A software license (or software licence in commonwealth usage) is a legal instrument (by way of contract law) governing the usage or redistribution of software. All software is copyright protected, irrespective of whether it is in the public domain. Contractual confidentiality is another way of protecting software. A typical software license grants an end-user permission to use one or more copies of software in ways where such a use would otherwise constitute copyright infringement of the software owner's exclusive rights under copyright law.
Some software comes with the license when purchased off the shelf or an OEM license when bundled with hardware. Software can also be in the form of freeware or shareware. Software licenses can generally be fit into the following categories: proprietary licenses and free and open source licenses, which include free software licenses and other open source licenses. The features that distinguishes them are significant in terms of the effect they have on the end-user's rights.
A free or open source license makes software free for inspection of its code, modification of its code, and distribution. While software released with such a license, like the GNU General Public License can be sold for money, the distribution cannot be restricted in the same ways as software with copyright and patent restrictions used by firms to require licensing fees.
The hallmark of proprietary software licenses is that the software publisher grants a license to use one or more copies of software, but that ownership of those copies remains with the software publisher (hence use of the term "proprietary"). One consequence of this feature of proprietary software licenses is that virtually all rights regarding the software are reserved by the software publisher. Only a very limited set of well-defined rights are conceded to the end-user. Therefore, it is typical of proprietary software license agreements to include many terms which specifically prohibit certain uses of the software, often including uses which would otherwise be allowed under copyright law.
The most significant effect of this form of licensing is that, if ownership of the software remains with the software publisher, then the end-user must accept the software license. In other words, without acceptance of the license, the end-user may not use the software at all.
One example of such a proprietary software license is the license for Microsoft Windows. As is usually the case with proprietary software licenses, this license contains an extensive list of activities which are restricted, such as: reverse engineering, simultaneous use of the software by multiple users, and publication of benchmarks or performance tests.
With a free software license, in contrast to proprietary software licenses, ownership of a particular copy of the software does not remain with the software publisher. Instead, ownership of the copy is transferred to the end-user. As a result, the end-user is, by default, afforded all rights granted by copyright law to the copy owner. Note that "copy owner" is not the same as "copyright owner". While ownership in a particular copy is transferred, ownership of the copyright remains with the software publisher. Additionally, a free software license typically grants to the end-user extra rights, which would otherwise be reserved by the software publisher.
A primary consequence of the free software form of licensing is that acceptance of the license is essentially optional—the end-user may use the software without accepting the license. However, if the end-user wishes to exercise any of the additional rights granted by a free software license (such as the right to redistribute the software), then the end-user must accept, and be bound by, the software license.
Open source licenses generally fall under two categories: Those that aim to preserve the freedom and openness of the software itself ('copyleft' licenses), and those that aim to give freedom to the users of that software (permissive licenses).
An example of a copyleft Free Software license is the GNU General Public License (GPL). This license is aimed at giving the end-user significant permission, such as permission to redistribute, reverse engineer, or otherwise modify the software. These permissions are not entirely free of obligations for the end-user, however. The end-user must comply with certain terms if the end-user wishes to exercise these extra permissions granted by the GPL. For instance, any modifications made and redistributed by the end-user must include the source code for these, and the end-user is not allowed to re-assert the removed copyright restrictions back over their derivative work.
Examples of permissive free software licenses are the BSD license and the MIT license, which essentially grant the end-user permission to do anything they wish with the source code in question, including the right to take the code and use it as part of closed-source software or software released under a proprietary software license.
In addition to granting rights and imposing restrictions on the use of software, software licenses typically contain provisions which allocate liability and responsibility between the parties entering into the license agreement. In enterprise and commercial software transactions these terms (such as limitations of liability, warranties and warranty disclaimers, and indemnity if the software infringes intellectual property rights of others) are often negotiated by attorneys specialized in software licensing. The legal field has seen the growth of this specialized practice area due to unique legal issues with software licenses, and the desire of software companies to protect assets which, if licensed improperly, could diminish their value.
In the United States, Section 117 of the Copyright Act gives the owner of a particular copy of software the explicit right to use the software with a computer, even if use of the software with a computer requires the making of incidental copies or adaptations (acts which could otherwise potentially constitute copyright infringement). Therefore, the owner of a copy of computer software is legally entitled to use that copy of software. Hence, if the end-user of software is the owner of the respective copy, then the end-user may legally use the software without a license from the software publisher.
As many proprietary "licenses" only enumerate the rights that the user already has under 17 U.S.C. § 117, and yet proclaim to take rights away from the user, these contracts may lack consideration. Proprietary software licenses often proclaim to give software publishers more control over the way their software is used by keeping ownership of each copy of software with the software publisher. By doing so, Section 117 does not apply to the end-user and the software publisher may then compel the end-user to accept all of the terms of the license agreement, many of which may be more restrictive than copyright law alone. It should be noticed that the form of the relationship determines if it is a lease or a purchase, for example UMG v. Augusto, Vernor v. Autodesk, Inc..