Whether a software license agreement is properly configured for a transaction depends on various factors. Of course, management of copyright owners' intellectual property rights is an important consideration. This defines the area (usually country) for using the software.
Software development contract
An important indicator of complexity is whether software licenses are part of a larger agreement to develop software from scratch - ordered word orders may ring several bells It is that. If the computer software is developed according to the contract, the proper advice is that specifying what the software does at the end of the day should be incorporated into the contract. Whether it is called functional specification, functional requirement or requirement document is not important. The important thing is that it defines what the software does with reasonable clarity. Of course, at the functional level.
Package software agreement
There is also a software license for packaged software. In this case, the software was not created based on a person's specific specifications, but rather the software supplier was having trouble identifying the market needs and built the software to fill the gap in the market. In many cases, niche software incorporates configuration options that handle various settings to accommodate different types of business. Therefore, the accounting package can be tailored to 10 to 1,000 businesses. The point is this: Software of this nature is basically packaged and sold as it is. It may be necessary to perform extended configuration according to the needs of a specific client, but it is finally packaged, and software is incorporated in a specific specification as in the case of a software development contract It is not.
The difference may be obvious in this respect, but the wrong agreement has been made over and over again and again.
After determining the basic nature of the software, some of the other things that are frequently dealt with so-called software license agreements are:
1. Provision of maintenance and support services
2. Installation and Testing
3. Service level agreement, offer improvement (hot fix, update or upgrade). Services related to software can be agreed in separate documents or incorporated in the same contract as software license. We will return to the following.
Intellectual property right
License terms
Assuming that software suppliers are not going to assign software copyrights to licensees, the license terms are very important for software suppliers. Further software development.
At the most general level, three types of licenses are permitted: non-exclusive license, exclusive license, exclusive license. However, licenses are only permitted, so anyway the parties may want it. Software suppliers often want to license software to many clients. In this case, the license is a non-exclusive license. This is because software suppliers grant Licensee non-exclusive right to use the software. Social licenses do not occur very often, meaning that the licensor (software supplier) will grant the party a single license to use the software and retain the right to use the software itself. There is an exclusive license at the other end of the license spectrum. An exclusive license is granted if the software supplier wishes to grant licensee the right to exclude other software and use the software. Care needs to be exercised in granting an exclusive license in order for the court to examine the terms of the exclusive license and to determine whether it is virtually assigned. If so, the court will order the licensing period not to be a legal license, but to transfer all rights of the software to the software supplier.
Here is a simple example of the complexity you can introduce when granting licenses.
Suppose that the supplier designs and builds software that manages the courier of the document from the office to the office. Software suppliers can grant non-exclusive licenses to companies in certain transactions (eg, using software for banks). These licenses may be restricted to use in certain areas such as London City. Software providers can grant non-exclusive licenses to companies in the financial sector of Manchester using software. In addition, the software supplier may grant an exclusive license to a person to develop the source code to perform additional functions. This exclusive license removes the software supplier from further developing the source code itself. Therefore, the licensor of the software can flexibly grant the authority to use the software, and can restrict its use geographically, for the industry and for other reasons.
Expansion of these types of licenses is a nontransferable and nontransferable license and effectively prevents licensors from licensing others to sell software. One of the exclusive rights of the copyright owner is the distribution right which is the right to grant others the distribution of software. This is the basis of reseller agreement and third parties are licensed software of software supplier. instead. Most software licenses do not give the licensee the right to exercise the right to license software licenses.
In addition, licenses may be set to a fixed period, or license grants may be permanent. Licensee may use the Software permanently pursuant to the other conditions the Licensor has imposed.
License tracking
If the software is licensed based on a single use, it is recommended to prepare registers to hold copies of the software, in addition to monitoring software used in Active Directory on Windows systems I will. Such an implementation facilitates denial of software usage by electronic means. However, when doing this, you need to notify the licensor in the contract.
Intellectual Property Compensation
In the software license agreement, these indemnifications are provided to protect licensees from the primary responsibility for infringement that the use of developed software infringes patent or copyright. Since innocence is not a defensive measure against infringement, users of software infringe intellectual property rights by merely using software. However, it is important to note that injury assessment may take into account innocence. These damages are becoming more important to licensee as an incidental influence of popularity when acquiring patents. Although patented inventions can be combined with other conventions, it may be difficult to prove infringement in cases where patent infringement does not cost much, but the presence of software patent rights is the best form of protection. It is created independently. The defense is available only in case of copyright infringement.
In order to assert the benefits of damages, damages should be sought to implement defense of infringement proceedings, and cooperation and assistance of compensated parties advocating for damages should be asserted. In this way, to some extent, compensators can keep costs down and defense can be carried out for best profit. Since software suppliers have knowledge of software development and information obtained at the development stage, they are in the best position to carry out defense in any case.
Normally, the accompanying intellectual property compensation is a provision that requires the software supplier to replace the infringing aspect of the source code, and if neglected it will pay Licensee's expenses.
License payment
The licensor may be configured to flexibly build payment of the license in the payment structure due to the nature of the licensor's rights in granting the software license.
There are also limitations when using software by network, machine, single use, specific equipment, user, site, world, region, or a combination of these.
The most basic form of license seems to be a fixed amount of organization. Expansion of this type of license may be a set number of users, with an additional license incurring an additional charge for a fixed period. For multifaceted software, different rates may apply depending on the type of license required. For example, organizations may require additional management licenses or data processing licenses, each attracting a different price.
If the licensed license is not permanent, you need to set the timing of the renewal payment and set the calculation method for the total due time. Properly drafted contracts should allow prices to be raised during the license period and prices of materials and human resources to rise. In addition, the parties need to consider whether to automatically update the license or to automatically revoke it.
Although it is worth providing delinquent interest rates, the 1998 Commercial Debt Delay Redemption Act never applies to these delinquent payments.
Other payment
If software is mandated, other costs such as hardware requirements for hosting the software, personnel expenses to be processed in the contract, other materials and travel expenses may be required. For clarity, regardless of whether the price includes VAT, it should be clear to avoid doubt who will pay tax if payment occurs in an unexpected situation.
Additional services and improvements (upgrade service)
Software license agreements may be established for further development and / or customization by software suppliers. These are generally handled in two ways. First, suppliers may require estimates of development services required by licensees. Alternatively, the software supplier is entitled to charge time and material with the published fee. It is rare at this day and age that suppliers receive blank checks to perform additional services for licensors who want to improve software functionality.
In packaged software and delegated software license agreements, in particular if the software is licensed non-exclusively, has been consistently improved and developed, the license gives Licensee the right to improve for a period of time . Licensor funded development monopolistically, but if you receive the reduced amount of software, more preferred rights to receive improvement will generally be encountered.
Change management
Valid change control provisions are essential to prevent creep of scope, but in order to provide reference points for change management, functional specifications or other documents must be included in the contract. The change management provision also enables an elegant mechanism for software suppliers to extend the delivery time scale. When scope creep occurs, the supplier has no problem in performing additional work, it is impractical to perform work in the same time frame as the original work. The focus in this sense is contract management: when to manage deliverables and when to deliver. Change management is never underestimated.
Factory acceptance test
In order for software suppliers to ensure that their products meet the purpose, it is necessary to conduct acceptance tests at the factory before software products are released.
In the case of shelving products, only the software supplier is responsible for ensuring that the product meets the functional requirements, there is no need to modify a copy of the software that is already on sale.
However, with more customized solutions and customizable solutions, both parties are responsible for the pre-release factory pass test. Most of the responsibility is attributable to the software supplier to ensure that the product has been tested internally before release.
Squeezing time often minimizes the actual time spent in this phase of software development. This will cause the number of failures reported in the user acceptance test phase to be much higher. This is a more expensive task for both parties.
Factory acceptance testing must be done reliably and the software supplier must be given the appropriate obligation to provide the test document to the customer before receiving the release. The test results should include a fixed number of test iterations throughout the software suite.
Customers must also be obligated to provide items such as a series of test data and test scripts to software suppliers in a timely manner. By forcing this partnership by contract agreement, you can balance the contract by concentrating on the work of the parties, shortening the time for user acceptance testing at the customer site and reducing the cost.
User acceptance test
The released software involves some degree of acceptance testing and the way to do it is more or less annoying to software suppliers. In order to conduct the exam test properly, purchasers should be given the opportunity to prepare their own test data and test scripts. The acceptance test connects so that intuitive defects are immediately processed in the presence of the software supplier, and if the test is successful, the acceptance certificate is a pioneer of payment, so the acceptance certificate is immediately It is necessary to obtain it. Provisions for retesting must be established to enable rapid processing in the event that true defects are identified during the acceptance testing process. The warranty period for software maintenance due to defects must be executed from the previous date, not from the reception date.
Document requirement
As business becomes more sophisticated with respect to the provision of computer software, the requirements for reasonable user documentation will be similar.
This is the minimum requirement for packaged software and delegated software. When assigning intellectual property rights to the commissioner of the software, delivery of the design document, the project management document and the user requirement document is required at the end of the development project, the software commissioner develops its own software.
Normally there is no commercial reason giving the right to access these development documents if the software is subject to package licenses or if Licensee has the right to use the software.
training
There are various forms of training. For delegated software, software suppliers need to train trainers. A formal training session must be carried out for end users. Many things depend on the complexity of the software and the computer literacy of the intended user base.
Escrow Arrangement
Escrow Agreement is intended to protect licensees who pay to software suppliers who design and build software that meets specific needs. These agreements are used when the software house loses its means of continuing software support through either liquidation or lack of will. Escrow agreement is based on the assumption that Licensee does not possess source code, and within that range, Licensee will maintain and develop its source code in the event of failure of software vendor or software house. Conditions for releasing software to Licensee may be made only if the parties wish. For the more formal flavor of the escrow contract, an independent and trusted third party specializing in providing escrow service is involved. They own the source code of the software and enter into an agreement to release the source code to Licensee only in the specified circumstances. Licensee can gain some sense of security in managing the risk of investing in software development at the initial stage.
Fine payment for failure of delivery
It is becoming increasingly common to incorporate criminal penalties (damages) clauses into software license agreements, rather than agreeing to litigation to reduce the cost of managing damages and contract management. Liquid damage clauses are frequently used as a means of recovery as they do not meet agreed service levels already. These liquid damages occur in the form of service level credits. The problem of liquid damage is to set the amount of damages paid in case of a breach or default to a level not considered as an unenforceable or confiscated by the UK legal system. The guidelines in determining whether a liquidated damages clause is considered a fine or confiscated pay the genuine prior estimate of the loss that the sum of damaged damages suffers as a result of a violation leading to the right of liquid damage. However, the agreement on the total amount to be paid for in liquidation damages may be due to the possibility that the victim may file a lawsuit for large damages, so that the recipient accepts the amount specified or calculated in the event of a violation It is not limited.
End
All professionally prepared documents for which the parties have nearly equal bargaining power can be used in cases of serious breach or when one party commences liquidation or is bankrupt You can quit.
Incorporate other rights to terminate large-scale relationships concerning the nature of the services offered. Contractually have the right to terminate contractual obligations with ongoing obligations. If the contract only grants a permanent software license at a certain fee, there is little need to terminate the right. Even packaged software (typically permanent licensed instances) is commonly used in software license agreements and can not meet certain minimum service levels.
End result
In the case of outsourced software services, exit management provisions are essential to ensure timely and professional handover of outsourced services when terminating contracts. In the context of software developed and subsequently licensed, for the licensor,
Handheld user manual
2. Delete all copies of the software residing on the server and workstation
3. Distribute copies of the software to backup media,
4. Destroy confidential information.
The certificate of compliance can be used to confirm that the requirement is observed after the contract is over.
In related issues, managing software licenses by electronic means is a useful tool to prevent the use of software. This is an unused measurement by the licensor to ensure that computer software can not be used.
Limitation of Liability
Limitation of liability may be one of the most serious problems in negotiating license terms. The purpose of limiting liability is to exclude or limit the liability incurred by the parties in case of contract violation or negligence during performance of the contract. The responsibility that can not be excluded should be insurance, there are good cases to manage corporate liabilities and adopt other means to protect corporate assets, including intellectual property assets. Liability due to negligence causing personal injury or death can not be limited or excluded in any case. The type of liability that may be excluded includes property damage. Loss of profit, business or profit; consequential or incidental loss. Damage due to loss of goodwill and loss and destruction of data.
In a technical contract using facilities such as the Internet outside the management of the parties, it is possible to deny the parties by using force majeure clause when force majeure occurs. The force majeure clause sometimes refers to specified events as well as general types of events. The effect is to avoid an instance of the compromised party if the event can not be controlled.
The basic checklist of some provisions that are often incorporated into software license agreements is as follows.
1. Parties
2. Price
3. Software Supplier's Obligations
4. LICENSEE'S OBLIGATION
5. User acceptance test procedures leading to acceptance, including the warranty period applicable thereafter
6. Other services
7. Change management
8. Training requirements
9. Escrow Agreement
10. Service level
11. Service level compensation
12. Liquidation damaged
13. User Manual
14. Improvement right
15. Confidentiality obligation
16. Intellectual Property Rights
a. Brand right
b. License terms
17. Confidentiality obligation
18. Termination clause
19. Result of termination
20. Limitation of Liability
