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Avoid Licenses to “Use” Software

A lot of software licenses grant the recipient the right to “use” software. But the use license springs from a misunderstanding of copyright law. As a result, it’s not clear. A use license may give broader rights than the provider intends or narrower rights than the recipient needs. I’m going to suggest a better, simpler way to draft licenses. (This post expands on a point made in The Tech Contracts Handbook—something that comes up in many of my trainings.)

Why does anyone need a license to software? A software recipient needs a license because software is text—a set of instructions for a computer—and the law gives the copyright holder certain monopoly rights over text. To exercise any of those monopoly rights, the recipient needs a license. But the right to use software is NOT one of those monopoly rights. So if you grant a use license, you’re really granting a license to one or more of the actual monopoly rights, and whoever’s reading the license will have to guess which ones.

Are you surprised to hear that “use” isn’t a monopoly right of copyright holders? Think of a self-help book. That’s a set of instructions in written text, just like software. Do you need a license to “use” a self-help book: to read it and follow the author’s instructions on finding your soul-mate, investing like Warren Buffet, or reorganizing your closet? Of course not. You’d need a license to copy the book, distribute copies, etc., but not to use it. The same goes for software.

The law gives the copyright holder a monopoly on the rights (1) to reproduce software (or any work of authorship), (2) to modify it (to “create derivative works”), and (3) to distribute it. It also grants a monopoly on the rights (4) to publicly perform a work of authorship and (5) to publicly display it, though those relate mostly to visual arts and don’t often come up in software deals. So a software license—a copyright license—grants one or more of those rights. A clear license lists the rights granted: “Provider hereby grants Recipient the right to reproduce and distribute the Software.” But what if the license just says, “Provider hereby grants Recipient the right to use the Software”? You can’t tell which monopoly rights the recipient gets.

As a result, a license to use software is an unclear license. To figure out what it means, you’ve got to look at the context. If it’s clear the recipient needs to reproduce the software to use it, and doesn’t need any of the other copyright monopoly rights, then a use license just grants the right to reproduce. But what if “use” of the software in question in requires that the recipient reproduce and modify it in some cases, while in others the recipient only needs to reproduce? Which does the license grant? What if some uses of the software require distribution to third parties—in a client-server setting, for instance, where third parties hold the client app? A license that merely grants the right to use won’t tell the parties what they need to know. And clarity is the whole point of a written contract or license.

If you’re the software recipient (licensee), don’t rely on the right to use. List the copyright monopoly rights you need. Make sure the license grants you the right to reproduce and distribute and modify the software if you need all three—or some subset of those if you don’t. Then, if you’ve already listed the necessary rights, you can throw in the right to use too. It won’t mean much, but it does no harm if you don’t rely on it.

If you’re the software provider (licensor), don’t grant the right to use—at least not without some explanation—because you can’t be sure what you’ve given. Instead, grant the copyright monopoly rights your recipient needs and withhold the rights it doesn’t. If the recipient needs only the right to reproduce the software, grant the right to reproduce and specify that the recipient may not distribute, modify, publicly perform, or publicly display the software. Or give the right to reproduce and modify, if that’s necessary, while specifying that the others aren’t included. Then, if your recipient insists, you can also throw in the right to use the software. It won’t mean much, but it’ll do you no harm if you’ve been clear about the copyright monopoly rights not granted.

That said, don’t hesitate to add terms about how the recipient can “use” software. A clear contract might grant the right to reproduce software, deny the other monopoly rights of copyright holders, and provide that the recipient may not “use the software to process more than 7,000 transactions per day.” There, you’re not relying on “use” as a grant of monopoly rights. You’ve got a clear grant of rights, using clear language from the copyright statute. You’re just narrowing those rights, using the verb “to use.”

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Notes:

  • The Tech Contracts Handbook addresses software license rights in Chapter I.C.1.
  • For the monopoly rights of Copyright holders, see the Copyright statute, 17 USC § 106.

© 2012 by David W. Tollen. All rights reserved.

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The articles posed here do not provide legal advice. No attorney-client relationship is formed by your use of this blog. You use the information provided here at your own risk. © 2016 by David W. Tollen. All rights reserved.

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