34+ Sample Software License Agreement

What Is a Software License Agreement?

A software license agreement is a legally binding agreement between a company and its consumers for using its software products. The document allows the customers to utilize the software with comprehensive information on how they can use it. The software license agreement also contains the details of installation procedures that customers must follow, including how and how often the installation is applicable. The software license agreement must also answer the inquiries of consumers about duplication, modification, and redistribution. The software price and licensing fees are also available in the agreement. Companies that develop software products for public consumption must produce a software license agreement that helps prevent and protect the organization from infringement of copyright regulations. The document contains the responsibilities of each party. Before a consumer can access or install software, it must have a legal and working license. Without it, users are breaching copyright laws.

According to a published article in Investopedia published in August 2020 entitled 10 Biggest Software Companies, Microsoft remains as the number one software enterprise in the world, with total revenue of 143 billion US dollars. Oracle comes in second place with over 39.1 billion US dollars in revenue. The third software company consists of SAP, which is a German-owned company. The fourth and fifth place is composed by Salesforce.com and Adobe, respectively.

Types of Software Licenses

Two categories of software licenses are available in the market. Proprietary licenses or closed-source software licenses restrict users from modifying, changing, sharing, or reusing software codes. Many software licenses fall in this category since most software licenses limit user access while outlining terms of proper use. The other type of software is the FOSS license or the free open-source software license, a contradiction to a closed-source license. There are other types of software licenses below with their descriptions that are prevalent in different industries.

Public domain license: This type of software license is open for use, redistribution, and modification without any restrictions. A public domain license is also highly permissive that provides a user without limitations, allowing them to adopt and utilize the source code of a software product into new applications or programs. Software in the public domain is very helpful to entry-level developers or coders that want to build similar yet alternative applications using it as a foundation. Since a public domain license software does not have coding practices or contain any security standards, users must exercise caution in the integration of source codes into new projects. In the occasion that private software does not possess a license, it is imperative to communicate with developers before any further action.Copyleft license: Copyleft licenses, reciprocal licenses, and restrictive licenses are the same thing. It allows users to modify code and redistribute work under the condition that it possesses a similar software license. An example of this type of software license is the GNU general public license. It authorizes users to modify software components for redistribution while requiring authors to publish the entirety of the source code that other users can also alter.Lesser general public license: This type of license allows users to link open source libraries in their code minus upholding the terms of a copyleft license that requires the developer to post their source code. Users can license the codes resulting from their activity under any type of license with the condition of linking their work to a lesser general public license (LGPL) library. Developers that utilize LGPL must make the program available for use under a similar LGPL.Permissive license: A permissive license, also known as Apache-style or Berkley Software Distribution-style license, supplies users with a minimal amount of restrictions in terms of modification and redistribution. This type of license contains similarities with public domain licenses but includes restrictions and stipulations about intellectual property rights. Permissive licenses are alternatives to FOSS licenses for creators who wish to help open source development while retaining copyright protection.Proprietary license: A proprietary license is one of the most restrictive types of software licenses. The proprietary license reserves all rights to the developer upon software release. There is also a restriction in the modification and redistribution of the software source code, and an end-user license agreement is a compulsory element. End users who want to use the software must agree to its terms, and if they refuse, they are not able to access it at all.Trade secret license: A trade secret software is not acceptable for distribution and license. It also remains private property. Provisions like intellectual property rights and copyright regulations protect these trade secrets as they have economic value. There are cases that a trade secret status applies to distributed, non-licensable, and non-public domain software only until the terms expire.

Components of a Software License Agreement

Software license agreements feature various sections that cover various information, including general ideas of executing the agreement to necessary clauses that offer protection to a company or a developer in the long run. Below are the fundamental elements within a software license agreement with their respective definitions.

General information: This section of the software license agreement supplies information about the duration of the agreement, the start date, and the type of licensing agreement. It is an essential part of the document as it sets the tone for the rest of the entire content.Involved parties: The section contains valuable information about the parties interacting in the agreement. It details the company that offers the license and also contains information about the person or organization purchasing the license. The agreement must have the complete name of the individual or the company, including the contact information and address. Each party must provide this information as necessary.Terms of the agreement: This section of the software license agreement defines all associated terms and conditions of use. It contains information about the price of the software, including payment schedules and payment terms. The section also indicates whether the purchase includes the code with the license and whether it is a site license. Site licenses allow users to install the software on other devices within the same location. The terms of the agreement also contain valuable information that details the maintenance schedules, support systems, or refund requirements that the company provides through the document.Fine details: The section contains any other specifications that are not present in other parts of the agreement. The terms available in this section are more specific to the situation of purchasing software. It also contains the signature section and signing dates and includes a notarized section if either party agrees. Non-exclusivity clause: When licensing software for company use, it is necessary to include a non-exclusivity clause. It allows the software developer to license the software for other parties to make revenue.Non-transferability clause: The non-transferability clause is essential if a developer does not allow the software to be transferable to other parties. The section guarantees that another person or institution will not be able to distribute the software, resulting in lesser customers for the developer. It also prevents any situation where there is no enforceable and legal arrangement with the individual or company with the software.Rights: The software license agreement states that the software remains to be a property of the developer even after its execution. It includes the software itself, its name, intellectual property, distribution, and copyright rights. Having this clause in the software license agreement protects the developer and their products.Modification: If the developer does not permit modification of any kind to the software, there must be a section in the software license agreement that mentions it. The best action to take is to limit any type of modification, if not completely prohibit them, in all cases. Contract breach: In cases that a purchaser violates any provisions in the software license agreement, there must be a clause that states the possibility of revoking the license. The clause helps the developer to take back the software for better protection.Device usage: A section of the agreement must detail the number of devices that the software can accommodate, whether for single-use or multiple uses limited to a single location. The clause prevents a company from taking advantage of the software by acquiring additional benefits for a single purchase.Limitation of liability: The software license agreement must contain a limitation of liability clause. It details that the licensee or purchaser of the software is accepting the software as is and will not be able to press charges for damages without any warranty guarantees for the software itself and its use.Termination clause: In certain circumstances that the developer needs to terminate the agreement, it is critical to have termination terms. The clause details the corresponding actions the licensee must take, whether it is destroying the software or uninstalling it from a device. The developer can also include terms for them to revoke or terminate the software at any time or reason without repercussions.Governing laws: This section of the software license agreement determines the governing laws that cover the document. Ensure that it is within the developer’s jurisdiction and state. It guarantees that any court proceedings are well within the area of the software developer.

How To Develop a Software License Agreement

The purpose of writing a software license agreement is to explain to a user the extent and limitations of using the purchased software. It also limits the developer from possible legal implications along the way. For a developer to properly develop a software license agreement, it is advisable to meet with a lawyer to help draft a suitable agreement for the business. Below are the steps to develop a software license agreement.

  • 1. Set up the Software Licensing Agreement

    Start with choosing a title and format for the agreement. Insert an agreement provision if the license is for the mass market. Instead of signing every single piece of document, you can set up the terms of the agreement when users install the software. The next step is to identify the involved parties as to the licensee and licensor. It is also necessary to include recitals to determine the reason behind signing the agreement.

  • 2. Granting of the Software License

    Grant the license to the licensee by stating that they have the right to use and access the software. Indicate whether or not the licensee can modify or redistribute the software. Identify what the user must give the developer in return that is visible on the agreement. The agreement must also contain specifications about copying or duplicating the software, stating possible reasons for making the copies. It must clarify that the software developer retains rights to the product and identify the length of the license with possible reasons for termination.

  • 3. Don’t Forget to Limit the Liability of the Developer

    When writing the software license agreement, decide whether or not to indicate a warrant provision. It must also identify possible remedies for the user when breaches to the warranty are evident. Indicate an indemnification clause to secure the developer from third-party liability, the licensee providing all costs to defend the developer. Together with the indemnification clause, include a limitation of liability provision. Lastly, indicate a dispute resolution clause.

  • 4. Add Boilerplate Clauses to the Agreement

    After writing all the necessary terms and conditions into the agreement, you can insert the boilerplate clauses. Add provisions on notices, and include a provision for the governing laws. Incorporate a severability clause and merger clause as necessary.

  • 5. Finalize the Software License Agreement

    For the final touches to the agreement, incorporate the signature line where the licensee and licensor can sign, along with the effectivity date. A developer can also consult with a lawyer before presenting the agreement to a licensee. Negotiate the document with the licensee and ensure that both parties are on the same page before proceeding. Finally, distribute copies of the agreement to the right individuals, and don’t forget to have a backup copy of the agreement.


What should you look for in a software license agreement?

As a licensee of the licensing agreement, there are certain elements you must guarantee in the document. It includes the scope of the license, possible deliverables, source code, access or disclosure arrangements, open-sourcing statement, acceptance, warranties, breaches, and remedies.

Why is it necessary to have a software license agreement?

To a software developer, having a software license agreement in place prevents customers from abusing the product. It also allows the developer to license the software without selling its rights. It also provides disclaimer warranties, limits liability, and revokes licenses.

What are the three main types of software?

The three types of computer software include system software, application software, and programming languages.

Software developers take pride in the rigorous hours they put in creating software that functions to help individuals and organizations to make their daily lives and operations easier. From the effort and knowledge they put in developing beneficial programs and applications, there must be a way to protect all their hard work. Writing a software license agreement guarantees that software, including its intellectual property, remains theirs. Download the software license agreement samples available in the article above and start drafting the document with the help of an expert lawyer.