Software Licensing

Written by Kevin Tavolaro
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In order to provide a legal contract specifying how a consumer is permitted to access a particular program, software manufacturers usually include a license agreement with all of their products. The license agreement acts a contract between the manufacturer and consumer, notifying the consumer of any restrictions placed on the use of the software. License agreements are especially important in a corporate environment, where many users will be accessing the same software.

Computer software programs are valued by their data content, as opposed to the physical container of that data, such as a CD-ROM. This is why software vendors sell their products according to licenses, rather than individual items. Manufacturers maintain that when you purchase a program, you do not become the owner of the content. Instead, you purchase the rights to use that program, meaning that you are licensing the software from the manufacturer. Because the software is licensed, your use of the product can be defined by the manufacturer in the license agreement that enables you access. As a result, when a CD-ROM containing an application is purchased, the consumer does not have the right to use it in any way they choose, such as installing the application to multiple computers, or making additional copies of the disc and distributing it to their friends. Unless otherwise noted by the license agreement, the application can only be legally accessed on a single computer.

Purpose Of Software Licensing

A license agreement stipulates a program's level of access in order to prevent the widespread reproduction of the intellectual property contained on the software's CD-ROM. If a business wants to install a program on their network, they are not permitted to provide all employees with unrestricted access to a program that has only been licensed for a single-user. The company must purchase a multiple-user license, which is priced according to the number of users who can legally access the program simultaneously. In either situation, the company physically acquires the same amount of software, and the actual sale centers around the intangible rights to use that software. This is why license agreements are so critical to vendors, as well as why software piracy can have such devastating results.

Licenses also enable vendors to monitor illegal replication of their products by providing a record of legitimate registered users. This prevents manufacturers from having to provide technical or warranty support to individuals using illegal copies of their applications. Software licenses can also clarify situations that might lead to unintentional copyright infringement. One such situation occurs when a user installs a home copy of an application they have already loaded to their work computer. Even though the same individual would access the program on both terminals, the legality of the situation would depend on whether the license covers multiple installations.

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