As a new software developer, you likely want to protect your software, given the time and cost involved in developing it. However, knowing what legal measures to put in place can be difficult. Some legal documents can prevent third parties from misusing your software and potentially profiting from it. This article will explain the various kinds of documents you may require before you put your new software on the market.
1. Non-Disclosure Agreements
A non-disclosure agreement (‘NDA’) is a legal document that prevents another party from disclosing your confidential information. If the party discloses confidential information to a third party, you then have a contractual claim against them.
For example, say you hire a developer to assist with fixing bugs in your software. However, you want to ensure that the developer does not share any information that you provide them. An NDA would place the developer under a legal obligation not to share any of your business’ information.
2. Software Licence Agreement or Software as a Service Agreement
Before selling your new software, you must consider how you will provide your software to your customers. Traditionally, many businesses supply software as a ‘good’ or ‘product’. In this scenario, the customer would:
- make a once-off purchase; and
- install the software onto their device for later use.
Alternatively, Software as a Service (‘SaaS’) refers to cloud-based software that you can ‘rent’ and access via the Internet. Developers often license a SaaS to users on a subscription basis. Some popular examples of ‘SaaS’ include Google Suite and Dropbox.
What Are the Key Terms in a Software Licence or SaaS Agreement?
The Software Licence Agreement and SaaS Agreement will set out a number of key terms.
| Terms | Explanation |
| Services | Your customers will want to know the scope of use of your software or SaaS. Accordingly, your Agreement should clearly state the functionality of the software and the types of services, including any additional custom development services or support services that will be provided to users. You may also wish to provide additional specifications, manuals and other documentation that sets out the details of the services. |
| Access | Your Agreement should include information about how your customers can access the software and whether you will allow any authorised users to use the software under your customer’s licence. For example, if a user needs to create and verify their account in order to access your software, you should state this in your Agreement. |
| Prohibited Uses and Responsibilities | To govern how users can use your app, you may want to set out explicit prohibitions against certain kinds of uses. Typical obligations under a ‘prohibited use’ clause include: + restrictions against the customer engaging in any unlawful acts, including bullying other users; + introducing any viruses into the software; + breaching any third-party rights, including intellectual property or privacy rights; or + interfering with the software’s proper operation. |
| Payment Terms | Depending on which model of software provision you choose, there may be a number of different pricing structures that you can use to acquire payment. Although in the past, many software providers offered once-off purchases of software, the flexibility of the SaaS means that you can provide your customers with many alternative payment options, such as: + annual or monthly fees; + pricing based on subscription tiers; and + fees for additional services, such as onboarding fees. |
| Intellectual Property Rights | As a software provider, protecting your intellectual property rights is likely to be one of your primary concerns in selling use of your software to your customers. In your Agreement, you must clearly set out the scope of the licence that you provide to your customers to ensure that any intellectual property that you wish to retain ownership of is clearly established. Additionally, you will have to outline which party owns the data that users enter into the software, as well as any output data that may be generated. |
| Termination | Your Agreement should include provisions around how a customer may be able to terminate their use of the software or SaaS. For example, you may allow your users to cancel their subscriptions at any time without any penalties. You may wish to terminate a user’s account if they breach the terms of your Agreement in any way, including if they have attempted to tamper with the software. |
3. End User Licence Agreement
An End User Licence Agreement (EULA) is an agreement between you and the end user of your software. An EULA is essential when you sell a licence to use your software to a business. In this instance, the licence may allow their employees to use the software under their enterprise licence.
The EULA will generally:
- bind both the business and its employees; and
- sets out the terms for how each individual will download, install and use your software.
4. Privacy Policy
Australian privacy laws might require your business to have a privacy policy in place. A privacy policy informs users and other third parties about how you deal with their personal information. You must seek legal advice to understand if any privacy obligations apply to you.
A privacy policy outlines how your business will:
- collect personal information from users, including through direct and indirect forms of collection; and
- use or disclose this information to third parties.
Under the Australian Privacy Principles, you may also need to state:
- a user’s right to contact you regarding the personal information that you may have in your possession; and
- any processes for unsubscribing or making complaints.
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Key Takeaways
As a new software developer, there are some legal documents you need to sufficiently protect your software and business. Some legal documents you can use include:
- a non-disclosure agreement;
- a Software Licence or SaaS Agreement;
- a End User Agreement; and
- privacy policy.
If you require assistance with drafting any of the legal documentation as a new software developer, our experienced IT lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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