Difference in software licensing terms


1

Someone wants to purchase software that I've written. Is giving him a royalty free, exclusive world-wide license the same as selling the software? If not what are the differences?

Software Software Licensing

asked Jan 4 '12 at 09:23
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Sam
6 points
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4 Answers


4

Royalty-free, exclusive world-wide license means that only license holder can sell the software without sharing revenues with you. If they want to acquire the product from you to develop it further & distribute it to end users, then this is one of the ways to do it as you essentially give up any rights to selling the software anywhere by granting such a license. However, if it's just a customer buying one copy, then they're trying to screw you big time.

answered Jan 4 '12 at 10:05
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Dnbrv
1,963 points

3

Max gives you 1000$ for your software. He has the only license to distribute it to his likings then and does not need to pay any more money to you. If Max sells the Software 10.000 times for 100$, he is making 1.000.000$. You will still have the 1000$.

If you see it sells well, you can't take his rights away. You can decide not to develop it further for him. So he will stick with the version you sold to him. If this version you gave him includes the source code, he might be able to ask somebody else to develop it further and you'll not get anything anymore.

You sell most rights you have on this software, depending on the exact phrasing of the contract.

You can do something else and sell only licenses to him. For example you could sell Max 10.000 licenses of your software. Or could sell him royalty free, exclusive world wide license restricted to 2 years. Or you can simply ask for royalities.

In any case, I would take care of these things:

  • he is able to sell a specific version of the software for a restricted time frame
  • he does not get any rights on the source code and is not allowed to develop it further
  • he can rebrand this software, but he must respect the original copyright (in other terms: your name must appear on this product with a nice ©)
  • you ask your local lawyer on that matter

Never I would agree to a royalty free, world wide license without time restriction - except I have no more plans to develop the product further and I need the money urgently.

answered Jan 4 '12 at 10:52
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Christian
3,590 points

2

There are differences between selling and granting an exclusive license. The relevant law here is copyright. If you own the software, then you can license it, but you need to be clear here as to exactly what you are licensing.

Copyright does not involve a single right, but rather a bundle of rights. From Wikipedia, the rights include:

  • to produce copies or reproductions of the work and to sell those copies (including, typically, electronic copies)
  • to import or export the work
  • to create derivative works (works that adapt the original work)
  • to perform or display the work publicly
  • to sell or assign these rights to others
  • to transmit or display by radio or video

So to answer your question we need to know exactly which rights you are licensing.

If you are granting an exclusive, irrevocable license to all rights to the software, then I don't see any difference between that and selling the software outright (ie transferring ownership).

answered Jan 5 '12 at 00:57
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Kekito
1,936 points

0

As they say, "I'm not a lawyer but," it will depend on how the agreement is written. If there are any clauses which would allow you to get control of the license back, then it is not the same as selling them the software outright. For example, is the agreement time limited, i.e., do they have full rights for 1 year, 5 years, 15 years, etc.? Some agreements also have clauses which allow an author to regain partial or full control under certain conditions, for instance, if they do not follow through on active marketing of the product, if they use it for illegal purposes, or, if it's written in the agreement, if the author tells them in writing that the agreement is to be canceled. In these type of contracts there are many many different variations depending on the current and perceived future needs of the two parties. My best advice is to consult with either a lawyer or business consultant experienced in this field. And, if your agreement is with someone from a different country, and/or it is likely that the use of the software would be in other countries, make sure your consultant or lawyer has experience in the international arena.

Make sure you are getting fairly compensated for your work in terms of its real market value (additional opinions would be valuable here). Giving up exclusive rights without royalties is rarely done without good size compensation is my understanding.

answered Jan 4 '12 at 10:15
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Michael E. Morris
29 points

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