Selling software is a legal minefield. When you purchase a digital product, you’re not buying the CD/DVD and packaging, but a license to use the software. The license is a legally-binding agreement that determines how you may use that product. If software was “sold”, you would be the legal owner and could do what you wanted, e.g. install it anywhere, disassemble it, give it away or anything else that didn’t contravene copyright laws.
However, what happens when you no longer need that product? Is it possible to re-sell your software license to another party in the same way that you can sell a second-hand book, music CD or movie DVD? It’s a legal grey area which has been highlighted by the case of Vernor v. Autodesk, Inc.
A SitePoint forum post by Dan Schulz describes the full legal arguments in detail. In summary, Vernor attempted to sell legal copies of AutoCAD on eBay but had his account suspended following intervention by Autodesk Inc. Vernor sued Autodesk in federal court:
- Vernor claimed he purchased the license from vendors who must have been the legal owners of the software. Therefore, the ownership transferred to him on purchase.
- Autodesk contended that ownership was never transferred, Vernor’s sale infringed copyright, cited that its license was a “computer software agreement”, and the industry normally restricted ownership transfers.
Frequently Asked Questions on Software Licensing and Selling
What is the difference between selling software and licensing software?
Selling software implies transferring the ownership of the software to the buyer. The buyer gets full rights to the software, including the right to modify, distribute, and resell it. On the other hand, licensing software means granting permission to the licensee to use the software under certain conditions. The licensee does not own the software but has the right to use it as per the terms of the license agreement. The licensor retains the ownership and can control how the software is used.
Can I resell a software license?
Yes, you can resell a software license if the license agreement allows it. However, most software licenses have restrictions on resale to protect the software’s intellectual property rights. It’s crucial to read and understand the terms of the license agreement before attempting to resell a software license.
How can I securely license and sell my software?
To securely license and sell your software, you need to implement a robust licensing system. This system should include a unique license key for each user, encryption to protect the software from unauthorized use, and a mechanism to track and manage licenses. You should also have a clear and comprehensive license agreement that outlines the terms of use.
How do I start a software business?
Starting a software business involves several steps. First, you need to identify a market need and develop a software solution to meet that need. Then, you need to create a business plan, secure funding, and assemble a team. Once the software is developed, you need to license it, market it, and provide customer support.
What is involved in software and technology licensing?
Software and technology licensing involves granting permission to a licensee to use a software or technology under certain conditions. The licensor retains the ownership of the software or technology and can control how it is used. The licensing process involves drafting a license agreement, setting the terms of use, and managing and enforcing the license.
Can I modify the software if I have a license?
Whether you can modify the software depends on the terms of the license agreement. Some licenses allow modifications, while others do not. It’s important to read and understand the license agreement before making any modifications to the software.
What happens if I violate the terms of a software license agreement?
Violating the terms of a software license agreement can result in penalties, including termination of the license, legal action, and financial damages. The specific consequences depend on the terms of the agreement and the nature of the violation.
Can I transfer my software license to someone else?
Whether you can transfer your software license to someone else depends on the terms of the license agreement. Some licenses are non-transferable, meaning they cannot be given or sold to another person. Other licenses may allow transfers under certain conditions.
How do I protect my software from piracy?
Protecting your software from piracy involves implementing security measures such as encryption, license keys, and digital rights management. You should also educate your users about the importance of respecting intellectual property rights and the consequences of software piracy.
What are the benefits of licensing software instead of selling it?
Licensing software instead of selling it has several benefits. It allows you to retain control over how the software is used, protect your intellectual property rights, generate ongoing revenue through license fees, and reach a wider market by making the software more affordable and accessible.
Craig BucklerCraig is a freelance UK web consultant who built his first page for IE2.0 in 1995. Since that time he's been advocating standards, accessibility, and best-practice HTML5 techniques. He's created enterprise specifications, websites and online applications for companies and organisations including the UK Parliament, the European Parliament, the Department of Energy & Climate Change, Microsoft, and more. He's written more than 1,000 articles for SitePoint and you can find him @craigbuckler.
