An end user licensing agreement (EULA) is a software licensing agreement entered into between a software publisher and the user. It includes specific information about the software, the rights of the company, and the rights of the user. An end user licensing agreement template can and should be edited to reflect the nature of the relationship between the parties. For example, one may be created for software licenses for individual users and another may be created for software licenses for government or business users.
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What is a Licensing Agreement Template? When is a licensing agreement needed? Components of a licensing agreement template EULA Legal ConsiderationsAn 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.
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A licensing agreement is needed if:
Common scenarios for needing a licensing agreement include:
Types of licenses include:
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:
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:
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.
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