Is Your Software Licensed? What Is a Software License Anyway?

Summary: This brief article explores the different types of software licenses and why it is important to use licensed software. If you require assistance with software selection or any computer installations, contact your business IT maintenance.

Everyone who uses computers uses software every time they boot up. Today, an extraordinary variety of software applications is available for many different purposes. Legally licensed software requires user activation and agreement to the licensing terms and conditions before it can be used.

When using licensed software, it is essential that users follow the terms of the license that describe how the software can be legally used. A software license is a legally binding agreement between the developers or owners of the software and the user. In addition to protecting the developer, the license protects the user’s rights and liabilities. Software generally falls into two main categories - closed-source and open-source software.

A Variety of Software License Types: What Does Open-Source Software Mean?

There are two general categories of software licenses:

• Closed-Source Software – Closed-source software is proprietary and does not permit user modifications. No source code is provided, and reverse engineering to inspect or modify the source code is strictly prohibited.
• Free and Open-Source Software or FOSS Licenses – What does open-source software mean? Wikipedia defines open-source software as “computer software that is released under a license in which the copyright holder grants users the rights to use, study, change, and distribute the software and its source code to anyone and for any purpose.”

Both open-source and proprietary software might have restrictions related to transfer of ownership, whether the software is leased or purchased and whether the user has rights to copy or sell it.

There are two instances of software not covered by licensing:

• Public Domain – Some software is available for public use and free of charge. Such software is not protected by copyright law.
• Private Unlicensed – Many custom-developed software applications created for use by individual companies are subject to copyright law and are not available for licensing by outside parties.

What is EULA? Knowing What a Software License Agreement Covers

When users first purchase and install software, they are presented with an end-user license agreement or EULA. The EULA is a legal, binding agreement that defines the rights and relationship between the user (or licensee) and software vendor (or licensor). A user must accept the terms and conditions of the software provider. The EULAs for some cloud-based software are more specific; they might specify the duration of the contract, cancellation terms and any monthly or annual charges related to the license.

What Other Software License Types are There?

We’ve already discussed open-source, the least restricted software license, and proprietary, the most restricted license. There are three other categories of licenses between those two extremes:

• Lesser General Public License (LGPL) – An LGPL license permits developers to link open-source libraries contained within their software. The new code can then be licensed under any licensing agreement for any software linked to an LGPL library.
• Permissive License – Permissive licenses, also known as BSD and Apache licenses, are just what the name claims. Permissive licenses have few restrictions for modifying, copying or distributing the software. There are a few different types of permissive licenses. Some include trademarks, copyrights and other legal requirements.
• Copyleft Licenses – Copyleft licenses, also known as reciprocal licenses, are restrictive. Under copyleft licenses, if the original software code is modified, it may only be distributed under the same terms as the original license. For example, if the original license states that the software is restricted to “Business Use Only,” the same license restriction applies to any new code created from the original software.

Why Are Software Licenses Important?

New software is developed all the time. Licenses protect the rights of the user and the software developers and are vital to ensuring everyone benefits from the software. They provide:

• A designated number of users for the software
• Warranty agreements, including performance guarantees, if any
• Legal authority to use the software, protecting users from copyright infringement and liability claims
• Distribution limitations
• Descriptions of what is included under the agreement, such as upgrades, tech support and maintenance
• Rights related to copying or modifying the software
• Copyright information related to the software and its user documentation
• Terms of termination, such as penalties and liabilities

Knowing what a software license involves and knowing what the EULA is can help protect your company from liability or legal issues regarding unauthorized use or ownership. Software for mobile devices has license terms concerning how much personal data is stored on the device and what data can be accessed by the software vendor. Cyber security is always a consideration, and personal data protection is crucial to avoiding identity theft, financial hacking and the release of personally identifying details about the user. Unlicensed software may not offer these protections.

If you are still unsure about what a software license is, the different types of licensing or how to select and install the right software for your SMB or home office setup, consider checking with professional business IT experts. They can help to simplify the process and ensure that all your software is installed properly, legally licensed, kept up-to-date and maintained appropriately. IT companies will know of products that may be better suited to your needs. Licenses are a key component of protecting everyone’s rights. Make sure to only use legally licensed software to protect your work from bad actors and safeguard your user rights.