Zal Dmytro Oleksandrovych

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zal@prikhodko.com.ua

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Specializes in protection of honor and dignity, of copyrights, inventions, patents, trademarks, support of tenders, protection of consumer rights, disputes with insurance companies, legal support in cases of administrative offenses.

Software licensing

Software licensing is the granting of the right to use a computer program under certain conditions set by the copyright owner. It allows developers to control the distribution, modification, and use of their programs.

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Types of Software Licenses

There are several main types of software licenses that determine the capabilities of users and the restrictions set by the owners:

Proprietary (closed) licenses – give the user limited rights to use without the ability to change the code.
Free (open source) licenses – allow users to view, change and distribute the source code.
Trial licenses (trial, demo) – provide temporary access to software with possible limited functionality.
Corporate use licenses – provide the right to install and use software within a company or organization on a large number of devices or with simultaneous access by a large number of users.

Differences between commercial and open source software

Commercial software is most often sold or distributed under a license that restricts its use, while open source software allows free use and modification. The main examples of commercial software are Microsoft Windows, Adobe Photoshop, and among open source software – Linux, OpenOffice. Another important difference is the fee for using commercial software and the impossibility of using it as part of other software or goods without separate permission from the copyright holder.

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Legal aspects of software licensing

Software licensing is regulated by copyright law. In Ukraine, this is the Law “On Copyright and Related Rights”, as well as international agreements such as the Berne Convention and the TRIPS Agreement.

The copyright holder may impose restrictions on:

the number of devices on which installation is permitted;
the possibility of modifying or decompiling the code;
the transfer of rights to third parties.

License Agreement: Basic Provisions

A license agreement is an agreement between the copyright holder and the user that defines the terms of use of the software. It usually includes:

Subject of the agreement – definition of license rights.
Restrictions and prohibitions – for example, prohibition of transferring the software to third parties.
Term – the period for which the right to use is granted.
Financial terms – payment for use.
Liability of the parties – what happens in case of violation of the terms.

Such license agreements can be expressed in the form of a separate written document or a public offer, and agreement to them can be made by paying for access to the software or by checking a box (clicking the “I agree” button) when installing such a program.

It will also be useful: Software copyright registration

Liability for Violation of License Terms

The use of unlicensed software or violation of license terms may result in various types of liability, depending on the nature and extent of the violation:

Civil Liability

Civil liability provides for the possibility of filing a lawsuit by the copyright owner. The court may oblige the violator to:

stop the illegal use of the software;
pay compensation for the damages caused;
compensate for moral damage;
destroy or remove illegal copies of the software.

Administrative Liability

The use of unlicensed software may be classified as an administrative offense, which entails:

fines that may be imposed on individuals and legal entities;
confiscation of illegal software;
confiscation of equipment and materials intended for the production of illegal copies of software (leading to temporary suspension of activities)

Criminal liability

In the case of significant losses or intentional mass distribution of pirated software, criminal liability may arise. In Ukraine, the relevant provisions are contained in the Criminal Code, and liability includes

fines in particularly large amounts;
corrective labor for a term of up to two years;
imprisonment for a term of up to six years;
deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years.

Liability of companies and management

Legal entities may also be held liable for the use of unlicensed software in their activities. This can lead to:

large financial sanctions;
loss of business reputation;
inability to cooperate with certain counterparties;
the risk of lawsuits from copyright holders seeking compensation for damages and lost profits.

Software licensing is an important mechanism for protecting the rights of developers and ensuring the legal use of programs. Therefore, it is important for both the person providing the software to correctly and fully determine the procedure and scope of use of its intellectual property, and for the user (whether it is a business or an individual user) to carefully study the terms of the licenses before purchasing and using the software in order to avoid legal risks.

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