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Licensing B2B Software

October 2021

Software comes in all shapes and sizes. It may be free, freemium, or premium; it may be proprietary or open source; it may be an entire operating system, or it may control the tiniest component inside the simplest appliance. What most software has in common, however, is that it will be (or should be) covered by a licence agreement of some form.

Some software will be highly bespoke and may even be assigned by a developer to a client instead of licensed, whereas some will be more off-the-shelf in nature.

Software licence agreements can be similarly varied in character. Some are highly standardised, often being associated with “wrap” style licences – click-wrap, shrink-wrap, browse-wrap and so on. These kinds of licences have a great deal in common with terms and conditions – there is little or no negotiation involved; the customer simply checks a box to indicate their acceptance and uses the software they have purchased.

In other cases, a licence will be more akin to a negotiated contract. The licensor and licensee will negotiate the finer points of the licence, even if the software itself is not bespoke. This is where our Standard Software Licence comes in. This B2B document is a general software licence suited to a range of different software but, unlike its “wrap” stablemates, it takes the form of a negotiated agreement which will be signed by the parties involved.

Updated Software Licence Template

Our Software Licence Agreement – Licensor to Licensee has been reviewed and comprehensively updated in light of current best practice. Clearer language has been used throughout and a fairer balance between the interests of the licensor and licensee has been struck (with particular attention to fairness of contract terms toward the licensee). Key new provisions address software updates (both interim updates and completely new versions), and many others have been brought up to date.

New Software Licence Variants

Incorporating the same improvements as the standard licence, we are now also offering a new variant which incorporates source code escrow provisions. Escrow helps to protect the interests of the licensee in the event that the licensor becomes unable (or is unwilling) to maintain the software. The source code and related key materials are deposited with an escrow agent for safekeeping. If what is known as a “trigger event” occurs (for example, the licensor’s insolvency), the licensee can obtain the source code and other materials and can continue maintaining the software. This document also refers to a separate escrow agreement – a tripartite agreement between the licensor, licensee, and escrow agent. Such an agreement (potentially in the form provided by an escrow agent) should be attached to this document as a schedule.

Another new version of the licence, allowing sub-licensing to third parties such as affiliates and other members of a corporate group will be added shortly and details will be added to this page when the document is available.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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