Understanding End User Licence Agreements

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Table of Contents

• What is the End User Licence Agreement?
• Types of End User Licence Agreement
• Main features of End User Licence Agreements
• Conclusion

If you have recently downloaded an App or installed software onto your computer, you will probably have come across the terms of an End User Licence Agreement. As the person installing or downloading the program, you are the End User. Have you ever bothered to read and understand the terms of the End User Licence Agreement?

There are various reasons people do not read these terms. Perhaps they are too boring or too long. One common misunderstanding amongst end users is that End User Licence Agreements are all the same. End users don’t bother to read the terms and simply click “I have read the terms and I agree”. For obvious reasons, agreeing before reading is never good practice, and can attract significant risks in some cases. Before we explain the risks, it might be worth explaining what an End User Licence Agreement actually is.

What is the End User Licence Agreement?

The End User Licence Agreement is a contract between the customers or ‘End Users’, and the software developer(s). The End User Licence Agreement establishes, amongst other things, that the intellectual property in the software remains the property of the developer, even when sold by a vendor or downloaded from the Internet. The End User Licence Agreement licences the customer to use the software, but prevents any transfer of the developer’s intellectual property rights.

This means that the user of the software must not alter the software in any way, and must comply with all the terms of the End User Licence Agreement. Unless, of course, the owner (developer) has permitted to certain uses of the software, the user must respect the restrictions contained in the Agreement.

Types of End User Licence Agreement

• “Shrink-wrap licence”

The terms of “Shrink-wrap” End User Licence Agreements become active as soon as the customer opens the packaging of the product.

• “Click-through licence”

This type of End User Licence Agreement requires the user click a box that usually says “I Agree” before the software can be installed.

Main features of End User Licence Agreements

While many End User Licence Agreements are similar in form and contain many of the same clauses, the following features are most consistently featured:

• Licensing

In this clause, you warrant the specific uses of the software to the user. Here is the most appropriate place to clearly identify the prohibited uses of the software, such as changing the software, selling, renting or making commercial gain from the software, and so on. This is also where you would be clear about ownership and intellectual property rights. The idea is retain all intellectual property right in the software and to prevent any unwarranted modifications being made to the software. If the user agrees to enter into the End User Licence Agreement, they are agreeing to use the software for specified purposes only. It is also worth prohibiting any of the following activities:

o   Attempting to reverse-engineer the software;

o   Planning to make copies or redistribute the software;

o   Making any alterations or modifications to the software;

o   Using the software in any prohibited way without first seeking your permission of the owner;

Another limitation typically imposed by the software owner is the number of installations permitted, i.e. how many computers the one software can be used for.

• Warranties

Make sure your IT lawyer includes a ‘Disclaimer of Warranty’ clause that limits your liability for things that are out of your control, such as damage to the disc (if it is a disc).

• Liability

Make sure your IT lawyer inserts a limitation of liability clause into the End User Licence Agreement so that you are not responsible for the potentially negative effects that the downloading or installing of your software may have on the end user’s computer. Will you be financially liable for any kind of damage that the end user suffers? And under what circumstances?

• Legislation

If someone agrees to enter into an End User Licence Agreement, they agree to the laws of the jurisdiction in which the End User Licence Agreement is created. Make sure your IT lawyer understands your needs with respect to the kind of legal relationship you wish to create with the end users of your software.

Conclusion

If you’re looking to create an End User Licence Agreement and do not know where to start, contact an IT lawyer to get an idea of what needs to be included in the Agreement. These agreements can be quite complex, so it’s a good idea to seek professional legal assistance. Our lawyers here at LegalVision have a great deal of experience in drafting End User Licence Agreements.