That’s a Wrap! Part 4 of 4: Applying the Finishing Touches to an End-User License Agreement

By Mike Wozniak | General Licensing Tips

Oct 21
finishing touches on a cake

Hard to believe, isn’t it?

With this blog post, we’ve reached the final installment of our four-part series spotlighting the various important aspects of End-User Licensing Agreements (EULAs). In today’s closing chapter, Jordan Donaldson, a prominent Orlando, Florida attorney specializing in business and intellectual property law, discusses obtaining end-user acceptance of the terms of the EULA and how the SoftwareKey System’s ELA (Electronic License Activation) and ELM (Electronic License Management) features can be used to create a permanent record of customer acceptance of the EULA as well as selected license management activities (e.g., dates and times of license activation, revocation, or transfer).

Oh, just a quick reminder as Mr. Donaldson makes his approach to the dais: If you missed out any of the previous installments of this series, we’ve got your back! You can read the first installment here and then come back to check out the second installment here and, finally, return to devour the penultimate installment here!

Part 4 of 4: Applying the Finishing Touches to an End-User License Agreement

Ensuring Your EULA is a Legally Enforceable Contract

In commercial transactions where the software is being licensed for use by multiple individuals throughout an organization — such as employees, individuals providing services to an organization and unaffiliated patrons of an organization — the licensor may wish to require that each person using the software be given a copy of the terms of use, and agree to comply and be contractually bound by them. To ensure that individuals are bound by the licensing agreement, it must be implemented to form a valid contract between the licensor and licensee. To enforce this contract, the user must be made aware of the EULA and agree to the written terms. With a click-wrap/click-through agreement, it is essential that the instructions for accepting the EULA be clearly displayed and that the user is given full control over whether to assent to the terms (e.g., the acceptance checkbox should not be preselected).

Like Every Good Boy Scout, Be Prepared!

There are few court cases that have considered the validity of click-wrap/click-through licenses. However, in the cases that have challenged their validity, the terms have most often been upheld. It is important to note, however, that even though courts have ruled some click-wrap/click-through licenses to be enforceable contracts, not every individual term of every agreement is enforceable. Click-wrap/click-through licenses are explicitly required to meet the criteria for enforceability of a unilateral (one-sided) form contract. The best way to be prepared for any possible legal situation that may arise is by keeping updated files containing every version of a EULA that has been published, and track which particular adaptations of the software used which version of the EULA language. Keeping a log of all online purchases, as well as logging when and which software versions were downloaded, will also come in handy if a lawsuit arises and the logs must be presented.

Let the SoftwareKey System Help You with Recording and Maintaining EULA Acceptance Data

Displaying your EULA and tracking which customer agreed to which version of each EULA has been a cumbersome proposition in the past. Fortunately, the SoftwareKey System presents several solutions to this problem issue. Not only does a person have to click to accept the EULA before making any purchase online, but the shopping cart records the version number purchased, the timestamp of the purchase, and the IP address from which the purchase was made. In addition, the person downloading the software (who may not be the purchaser) must also click to accept the EULA for the then-current version of the software, and the version number downloaded, IP address, and timestamp of the download is also recorded. This log of information is available for every customer’s purchase and downloadable license.

The SoftwareKey System also provides a core set of APIs from which the software developer can choose including Electronic License Activation (ELA) and Electronic License Management (ELM). ELA facilitates product activation and version checking for updates, which is done by allowing software to communicate with a central licensing server. ELM allows for license transfer, revocation, the collecting of usage statistics, and various other data collection and manipulation features. When using either or both of these product-activation schemes, it is crucial to make proper disclosures in your EULA regarding the way client information is used and stored, and an experienced IP attorney should be consulted regarding EULA disclosures regarding data.

Epilogue

Proper licensing is an essential part of modern software sales, distribution, and management. Software companies should have a relationship with an experienced IP attorney to guide the company through the maze of intellectual property laws that affect licensing, and should also deploy a solid, automated system to manage licensing of their products. Managed, automated licensing processes are key to scalability of software companies, and the SoftwareKey ELA and ELM APIs provide a comprehensive licensing solution for software companies of all sizes.

About the author

Jordan Donaldson is a business and intellectual property attorney.

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About the Author

Mike Wozniak is one of the co-founders of SoftwareKey.com and responsible for marketing, content and product strategy. When he isn't plotting new ways to help customers solve licensing and business automation challenges, he likes to travel and entertain guests who come to visit the Orlando area. He also writes most of the licensing tips here.