Tannenbaum Helpern Syracuse & Hirschtritt, LLP
About Us Careers Contact Us Search
Home Practice Areas Industries Case Results Attorneys Publications Events Press Room

Software Ownership

So you go into your friendly neighborhood computer store and "buy" your pretty little box of software. You're excited now and can't wait to install it. You rip open the box and put aside those books that you only read when you can't make the thing work. Now you get to that envelope in the middle with the golden silicon. The gold is the disk that makes your system do those wonderful things the ad promised.

As you're about to tear open the flap, you see this imposing language, "IMPORTANT: CAREFULLY READ THE LICENSE AGREEMENT ON THE FRONT OF THIS PACKAGE BEFORE OPENING. BY OPENING THE SEALED DISKETTE PACKAGE, YOU INDICATE YOUR ACCEPTANCE OF THIS COMPANY'S LICENSE AGREEMENT."

This is what's called a "Shrink-Wrap Agreement." It's called such because opening the envelope is supposed to prove legally that you agreed to the license in the same way that signing an agreement proves that you have a deal.

So, in the face of this important sounding language, you stop, carefully read the contract and call your attorney for advice before opening the envelope. NOT!

Actually what happened was that you didn't pay attention to the crafted legal language on the envelope. You had adrenaline coursing through your veins, gold to get to, and you weren't going to allow a few words in boldface type slow you down. What you really did was rip open the envelope, slip disk one into the disk drive, and click "install." Next you called 1-900-tech-support when your new software crashed (but the tech support part of the story is for another day).

Herein, I deal with the question, "What exactly did you buy when you bought your software?" Obviously, you bought some diskettes and books, but what else did you get? That "what else" is arguably only a license to use the software. Possessing a license is a lot less than actually owning what you have purchased. A license is essentially permission to do something that without a license, would be illegal. The company that wrote the software wants you to believe that you do not own your software although you bought and paid for it.

The corporation that wrote your software tries to legally ensure that it retains ownership of the software, and that for an appropriate amount of money (guess who decides what's appropriate), they give you permission to use it by their rules.

These rules vary depending upon the license. A common license for application software allows "single-user" software to be installed on more than one computer if the software is not used simultaneously on another computer or processor. As a practical matter, this means that you can buy one copy of software and install it on your office, home and notebook computers. This assumes that you are the only user and can be at only one place at a time. Now, if your child is at home typing that term paper on WordPerfect just when you're writing a letter at the office, technically you've just violated your license.

Utilities and operating systems generally have licenses that are different from application software licenses. With these types of software, the company wants to sell you one copy for each work station. For example, Symantec's license for Norton Anti-Virus gives you the right to use one copy of the software on a single terminal connected to a single computer. Theoretically, you could run the software, delete it and then install it on another machine, but that is probably not practical. With this type of license, the fact that you don't virus check your notebook when you virus check your home computer is not relevant. This license only gives you the right to install and store the software on one computer's hard drive at a time. This is a much more restrictive type of license.

Microsoft's licenses for DOS and Windows are similar. Microsoft makes it clear that it requires you to have one copy of its operating system for each computer that you own.

Networking raises its own unique and more complex questions. The key is to read the license agreement that came with your software. In general, these agreements are moderately well written and contain a minimum of legalese. The software companies have tried to make the license agreements understandable to non-lawyers.

The key concept with networks is that software producing companies want you to purchase a separate license for each computer that uses the software. This can get interesting with large networks where there might be a hundred computers, but no more than fourteen systems using the particular software package simultaneously. Does this mean that you need fourteen licenses or a hundred? The answer is in your licensing agreement; either answer could be right, but you must read it to avoid problems. And don't forget the danger posed by that disgruntled employee. He or she can be very quick to report you. It's as easy as calling an 800 number.

Federal copyright law supports the software company's right to limit copying of their software, which can even be more restrictive than some other licenses. It gives the owner of a copy the right to reproduce it for only two purposes. The first, entitles you use of the program. In other words, you can install it on the computer you will use. The second, permits you to back-up a copy for "archival purposes."

You may have heard that there is some question about whether "Shrink-Wrap Agreements" are enforceable. The problem is that law is always slow to develop as new technologies appear. Computers are still new enough that the law provides more questions than answers. Sometimes the answer to a legal question is not a pure legal answer, but rather a practical one.

The practical answer may be that unless you want to be a test case and bear tens of thousands of dollars in legal fees, abiding by the Shrink-Wrap Agreement seems wise. The software industry is better prepared to litigate these issues than you.

Groups like the Business Software Alliance (BSA), an industry trade association, polices the enforcement of software licensing; they are prepared to spend money to make their point. To give you an idea of what is at stake, BSA estimated that in 1994, software piracy accounted for fifteen billion dollars in lost sales. So BEWARE, Big Brother IS watching. You are only one phone call away from a problem; and the most likely person to make that phone call is a disgruntled employee. Clearly, they do not catch most people who improperly copy software, but unless you have no enemies, you are at risk.





Like us on FaceBook Follow us on Twitter Get LinkedIn with us Pin It! Email Us Print this Page

Sitemap | Terms of Use | Privacy | Attorney Advertising

Tannenbaum Helpern Syracuse & Hirschtritt LLP provides legal advice only to individuals or entities with which it has established an attorney-client relationship and such advice is based on the particular facts and circumstances of each matter. Contacting us through this site, or otherwise, will not establish an attorney-client relationship with us. Any e-mail or other communication sent to THSH or its lawyers through this site will not be treated as subject to the attorney-client privilege or as otherwise confidential and you should not include any confidential information in any such communication.