SOFTWARE LICENSING AGREEMENTS

When a customer requires software on a non-exclusive basis, the supply agreement will normally be in the form of a software licence. The terms of the licence should be carefully considered and preferably checked by a lawyer.

As with all agreements, there should be adequate definitions of important terms. These should include points such as:

• What is the licensed Program?
• What is the scope and duration of the licence, for example, two years in Australia
• Does the supplier have the right and authority to grant the licence?
• Is there to be any transfer of title or ownership to the customer apart from a one-off licence?
• What are the program's operational requirements?
• What documentation will the supplier provide to the customer? Can the customer make copies of this documentation? Does the supplier have to provide updates for the documentation?
• Is copying of the program by the customer allowed? Are backup copies permitted?
• Is the customer allowed to make modifications or alterations to the program? Is reverse engineering allowed?
• What are the customers' obligations to oversee the use and control of the program and associated documentation?
• What warranties and training will the supplier provide?
• Are there to be maintenance services provided by the supplier?
• What are the fees and charges stipulated by the supplier and what are the terms of payment?
• What are the customers' duties with respect to confidential information?
• What is the liability of the supplier for faults and consequential loss and damages?
• Is the customer able to sub-licence the program?
• Can the supplier sub-contract any part of the agreement, for example, maintenance?
• When may the licence be terminated?
• Limitation of Liability

There is no legal requirement for a software licence to be in writing, but if it is not, there can easily be a dispute as to what restrictions apply.

• Is the copyright to be assigned?
• Do you wish to reuse your development libraries?
• Maintenance fees and hours of operation.
• New release fees.
• Limitation of liability.
• What is a delivery?
• When has the customer accepted the product?
• Confidentiality issues.
• Arbitration and mediation clauses. Are they an appropriate mechanism to resolve problems?
• Disaster planning
• Does your insurance cover software failure and professional negligence?

An Escrow agreement regulates the storage of and access to source code.

It is a means by which the customer can guarantee access to the source code even if circumstances change which would normally make access difficult, for example if the supplier ceases trading.

Some issues to consider include:

• A clear definition of the source code
• The period of the agreement
• When and with whom the source code shall be deposited
• Access to source code
• Verification of software held in escrow
• Insurance
• Release of the source code to the customer and/or to the supplier
• Escrow fees and charges
• Confidentiality
• The rights of the Escrow agent to sub-contract its obligations under the agreement.
• The method required to settle disputes
• The governing law
• Termination of the agreement

This article is a guide only and should not be used as a substitute for proper legal advice, readers should make their own enquires and seek appropriate legal advice.