What software license to use for commercial software?

Hey there,

Under what license agreement should you release software under if it's closed-source and for commercial use only? Are there multiple license types? (such with open source you have BSD, GNU/GPL etc..)

If so, which one do I choose, and are there samples out there to get you started? I have heard the term and seen documents named EULA.txt for an End User License Agreement, but can't seem to find a definitive guide on the net as to how to structure one but do see this included with nearly every commercial app I have installed and don't know if it's as simple just to "change to suit your business".

Can anyone shed some more light on this? Thanks guys.

For further details - our software is non-redistributable, non-modifiable and the user is charged yearly.

When it comes to legal topics, it seems almost everyone on the internet says "don't trust what some guy on the Internet says, get a lawyer." But if it were that easy, then I'm sure you would have already done it.

To find a lawyer who is familiar with the intricacies of software licensing will not be a small investment at all. I could see this being a 50+ hour project for an experienced lawyer to understand all the details and build you a custom license exatly how you want it.

Considering the high bill rate of a specialist, I do not believe it's worth the investment at this point in your company (you are, after all at the point of asking the internet for advice).

A license agreement needs a few major components, most of which you can plagarize from other license agreements of products in similar spaces:

explicit statement of license (not a transfer of ownership, etc)
expiration/time period (you said a year)
usage limitations (10 users, 5 servers, 8 computers, ?)
back-up rights
standard limitations: no alteration, reverse engineering, redistribution, benchmark/analysis, separate into smaller parts

You also should have all the "standard" contract stuff in there, like jurisdiction, rights/obligation survival, indemnification, entire agreement, etc. If none of those past words make any sense, then you should strongly consider either reading more contracts or getting a general lawyer (you don't need a specialist... yet).

I'll sum up what a lawyer would say after an hour consultation: "this is very complicated and, now that I understand what you want, this will cost upwards of $10,000 to develop."

Alex Papadimoulis 2009-09-02 04:18:57

Yes that's exactly why I figured there is an easy way to go about this. As do you really think every commercial product has got a lawyer involved? I don't think so.

GONeale 2009-09-02 04:26:58

Not the lawyers I know here in Silicon Valley -- a highly competitive market where getting on the right side of the right startup (and getting paid partly in options) may easily make a lawyer WAY rich enough to retire. I don't know where the OP's from, but any similar market thriving on high tech will surely offer similarly USEFUL lawyers, as opposed to the leeches you portray, o homonym (i.e. @alex -- though it sounds like out roots go to two _different_ mountainous peninsulae stretching in the Mediterranean sun;-).

Alex Martelli 2009-09-02 04:27:15

@GONeale, in as litigious a country as the US?! You gotta be kidding -- OF COURSE every closed-source product routinely consults with lawyers! It's not about "commercial": commercial open-source can piggyback on a LOT of pro-bono work already done by lawyers freely consulting for the Apache Foundation, etc. It's about closed source: if your IP is THAT valuable, it's worth investing a lawyer's fee in. In Silicon Valley (and, I'm sure!, anywhere else that's a thriving center of innovation) it IS easy to find excellent lawyers familiar with high tech (if in SV, ask me privately about it;-).

Alex Martelli 2009-09-02 04:33:30

Yes sorry fair enough, I didn't mean to say "do you really think every commercial product has got a lawyer involved" I was particularly talking about just putting the license agreement together, I'm sure for anyone taking their business seriously, a lawyer would be involved. But I just meant for license alone, I'm sure some startups have just copied and changed one on the net. Thanks for your insight though Alex :)

GONeale 2009-09-02 05:44:16

@Alex: I did not mean to portray lawyers in a bad light at all. To develop a complex license agreement for a complex commercial software product will take *far* more than an hour -- the only thing that hour-long consult would give is a birds-eye view of the outline for developing the document. IMO it's too expensive for early start-ups, whether you're paying in cash or equity.

Alex Papadimoulis 2009-09-02 05:49:45

How to find a Lawyer that provides peace of mind? There are lawyers and Lawyers, and mr Pareto predicted that the former group is 4 times an numerous as the latter..

Tomasz Zielinski 2010-04-03 07:41:29

Rex M 2009-09-02 04:24:26

Thanks Alex, helpful. I think altering an existing EULA ensuring coverage of the points you have mentioned might be the best approach.

GONeale 2009-09-02 04:28:33

Note that definitions of 'users' and 'servers' and so on can get very complex - be careful. Don't forget virtualization.

Jonathan Leffler 2009-09-02 05:40:47

ansaurus

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What software license to use for commercial software?

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