Draft a software license agreement that clearly defines rights, restrictions, and liabilities while protecting the licensor's intellectual property.
Sources: SPDX License List (spdx.org); OSI Approved Licenses (opensource.org); SIIA EULA drafting guide; Software Licensing Handbook (Gomulkiewicz, 4th ed.).
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Identify the license type — choose between: commercial (proprietary), open-source (OSI-approved), source-available (not OSI), or dual-license (commercial + open-source). Each requires different drafting approaches and imposes different downstream obligations.
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Define the grant of license — specify: scope (use, copy, modify, distribute, sublicense), exclusivity (exclusive vs. non-exclusive), geographic scope, duration (perpetual vs. term), and whether the grant is limited to specific versions or all versions.
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Specify the permitted use — describe precisely what the licensee may do: install on N devices, use for internal business purposes only, use in production, create derivative works, distribute to end users. Ambiguity here is the most common source of dispute.
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Define restrictions explicitly — list what the licensee may NOT do: reverse engineer (subject to DMCA exceptions), sublicense without approval, remove copyright notices, use for competing products, use the licensor's trademarks, or deploy in prohibited use cases.
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Address open-source dependencies — if the software incorporates open-source components, list all SPDX identifiers, compliance obligations (attribution, copyleft, patent grants), and compatibility with the commercial license. Copyleft components (GPL, AGPL) can infect proprietary code.
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Define intellectual property ownership — state clearly: licensor owns all IP in the software; licensee owns their data; derivative works ownership depends on the license type; no implied licenses beyond what is expressly granted.
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Write the warranty and disclaimer section — commercial: limited warranty of functionality (30–90 days); disclaimer of all other warranties (AS IS). Open-source: typically no warranty. Specify remedy for warranty breach (repair, replace, or refund).
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Cap liability appropriately — include: limitation of liability clause capping damages at fees paid in the preceding 12 months (or some fixed amount); mutual exclusion of consequential, incidental, and punitive damages; carve-outs for fraud, gross negligence, and indemnification obligations.
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Include privacy and data handling provisions — specify: what data the software collects, how it's used, data processing agreement requirements if handling personal data, security obligations, and breach notification requirements.
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Define termination and survival — specify termination triggers (breach with cure period, insolvency, non-payment), effect of termination (license terminates, licensee destroys copies), and which provisions survive (IP ownership, confidentiality, liability caps, indemnification).
