Software licensing has always been a popular way for software developers to monetize their software. However, while there are a number of benefits to the licensing model, if you aren’t clear about the terms and conditions, it can come back to bite you. Here are three key things you need to consider when writing the license agreement for your software.
Before you can start providing your software to any licensees, you need to be clear about what the parameters for its usage are. If you have any concerns about your software being misused in any way, then you may want to include provisions in your licensing agreement to account for this. Many developers will offer different subscription tiers for their software so you may well be dealing with multiple licensing agreements, one for each different type of subscription you offer.
You will also need to be clear about how many user accounts will be included with each license. Will you be licensing on a per-user basis? Or will you allow multiple users on a single license? You also need to be clear about where you stand on the sub-licensing or re-licensing of your software.
Protecting Your Intellectual Property Rights
Protecting your intellectual property is essential if you want to avoid the time and money you have invested in research and development for your software going to waste. Potential licensees are going to want to know about your software in some detail, especially if you are charging a premium price for licensing. You don’t want to give away any details that might lead to someone else taking your idea and doing it for themselves, but you will inevitably have to touch upon confidential information, if not reveal it directly.
Fortunately, there are virtual deal rooms that are designed to facilitate deal negotiation. Deal management software enables you to share sensitive documents and information securely. Being able to talk more freely about your software makes it much easier to sell it to other people. Deal management software also makes managing the rest of the process easier for everyone involved.
Warranties And Limitations
Depending on the context in which your software will be used, there may be potential liabilities on your part. No business wants to find itself facing unexpected litigation costs because the software that they provided has caused issues for their users. Furthermore, if you allow licensees to create their own code that is derived from yours, you could be opening yourself up to more liabilities.
Clearly state any guarantees that you are able to offer to licensees, but also make it clear to them what the limitations of your software are. If there are certain scenarios in which your software isn’t just unsuitable but potentially dangerous or damaging, make sure that you make this clear as well.
Licensing software can be a great way to monetize it. In fact, in certain industries, licensing software rather than selling it has become the norm. Recurring licensing payments enable software developers to support and refine their software over a long-term period. However, there are a number of rules and regulations that you need to be aware of. If you don’t get your licensing right, you could end up exposing yourself legally.