An app license agreement, also called a software license agreement, is a legal contract that software developers should pursue to limit the exploitation of their work and protect their rights to receive fair compensation for the product they create.

Whereas copyrights also protect software code or online apps from infringement by other parties (and it is recommended that anyone who has developed a software app register their work with the Library of Congress), by their very nature they prevent others from using the registered material without permission. An app license agreement, on the other hand, protects and, at the same time, allows people to use the app. It sets the terms a user must agree to comply with in order to legally play the developer’s game.

The following is a very brief overview of the issues that an app license agreement should address. As always, it is recommended that legal counsel be consulted if further clarification is desired, like in the case of copyright questions.

Why Consider an App License Agreement

Exactly what is an app license agreement and why is it important? Here are a few reasons:

  • Unauthorized use is restricted
  • Rights of both parties are clearly defined
  • Formal acceptance is required
  • Distribution rules are established
  • Issue of whether software is free or proprietary is spelled out

App license agreements are not just the domain of the individual developer. Complicated agreements are often used by large software companies that create elaborate software for business and government entities in order to protect valuable patent information that may have taken years to develop.

While it is standard practice for app license agreements to be installed within the software package and for acceptance to be the final step to complete the software download, it is not uncommon for developers to require a signed agreement that must be returned before access is granted. Either way, it is always up to the user as to whether or not to agree to the terms of the agreement before the software can be accessed.

Special Qualities of an App License Agreement

The traditional concept of an agreement between two parties is putting signatures on the last page of a paper contract. Each party then receives a copy of the signed agreement to verify that the agreement is legally binding.

Things move much faster these days, and when it comes to downloading a software program onto a computer, the two parties to the exchange are seldom in the same room, let alone in the same city, state or country. Taking the time to sign an agreement, scan it and then send it to the other party by email seems like unnecessary steps when, with the click of a mouse, the software program can be up and running on a computer.

In fact, a signature has never been the sole determinant in terms of creating a legally binding agreement. Throughout the ages, an oral agreement or a handshake has been enough to establish the intention to form a contract. Today, just the act of downloading software is enough to indicate that a party has accepted the terms of use and is legally bound by them. Now, as then, intent is the determining factor as to whether an agreement has been reached or not, whether it is with a signature or by checking a box on a computer screen.

The End User License Agreement

Perhaps the most well-known form of an app or software licensing agreement is the end-user license agreement, or EULA. It’s almost impossible to have never come across a standard EULA if you’ve ever downloaded any software program to use on your computer or smartphone. Agreement is reached between parties by clicking or touching the accept button on a screen, which is the final step before a download begins.

In an e-commerce marketplace, such as eBay or the Apple App Store, where a variety of products are offered by many vendors (each with varying levels of quality control and security issues), it has become standard practice to have a general EULA that consumers accept before entering the marketplace. This protects those marketplaces from liability for issues caused by vendors.

In-app EULAs can provide additional protection from liability for individual vendors who are not covered by the standard EULA used by the e-commerce sites. These EULAs serve as a valid contract that grants the end-user limited rights, while at the same time places terms and conditions on usage that indemnifies the app developer against issues arising from unauthorized use or, in some cases, breaches of security.

As innovations in app development are creating new ways through which developers and users interact, and the lines between what is owned and what is shared between parties to an agreement evolve, it is more important than ever that app and software creators keep abreast of the latest developments to protect their intellectual property.

To learn more about app licensing agreements, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.