenario is referred to as a click-wrap license.
EULAs are not legally binding. When a user/buyer agrees to the terms specified in the agreement, they are, in actuality, renting or purchasing a license from the supplier. No court has thus far ruled on the validity of EULAs generally; decisions have been restricted to specific provisions/terms. Enforceability of an EULA, therefore, depends on several factors, including the court that hears the case.
While a majority of jurisdictions have held that shrink-wrap licenses are enforceable, despite the inability of the user/buyer to review the license agreement before purchasing the software, some courts have ruled that certain EULAs are invalid, describing them as contracts of adhesion, unconscionable, and/or unacceptable under the Uniform Commercial Code, while other courts have found that the shrink-wrap license agreement is valid and enforceable.
The contract's enforceability also depends on whether the state in question has passed the Uniform Computer Information Transactions Act (UCITA) or Anti-UCITA (UCITA Bomb Shelter) laws. In Anti-UCITA states, the Uniform Commercial Code (UCC) has been amended to specifically define software as a good covered by the UCC or to disallow contracts that specify its terms fall under the laws of a state that has passed UCITA.
Every EULA should include the following sections/clauses; it is wise to seek legal advice from a reputable law firm or attorney regarding any questions about a EULA:
Licensor: This section includes the name, address, and other contact information for the software developer.
Licensee: This section includes the name, address, and other contact information for the user/buyer.
Software: This section includes the name of the software being licensed and any source code availability.
Maintenance and Support: This section states whether support and maintenance will be available for the software and the service providers, how it will be delivered, and how often it will occur/on what schedule.
Start Date: This section states at what point the user/buyer is bound to the terms and conditions of the EULA.
Site Licenses: This section states whether the user/buyer may install the software on more than one device.
License Granting: This section explicitly states that a license is being granted, giving permission for the licensee to use the software, and that the license is revocable, non-exclusive, non-transferable, and limited.
Restrictions on Use: This section details the limited license granted to the user/buyer -- the restrictions on the use of the license. This section often includes restrictions on reverse engineering of the software, copying the license onto multiple devices without authorization, using the software in an illegal fashion, and competition and solicitation. and protect proprietary traits of the app.
Copyright Infringement/Intellectual Property Rights: This section demands non-infringement of copyright/intellectual property rights. This clause should make clear the user/licensee will be held liable for legal issues that arise from infringement/any violation of copyright law.
Termination of Licensing: This section grants the software developer/copyright owner the right to terminate the license in the event of violations of use/other issues and states the violations/other issues that give the software provider the right to cancel the agreement. This clause is generally absolute, granting strong rights to the licensor rather than the user/buyer.
Warranty Disclaimer: This section states that the software is delivered "as is" and that the licensor/provider is not responsible for any problems that occur as a result of the software or altering/improving the software/app to satisfy the end user. This section can also include a limited warranty, such as a limit on tech support or the time frame for a refund, and a disclaimer of certain warranties, including implied warranties, that arise under common or state law, such as a warranty of merchantability.
Limitations of Liability: This section states that the provider or licensor will not be held responsible for any damages that arise out of the use of the app and limit liability for any damages to the purchase price of the software.
Governing Law: This section identifies the applicable law - the state laws that applies if a conflict arises.
Severability and Terms of This Agreement Waiver: This section states that If a court of competent jurisdiction determines that any provision of the agreement is invalid or unenforceable, the invalidity or unenforceability of such provision shall not affect the validity or enforceability of any other provision of the agreement. This section also states that waiver by any party of any breach of the agreement or failure to exercise any right under the agreement shall not be deemed to be a waiver of any other breach or right.
Entire Agreement: This section states that the agreement contains the entire understanding between the parties, and supersedes all previous discussions, communications, negotiations, understandings, representations, warranties, commitments and agreements, in respect of its subject matter.
A EULA does not protect the consumer (user/buyer) -- only the copyright owner. The developer/vendor owns the license and legally owns any private data the user/buyer enters into the software; the software owner can access, read, and/or share that private consumer data. In addition, many EULAs include terms that force users to agree to automatic updates, generally via a third party without notification to the consumer, possibly compromising security and privacy. EULAs are also subject to change without notice; by signing the contract, the user/buyer agrees to every change in future versions of it.
Further, many EULAs include demands for a consumer to give up fundamental rights, including those that forbid a user/buyer from comparing the product with another/publicly criticizing the product and those that attempt to forbid "benchmarking," determining the performance of hardware/software in a controlled, defined environment. Such restrictions limit an individual's free speech and restrain consumer watchdog groups that perform independent reviews of products, making it hard for consumers to obtain accurate product information. They also undermine competition, as only the developer can publish benchmarks comparing its products to open source alternatives; consumers can only obtain one-sided information. EULAs are also employed to force consumers to agree not to use products that evaluate the performance of the software program in question or that can uninstall all or part of it.
Some EULA provisions prevent the user/buyer from reverse engineering -- customizing the technology in question or inventing a new product that will work with it, despite the protection of that activity under federal law as a "fair use" of a copyrighted item; courts have ruled that the US Copyright Act's fair use provisions allow the reverse-engineering of software when the purpose is to create a non-infringing, interoperable program.
By restricting the user's/buyer's ability to reverse-engineer -- taking software apart to see how it works, an EULA makes it impossible for a consumer to alter software/devices to suit them or create a new product that enhances the software/device in question, thereby limiting competition.
Finally, the disclaimer of warranties clause, a disclaimer of any warranty on the performance of the software, and the limitation of liability clause, a limitation of liability for faulty software/any damages to the purchase price of the software or damage that arises through improper use of the software, both included in most EULAs, attempt to supersede and replace traditional consumer protection and products liability law.
A EULA that includes these clauses is attempting to prevent the consumer from filing a class-action lawsuit against the developer/vendor for a product that does not perform as advertised or a product that is faulty. Limitations on consequential damages (special special damages), damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation, have been upheld.