Business-in-a-Box's Software Development and License Agreement Template

Software Development and License Agreement Template

Understanding a Software License Agreement

What Is A Software License Agreement?

Software license agreement templates are documents that serve as contracts between your company and your clients and customers, allowing them to use the software that your company developed or has the rights to. It is based on the standard license agreement template. The software license agreement lays out in detail where and how your clients can install the software. A well-crafted software licensing agreement conveys the client’s ability, or lack thereof, to copy, modify, or redistribute the software.

Software license templates are purposed to protect you from copyright infringement. Therefore, you must exercise caution and carefully draft this agreement’s language and contents. Our professionally created software license agreement template offers you a comprehensive outline that proves quite useful, both for your company as well as your clients. The license agreement template provides you with the essential clauses, along with the right language, so that it can achieve its purpose.

What Purpose Does A Software License Agreement Serve?

As with any company engaged in software development, your company is probably also trying to build software that may generate revenue through licensing. You must also make sure that your income stream through licensing is properly safeguarded. This is precisely what a meticulously crafted software license agreement does. It protects the revenue that you are earning through licensing. An effective software license fulfils the following purposes:

  • It secures the software from abuse.
    A carefully drafted software licensing agreement allows you to secure your software from abuse. Failure to forge an effective software license agreement may result in the software being redistributed by your customers. If your clients succeed in doing so, they will be benefiting from your hard work and earning profits. Even if your clients do not sell your software, they can still replicate it and use it within their enterprise, deploying it on all their systems at the cost of one.
  • A software license agreement enables you to license the software.
    The software license agreement’s primary purpose is to allow you to license and generate profits from licensing fees over a long period, instead of having to sell it and earn a one-time gain.
    Software licensing agreements enable you to retain all the rights to the software; allowing you to license it, charge licensing fees from anyone who wants to use it, and place restrictions on the way they can use it. A software license allows you to exercise greater control over the usage and enables you to manage the distribution of your software. Due to the presence of a software license, you can capitalize on your investment and effort on any software and profit from it for a long time.
  • A software license agreement protects you against warranties.
    Regardless of your software’s capabilities, occasionally, you will encounter a client who will be dissatisfied with your software’s performance. By including specific disclaimers in your software license agreement, you will be able to waive-off claims of warranty. You may be confident in your ability to deliver; however, there are always contingencies. Hence, in the event, the software servers are down, and your clients cannot access it, a disclaimer in the software licensing agreement will shield you from the responsibility of their data loss.
  • The agreement protects you from excessive liability.
    As a software development company, you are supposed to deliver software to your clients according to their needs and requirements. However, you cannot expose yourself to all liabilities attached to the project, as your client can potentially sue you, to hold you accountable for something that may be totally beyond your control. These lawsuits might cost you a lot, both in terms of time and money. Therefore, it is prudent to include a clause that limits your liability in the software license agreement. Putting it in the agreement, you basically get the clients to agree to your terms, because only after agreeing to the software license, will they be able to access the software. However, you must not overextend the liability clause’s use so that it is equally fair to both you and your client.
  • A software license agreement permits you to terminate the license without hassle.
    The agreement comprises a section for termination, where it can be stated that you retain the right to revoke the license. This means you can suspend or terminate the software if you must, and your clients will not be able to raise any disputes over your decision.
What’s Included in A Software License Agreement?
1. Scope of The Application of The Software

An apt software license allows enough room for the client to be able to install and utilize the software on one or more computer systems, and copying and executing the software if needed, like for the rational purpose of backup, etc. Software licensing agreement templates should also be adequately flexible to permit some modifications that the client may require for the software’s optimum usage.

Thus, in terms of the scope of the software license agreement, the following points are important to remember:

  • If your client relies on an independent development or support system and backup site, make sure to negotiate suitable rights of installation, use, testing, and adaptation.
  • If the software license happens to be location-specific, the agreement should provide the license’s leeway to change location.

Our software license agreement template is designed to provide you with a precise outline in the desired language, laying out the scope of the software license that will protect your interests while also conveying it in an understandable manner for your client.

2. Products and Services Being Provided

This section of the software license agreement template should provide detailed information on the products and services it delivers. For instance, if the client will require some training to execute the program, then you will have to provide it, and therefore include when, where, and how the training will be provided.

Apart from training, maintenance and support are other aspects of services, generally rendered under a software license. The following are some of the services that are covered under a software license:

  • Fixes
  • Versions with corrections
  • Freshly released features and New upgrades
  • Telephone consultation and support
  • Online support
  • Programming services

Our software license agreement template will guide you on how you can include terms of maintenance in your software license. You should either provide the client with the right to support, and maintenance in the software license or an entirely separate software maintenance agreement should be signed alongside the software licensing agreement template.

If you decide to undertake a separate contract with the client, you may find our software maintenance agreement template useful in crafting the deal efficiently and effectively. Usually, the maintenance services are rendered for a certain period, like 3 or 5 years, with a fixed expense.

3. How To Use The Source Code, If Provided

There are some scenarios where you may be required to provide the source code to the client. For instance, if the system is expensive, or modifications are unavoidable, or if the client is demanding the capability to perform changes, you may have to deliver the source code. You must clearly define the way the client can utilize the source code.
You can include the specifics in the software license agreement template or draft a separate source code agreement. By using our source code license agreement template, you would be able to formulate a coherent and professional agreement that would prevent the client from abusing the source code.

4. Clarity on Disclosure Rights

A software license agreement is supposed to provide details about the rights being provided to clients regarding disclosure and access. You can choose to provide specific guidelines in the software license, access the software within the client’s company, and the obligations of those individuals regarding the disclosure policy.

If there is a need for a formally written non-disclosure agreement, then you can also draft a separate contract with the prospective licensee. To draft an effective non-disclosure agreement for a prospective licensee, you can use our template, built explicitly for the purpose. You must consider the requirements of the client before drafting a non-disclosure agreement.

5. Clarify Termination of License in The Event of a Breach

One of the prominent clauses to be included in license agreements is regarding the licensor’s license in the event of a breach of contract on the licensee part. Generally, you must provide the client with a minimum of 30 days advance notice, along with an opportunity to make amends in the event of a breach. Only then can you proceed to terminate the license.

You can include the specifics in the software license agreement template by using our template, which will guide you on how to insert terms of termination in a manner that will protect you against a breach.

Software License Agreement Template Sample
1. Definitions

Here you will describe the meaning of the terminology used throughout the agreement.

2. Software License

This is the main section that would describe the license and will include all the important clauses you want to include in the software license agreement.

Contents of this section will include clauses such as:

  • Installation
  • Usage
  • Acceptance
  • Distribution
3. Pricing and Payment

In this section, you will cover the channels of payment, along with the details of the licensing fee.

Contents of this section will include details regarding:

  • Price
  • Taxes
  • Interest
  • Proprietary rights
4. Confidentiality

This section will primarily cover clauses such as non-disclosure to ensure confidentiality.

Contents of this section would include:

  • Terms of confidentiality
  • Unauthorized disclosure and repercussions
5. Warranty

This section will cover the warranty period’s details and the specific corrections/remedies delivered under the license.

The contents of this section include:

  • Functionality and operation
  • Correction/remedies
  • Warranty period
  • Warranty disclaimer
6. Compensation

This clause will cover details of the licensor’s obligation to inform the licensee if the license is infringing upon registered copyright or patent in any country and will also address the process of indemnification in the event of an infringement.

The contents of this section will include:

  • Indemnity
  • Alterations/amendments
  • Injunction
  • Liability
  • Infringement
7. Limitation of Liability

This section is crucial, as it will help you limit your liability in the case the licensee claims or lawsuits.

8. Terms of Termination

Under this section, you will lay out the terms and conditions under which you will be entitled to terminate the license.

Contents of this section will include:

  • Terms of termination
  • Breach
  • Remedy
  • Cessation fee

Apart from the above, there are many other nuances that you may miss while drafting the agreement. Therefore, we recommend you use our professionally developed license agreement templates to prepare an agreement that would protect the interests of both your company, as well as your clients.

Make sure to sign up to Business-in-a-Box and check out the full template preview or browse through our 2,000+ legal templates to pick the one that suits you the most.

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