A Guide to Licensing Software

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Software licensing can be a broad subject, and it isn’t easy to dive into and understand all of its intricacies. However, by understanding the basics, you’ll have a much better idea of how to make the most out of the distribution of your applications and programs or manage your existing software to ensure they’re optimized and prepared for audits.

Software license—what is it?

As its name suggests, software licensing is the legal instrument governing software product redistribution or use. In most cases, all software is protected by copyright law, in both object and source code forms. However, exceptions exist, such as if the US government creates the application or program.

Software license

There's a good chance that you've already read or skimmed through license agreements if you've ever purchased or downloaded software. Whether free or commercial, most tend to come with a dense outline of what and how to use them. Simply put, it serves as a contract between the developer or publisher and consumers on what can and shouldn't be done with it. It can also be used for monetization software purposes.

Generally, there are some commonalities between every license, regardless of the companies owning the rights to the intellectual property. For example, the licensing agreement usually addresses concerns about how the software can be distributed, installed, and used. But remember that there will still be significant differences between licenses, depending on those who own them.

Proprietary and open-source

Understanding how proprietary or closed-source software differs from its open-source counterpart is crucial. Where the latter's licenses typically have fewer restrictions regarding their usage and installation, the former has more stringent limitations.

For example, open-source software solutions can be downloaded multiple times across various devices and redistributed without legal repercussions. On the other hand, proprietary software cannot.


The end user licensing agreement or EULA generally accompanies proprietary software, and this document describes what can be done with the digital product.


For example, it shows the number of copies that can be used, any auxiliary systems the devices or machines require to operate it, secondary use rights, and any data developers or publishers can collect from users and their intended use. With that in mind, proactively understanding the licensing terms is a rule of thumb.

Usage can also change, much like preferences. Therefore, it is recommended that users familiarize themselves with transfer or deactivation protocols included in it. Having a deactivation or transfer plan will allow you to save money and time addressing problems that may arise due to noncompliance. It’s an investment of time that will pay dividends in the long run.


Most are aware of the existence of software licensing, but many take it for granted, only for this mistake to cost them down the line.

Whether you’re a developer looking to monetize your software or a business looking to manage your software for better compliance, learning about software licensing can be beneficial. And the information in this article should be able to help you in your endeavors.

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