What is Software licensing?

A quick guide to the basics of Software Licensing by Nalpeiron

Software licensing is a contract of agreement between a software publisher and an end user of the licensed application.
This tends to be regulated via a document called the End User License Agreement, or EULA. Though software licensing can be a paper agreement, it is most often imbedded in the software itself as part of the installation process. In larger corporations much more complex agreements tend to be in place that require considerable legal expertise to manage and negotiate.

As software is "licensed" and not sold to the users an agreement is required to define the "rights" that the user gets when they pay for said license. A software licensing agreement protects the authors copyright and intellectual property rights (IPR) by placing restrictions on the end user in relation to the usage of the application. For example: duplication for purposes other than backup, installation on more than one computer, editing the code, or changing the program in any way is usually forbidden unless the product is "open source". Software licenses might also restrict reverse engineering and bypassing controls intended to cut down on pirating, technology for achieving this is usually referred to as "copy protection software".

Most EULAs also include statements to protect the publisher in the case of any unforeseen circumstances that might arise as a consequence of using the software. This could refer to anything from a computer crash to loss of data, time or income. In addition, generally due to the nature of software no or a limited warranty is given to the suitability or performance of the software.

In general if you are a software publisher it is critical that you "license" your software to the recipient very carefully in order to retain your IPR and the ability to generate revenues from your work. It is also important that you protect yourself from the various legal issues that arise from selling software.
If you are a user you need to be sure what type of license you need and be careful not to abuse the basis  of the license or you could be accused of "software piracy".
Publishers who wish to enforce their software license tend to use other software applications to help them control their IP and these tend to be reffed to as "software license management" technologies.

About the Author:

Jon Gillespie-Brown is a published Author, Lecturer, Founder/CEO and an expert on Software Licensing and Piracy. He currently mentors at Stanford, UC Berkeley and the London Business School. Visit his software licensing company, Nalpeiron for more information, a blog and a free trial of the leading hosted software licensing platform.