Familiarize Yourself With The Different Types Of Software Licenses

If you are planning to develop your own software, odds are you will be reusing existing code, such as frameworks, functions, code snippets, and more. If you want to use any existing software code, you need to meet certain obligations for reuse. Even unlicensed code that is open-source and free of cost comes with obligations for reuse.

However, if you plan to use formally developed code, there is a good chance that you will need to pay for the license to use it. If you don't have the license to use the code, you could face serious legal action. It is therefore important to familiarize yourself with software licensing.

What Is Software Licensing?

Software licensing is a way of managing software assets. It ensures that the original developers get compensated for their program code. It also protects the software developer using the code from any legal action. Software licenses also allow for tighter control over how many times a program is used, which can help avoid piracy and illegal distribution.

Habitual use of software without a license is considered illegal. Even if you are using open-source programs, which are free to download and use, there are obligations for reuse. If you don't have the right to use the software code, then you could be violating copyright law and find yourself in court.

What Are Licenses For?

A license is essentially an agreement between the developer and the user. The license outlines the rules the user has to follow and the rights and obligations they have when using the code. Generally speaking, a software license includes the following:

  • Permission to use the software
  • Usage rights
  • Number of users  eligible to use the software
  • Inclusions with the software (such as support, maintenance, software upgrades)
  • Warranty terms
  • Permissions and limitations regarding the distribution of the software
  • Copyright definition
  • Terms for termination of the license
  • Software performance guarantees
  • Penalties and fees for non-compliance

Benefits of Managing Software Assets

If you are developing your own software, then there is a good chance you will need to use multiple existing codes. It rarely makes sense to build everything from scratch, especially if there is existing code out there that is perfectly suited for your application.

However, if you license multiple software codes, then you need to manage those assets carefully to ensure correct usage and compliance with legal requirements.

A software management tool may be useful to manage all the software licenses you are using.  Implementing a software management tool can help with the following:

Improve IT Asset Oversight

If you implement a software management tool to manage your software assets, it will be easier to see which specific types of licenses are in use. As such, you’ll greatly improve your IT asset oversight. Effective asset oversight means you can track the usage and installation of the different types of licenses you’ve paid for, which helps ensure that you are operating within the constraints of the licenses you have.

Optimize Spending While Maximizing Savings

By monitoring all of your software assets, you will be able to keep track of exactly how much you have spent on licenses. You can also learn which types of licenses you use most, and which licenses are extraneous for your project.

You can then optimize your spending by buying only the types of licenses that are necessary for your software project. This will maximize your investment, and help you save on licenses that you don’t require.

Compliance Equals Less Litigation And Financial Risks

Finally, software management and compliance can help you avoid litigation. By staying compliant, you will minimize the risk of facing litigation and hefty fines.

Without appropriate management, you may find yourself using code that you no longer have the license to (or in a way that is prohibited by the license) without even realizing it, which could expose you to legal consequences.

Types of Software Licenses

There are two primary types of software licenses: commercial and open-source. Commercial software licenses typically require a fee, while open-source licenses are free to use. However, open-source software licenses do come with certain obligations. This means that, despite the code being free, you cannot just use it however you like.

There are five subtypes under these two categories of software licenses, which include:

Public Domain License

Public domain licenses are reserved for software that is not copyrighted and does not require permission to use. Moreover, you will not have to pay any fees or royalties to the owner.

Such software can be used however you want—the code can be copied, reused, and distributed without consequence. The only drawback is that public domain software does not always adhere to the best coding practices. Essentially, you get what you (don’t) pay for.

GNU Lesser General Public License (LGPL)

The GNU Lesser General Public License is essentially the same as public domain software, but it also offers a warranty. You will still be able to modify and reuse code without any problems.

However, if you do so, you have to make sure that your modified version follows all of the applicable licenses, which means making modifications in ways that are compatible with the original license.

Permissive License

Permissive software licenses allow for any type of modification as long as the original license is acknowledged. You can reuse and modify the code as much as you require without worrying about whether or not it's compatible with other types of licenses. You just need to give credit to the original developers.

Copyleft License

Copyleft licenses are types of open-source software that allow for specific types of reuse and modifications. If you modify the code, then your version must be released under a copyleft license.

Doing so ensures that others can access and use it too if they want to—provided they adhere to those same terms. For example, if the original software specified “personal use only” in its copyleft license, then the software you develop using that code can only be for personal use.

Proprietary License

Proprietary software is the only type of software that is not open-source. Proprietary software licenses are also referred to as commercial or non-free software licenses. Not only do you have to pay for their use, but it usually comes with various types of restrictions.

These types of licenses will only allow you to use the code in specific ways, depending on how it's written. Additionally, you cannot copy, modify, or distribute the code.

Which License Type Applies To Your Software?

When it comes to your own software project, proprietary software code may be too restrictive (as you will not be able to copy, modify, or distribute the code in any form). As such, your project requirements may be better suited to open-source software licenses.

Although public domain software is the least restrictive, the quality of such software tends to vary. Instead, focus your attention on LGPL and permissive software licenses. If you plan to use code from a copyleft software, you need to be very careful about the terms of use because they can be quite restrictive as well.

How Does Software Licensing Work?

When you pay for software, you are paying for its use, not its ownership. As such, you don't actually own it. When you license software, you purchase the temporary rights to use the software and agree to the obligations and rights that are outlined in the licensing agreement. Usually, you pay for the license by the month or by the year.

Typically, software licenses are paid for using a subscription model and can be renewed when the term ends.

How Much Does It Cost?

If a software is open-source, it usually indicates that it’s free to use. However, just because you don’t have to pay to use it, doesn’t mean you can use it however you want. You will still have to follow the license’s terms of use. On the other hand, if the software has a proprietary license, it means that you will have to pay for it. Keep in mind that you’re not buying the software’s ownership, you’re simply paying for the right to use the license.

The cost will vary based on the type of software you are buying and how you are buying it. For instance, a perpetual license allows you to use the software forever—but you will not receive support from the developer, nor will you be able to access any updates that are released in the future. Essentially, you’re paying a one-time fee upfront.

A subscription model allows you to pay monthly or yearly and usually comes with all updates and some support. Subscription licenses can cost anywhere from a few dollars a month to thousands of dollars a month.

What Is a Software Licensing Agreement?

A software licensing agreement is a legal document between the user and the developer that outlines key conditions designed to protect the property rights of the owner and to protect those who use the license.

It outlines certain rules, including:

  • Who retains the ownership rights of the software
  • Where you can install the software
  • How often you can install the software
  • How you can use the software and its code
  • If the software or its code can be copied or modified
  • If the software or its code can be redistributed
  • How long the agreement and its terms last

Manage Your Software Assets To Reduce Risks

The average cost of non-compliance for using software without a license is $20,000. If non-compliance is discovered during an audit, the average cost is only $1,500. If non-compliance is found via a software asset management tool, it could cost as little as $40 to fix.

Monitoring your software assets is critical when reusing or modifying code for your own software development project. Proper software management can help you keep on top of your software assets, licenses, and remain compliant with your licenses.

Here at Brainspire, we develop custom software from scratch to meet the specific needs of our clients. When you pay for our custom software development service, you are not paying for the software—you are paying for our service.

That means that once your software is complete, it belongs to you, and you can do whatever you want with it, including licensing it to other users or even selling it.

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