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3 Essential Things to Know When Licensing Software


These days, nearly every business makes use of software for managing processes, communication, and a myriad of other purposes. What this means is that these applications and programs are invaluable tools that few organizations can ill-afford to function without. And in many instances, they require the agreement to terms imposed by the developer or software company and activation of their respective licenses before they can be installed and accessed. Because keeping abreast of everything can be challenging, most defer to a software license management solution instead.

However, before you begin licensing software, there are a few things you need to know. Only through an understanding of the basics of the process can you ensure that you’re able to comply with all legal limitations and terms. With that said, here are some essential things you should be aware of when you license your desired software.

  1. Licensing agreement

The software's licensing agreement is essentially the legal document stipulating the conditions of the software developer or company for the use of their program. These conditions exist primarily to protect their IP or intellectual property from misuse and avoid any trouble that may result from the software's utilization. Generally, they include payment terms and pricing, although some may have it on separate documentation. But at its core, it provides ground rules that end-users need to follow, such as the number of times it can be installed, whether it can be redistributed, copied, or modified, and its correct usage.

  1. Types of licenses

Contrary to what some might think, there are multiple types of licenses for software. Here are some of them:

  • Public domain. If a piece of software is clearly defined as public domain, it means that it can be used without any restrictions. Users need to exercise caution and do their due diligence when it comes to adopting software that’s public domain because they may not always comply with the best standards of coding. There’s also a possibility that it isn’t secure.
  • Under the LGPL license, software companies and developers have the right to link into libraries that are open source within their applications and programs. The resulting code may then be used under a different license type, including proprietary.
  • Permissive. As the most popular type of open source licensing, there are minimal restrictions for its modifications and redistribution.

  1. Purpose of licensing software

Software is released for different reasons, be it the demonstration of new ideas or economic gain. So there needs to be clear conditions and terms to ensure that all entities involved benefit from its use. And these are typically expressed in the licensing agreement. In other words, it’s there to give everyone a contingency.



Many take software licensing for granted, but it’s more important than you think. After all, it outlines what can and cannot be done with the program, from distribution limitations and permissions to financial liabilities, penalties, and termination fees. So make sure you go through it before you make any commitments.


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