What is the Difference Between a EULA and a Software License Agreement?

By Drew Stevens - April 29, 2020 - Technology & IP

When it comes to software, lawyers, and legal contracts, it can be easy to get license agreements mixed up. There are a number of agreements out there, and the type of agreement that you want depends on what you’re trying to accomplish. Some of the more popular agreements include the end user license agreement (EULA), a standard software license agreement, the terms of service agreement (TOS), the software as a service agreement (SaaS), and the service level agreement (SLA). Here, our Columbus, Ohio software licensing attorney will explain the difference between EULAs and a standard software license agreement.

What is an End User License Agreement?

An end user license agreement is exactly what it sounds like – it is an agreement that conveys an end user license. End user license agreements are used in a variety of situations including for traditional off-the-shelf software products, for software apps, and pursuant to a master services agreement, often times at the business and enterprise levels.

What needs to go in your EULA?

What needs to go in your end user license agreement depends on your software product. A standard template EULA needs to cover a few key areas, at minimum.

The EULA needs to be clear on intellectual property provisions, with no hidden or ambiguous terminology or language. A standard EULA will grant the customer a non-exclusive right to use the software. Certain restrictions on that license might include territorial or geographic restrictions.

A good EULA might also feature limitations on liability. A standard limitation of liability might include a total dollar cap on which the provider can be liable. This is usually limited to the total amount of fees received by the provider, often over the last six or twelve months.

Overall, the scope of your EULA will usually be dictated by the complexity of the end-use license involved. For example, say you have a simple online photo generator or a plugin that allows an user to upvote or downvote an action. Generally, the EULA will be on the simpler side. Just be sure that if your EULA is presented in an online-only manner, the process for the user to accept the terms of EULA should be clear. Having the user click on some sort of confirmation can be a best practice.

Complex EULAs

On the other hand, if your EULA is for a product or service at the business or enterprise level, you’ll want to have a more thorough agreement that covers a number of areas.

If your software product or service has the end user inputting data or using the data generated by the customer’s use of the software, your EULA should address security and privacy. Ideally, the EULA would have the user also agree to the terms of your privacy policy.

If your EULA is on the more complex end, you may want to cover limited warranties and disclaimer of certain warranties. A limited warranty might include limiting tech support or refunds to a certain time period. Certain warranties arise under common law or statute (think warranty of merchantability, fitness for a particular purpose), and your EULA may have to explicitly disclaim these warranties, so they cannot apply to you.

What is a Software License Agreement?

A software license agreement is similar to a EULA in that it also conveys access to software pursuant to certain terms and restrictions. Perhaps the key difference between a EULA and a software license agreement is that a EULA is often meant for scenarios where many users could be using the software on a continuous basis and a software license agreement is more often used for business-to-business, often times for finite engagements.

As between a software license agreement and a SaaS agreement, software as a service is usually hosted and accessed through the internet, whereas a software license agreement can be used more for situations where the software is installed and operated on the licensee’s computers, networks, or servers.

What Needs to Go in Your Software License Agreement

One of the first aspects to address in your software license agreement is the scope of the license. Often times, the license should by non-sublicensable, non-exclusive, and non-transferrable. If the license includes limitations as to how many computers the software can be used on or how many total authorized users can use the software, these restrictions need to be addressed in the scope of the license.

No matter what kind of license is made or what kind of restrictions are associated with the license, the licensing language needs to state that the license still remains the exclusive property of the licensor and that all intellectual property rights in the software also stay with the licensor.

Restrictions on Use

A good software license agreement will list a number of restrictions. These often include:

-copying or attempting to reverse engineer the software

-sublicensing, renting, publishing, transferring, otherwise allowing access to the software to any person who is not authorized to use it

-using the software in any way that would infringe upon the intellectual property rights of the licensor or any third party

-attempting to modify, combine, delete, or otherwise change any components or features of the software

Finally, don’t forget a good catch all restriction – barring the user from using the software in anyway outside of the intended permitted use of the software.

Confidentiality

Chances are the software license agreement, whether it’s the software itself, the pricing for the software, of the terms of agreement, involve a certain amount of confidential information. The licensee, in using the software may also be disclosing certain confidential information. Beyond information that the parties label as confidential, confidential information can include proprietary information and trade secrets. Before you share any information that you deem confidential or valuable, be sure that the scope of the confidentiality provision in your agreement is tailored for the situation.

Fees and Payments

Don’t neglect your fees and payments provisions. Beyond your actual pricing, be sure to cover expenses, taxes, late fees and payments, non-payment rights, and currency.

Software Licensing Lawyer Columbus Ohio

If you think you might have questions on your EULA or your software license agreement, contact our software lawyers today.