Software licensing agreement in India

Author: Ayush Parikh

What is a software licensing agreement?

Software licensing is the act of allowing an individual or group to use a piece of software . Almost all applications are licensed without being sold. There are different types of software licenses. Some depend on the number of machines that can run a licensed program, while others depend on the number of users who can use the program. Some licenses allow you to run programs on different computers as long as you do not use copies at once. A software license (or software license in commonwealth use) is a legal device that regulates the use or redistribution of copyright-protected software.

Why do you need a software licensing agreement?

As a software developer, you have to spend a lot of time, money, and effort to design your software. To ensure that all efforts are worthwhile and bring monetary benefits, your software must be protected. This Agreement protects copyrighted software from various scams and infringements. Below are five main reasons why every software developer should conclude a software licensing agreement before selling your software.

1. Prevents software misuse

Unless there is a licensing agreement between the seller and the buyer, the seller can easily sell the software or duplicate it without the owner's permission. It makes your product easily available in the market and does not give you profit or recognition as a developer. Lack of a license agreement will not leave you anywhere as no solution can be found to the misuse of your product. The licensing agreement, therefore, prohibits business and software misuse.

2. Software license allows

To make your product available in the market, you must license it with a contract and not necessarily sell it. Licensing software is a good idea, as it allows you to retain all rights and prohibit the use of the software. Additionally, it gives you the freedom to license software to more than one customer and make money in the long run.

3. Allows warranties to be denied

Every customer has different expectations from the software you provide and sometimes those expectations are beyond copyright. To avoid such situations, the company may have a disclaimer of the warranty provision.

Types of Software Licenses

Software licenses generally fall into the following categories: proprietary licenses, free software licenses, and open source licenses. The characteristics that distinguish them in terms of their impact on end-user rights are important.

(A) Proprietary software is computer software that is the legal property of the party. Terms applicable to other parties are defined by agreements or licensing agreements. These Terms may include multiple powers to share, modify, separate, and use the Software and its code.

(B) A free software license may be a software license that entitles recipients to switch and redistribute software that's prohibited by copyright law. Free software licenses liberate recipients of licenses to modify or distribute copyrighted work.

(C) Open source software refers to any program whose source code is made available to users for use or modification and is freely available. Open source allows users to view and modify source code.

What are the important terms of a software license agreement in India?

The above four sections provide only an overview. But to defend oneself and to ensure that good evidence is concluded in the contract, the legal contract must contain the following provisions.

· Not unique

If the offer is a separate agreement and there is no non-exclusive provision, this may impede further licensing of the software. For example, A Ltd has licensed its voice modulation software to BK and their agreement is non-specific. C and D are also interested in the software of A and because A Ltd has entered into a non-exclusive agreement and they can license their software to C and D and make a greater profit.

· Non-transferable

The non-transferable clause in a contract does not give the licensee the right to transfer the software to a new customer or customer. This ensures that your customers are not compromised and that you have no enforceable contract with a third party. For example, when A Limited licenses its software to BK, there is no non-transfer clause in the contract. Now, instead of leasing C, A Ltd's software, the interested party receives it from B. This harms A Limited, which grows exponentially with each transfer.

· Right

Including the provision to protect your rights even after the execution of an agreement to protect the product. These rights include copyright, intellectual property rights, and distribution rights. The rights ensure that no part of your product is stolen by any user or market.

· Change

If you do not wish to modify your software or product in any way, your agreement should be as follows. Define the meaning of the provision amendments and the restrictions imposed on such amendments. The best way to ensure that your software contains its original content.

· Breach of contract

Violation of the terms of the contract should be included in the contract. This section stipulates that the licensee is free to terminate the Contract if the terms or conditions of the Agreement are not complied with. For example, A Ltd provided its software without any modification when it was leased and B modified the software to suit its needs

· Limitation of liability

This section states that the licensee has accepted the Software as it stands and that there is no warranty for the use of the Software. As discussed earlier, this provision provides a shield for the software leasing company. Without this provision, the company will be open to unlimited litigation.


The software license agreement is an essential tool to protect the rights of the owner as it prevents misuse of the software, permits the licensing of the software, allows the warranty to be denied, limits the owner's liabilities, and usage.

References :

1) The history of English law before the time of Edward I

Book by Sir Frederick Pollock, 3rd Baronet

2) Bleak House(Paperback Edition) by Charles Dickens by Hablot Knight Browne by Nicola Bradbury by Terry Eagleton

3) Charles A. Reich, The New Property, 73 Yale L.J. (1964). https://digitalcommons.law.yale.edu/ylj/vol73/iss5/1

4) Meritor Savings Bank v. Vinson, 477 U.S. 57 (1986)

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