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What Is a Software License Agreement?‌

Group of people around a table in front of their laptops | Software License Agreement

‌A Software License Agreement is a contract that allows a licensee to use software, but not own it. The software maker keeps some rights that the licensee doesn’t get, like continuing to sell the software to others and granting the licensee permission to use the software on a lone computer. 

‌The licensee also gets other rights and abilities, like the right to amend the code to make the software integrate better with other programs. Software license agreements used to be called end-user license agreements (EULAs), but that term is going out of style. Often the license is in the middle of the chain of users.

A software company wants to keep ownership of its code and programs, but still sell the use of the software to others. A license agreement does just that. It divides ownership and use rights between you and the software company. You need a Software License Agreement whenever you need to sell or buy uses and abilities, but not own the software entirely. If you buy all rights, you can do anything with the software, but it will cost a lot of money. If you license just the rights you need, the costs are much lower.  

You may have a license from Microsoft to use MS Word. Years ago, you may have bought a copy of Word “forever,” and then it stopped updating. You then had to buy it every year. You do not own the program, but you can use it in all the ways that matter. The Software License Agreement sets terms for what you can and cannot do with the software. For example, you can use it to create documents and show or give them to others but can’t get inside the code and reverse engineer the software. Here’s what you need to know about Software License Agreements.

What is the purpose of a Software License Agreement?

Software license agreements set out which rights belong to the licensee and which rights the software’s creator keeps. Both parties can negotiate to get their desires into the contract. For example, sellers of a tax software program will want to make sure that they don’t get sued if the purchaser uses the software for bad things. Another company may incorporate the seller’s software as part of its own software. The agreement needs to spell out those terms.

When do I need a Software License Agreement?

Software license agreements come with every piece of software you use. You have them, whether you want them or not. They become especially important with software as a service (SaaS) or when you need to negotiate the terms of software’s use.

What are the parts of a Software License Agreement?

A Software License Agreement sets the scope of the contract. It specifies which people or things the contract binds and how they change money for software. It details what services the software maker provides, like updates or a help desk. It often says the software maker keeps all rights not included in the contract. The licensee gets all rights listed in the contract. Then, it lists the rights the user gets from the software maker.

What are the limitations of Software License Agreements?

Say, an intern or corporate vice-president pushes a wacky idea that no one has thought of before. They will sail right through a contract loophole and gain (or lose) a million dollars. They’ve listed every possible circumstance, and it’s made the contract fairly long. As the longer Software License Agreements grow, the harder they are to read, understand, and keep track of.

‌How do you create a Software License Agreement?

You will work with two types of Software License Agreements. The first is non-negotiated. It’s mass-marketed and you can only accept or refuse the entire agreement. You negotiate the second, where the buyer and seller both put their terms in the contract. 

You create a new agreement, often using an old one for its good bones, by starting with the basics: names, dates, the product. Each side raises what they want, which is added to the contract if both agree. They might agree to spread payments over three years. You might agree to send the data to improve their program.

Managing Software License Agreements

Software license agreements can be time-consuming and hard to keep track of. As a software user, you will have an agreement with every piece of software you use. Each one will be different. Finding out what you need to know can easily put you at the bottom of a pile of papers. Luckily, automated record-keeping systems are exactly what the computer was first built for.

Old-system contract management‌

How does your office store and manage its Software License Agreements? Are they organized? Can you find them? Without a specialized system to manage them, the information in those contracts is often lost. Many offices use tools like spreadsheets to keep track of contracts, but those tools do not enable you to use the information in the contracts.

Separate systems. The office stores contracts in separate systems that don’t talk to each other. You find some printed out and sitting in a drawer. You know many sit in computers around the office in a variety of file formats. You find others inside the software program itself. 

Isolated processes. You must negotiate each contract separately. Your negotiations improve with knowledge of your other contracts. Are the rates of one vendor similar to those who offer similar products? It’s hard to tell without digging into a pile of contracts. 

No transparency. Contracts often get shoved into a filing drawer and are ignored. Even once you find the right contract, these documents are often difficult for a non-lawyer to read. You need to find and use the information inside them.

Ironclad Digital Contracting

‌Digital contract management systems are designed to take on the weaknesses of the old system. They put all your information together and make it accessible to everyone who needs to use it. You can now analyze your contracts and make changes to benefit your company.

All-in-one solution. One system contains all your contracts. The contracts you need jump to your fingertips. They are comparable and sortable. You can get to them using your computer or phone from anywhere. 

One source of truth. With everything in one place, it is easy to know the truth. No longer do you have to compare Pat’s memory to Justice’s meeting notes to an old version of the contract. The terms of the contract are all typed into the same system. You just go there.

Full transparency. When negotiating, you now have the past 10 years’ records of shipment rates. You also have the rates of competitors. Information about past and present contracts is easy and immediate to find and use.

Ironclad product features that help

Ironclad designed its contract management software to work for your office. It is more than a searchable repository. Its features put it to work, helping you create new contracts and negotiate old ones.

Automating workflows for Software License Agreements

The Ironclad digital contracting platform lets you automate your contracting workflow. It works both in creating new contracts and in keeping track of your old ones, like Software License Agreements. The program is easily usable by an untrained person. We offer a dynamic data repository where you can put your contract to work. 

Templates simplify workflow processes

The software works like a smart contract template. It tells you where you need to fill in the information. It lets you add and delete sections. All your contracts go into a template, which you can use to understand your contracts better. Using metadata, you can search and compare by contract type, contract value, names of signatories, expiration date, renewal dates, and more. 

You can make new contracts from the same template you store your old ones in. This further simplifies your work because now all your contracts look similar — and you’ll know where to find things. You’ll also be able to mine contracts for information to improve your business and your negotiations. 

Workflow Designer

‌The workflow designer keeps track of the details inside contracts while you are working on them. It shows what you still need to do at clearly marked places. It allows several people to work on the same contract. You can easily modify a contract or fine-tune its language. Plus, anyone can use it — no technical experience is needed. Dropdown menus and addable sections mean nobody skips the important parts.

Ironclad keeps you on track

‌Software license agreements don’t need to be a headache anymore. Ironclad’s Contract Management System keeps track of all your contracts and all their details. With it, making new contracts or revising old ones is a breeze.  Digital contract management takes the pain out of keeping track of your Software License Agreements. Ironclad can sift through all your documents for you, giving you just the answers you need. Contracts become more standardized, simpler to negotiate, and faster to create.

Visit our website for more information about our program and about contract management systems in general. We will show the ways that Ironclad can help at all stages, from contract creation, collaboration, and negotiation to our dynamic repository with world-class security. Sign up for a demo to see how automated contract management can tame your wild Software License Agreements and make them work better for you.

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