Software Licensing Agreement

This is a standard software licensing agreement.


THIS AGREEMENT is entered into this date, by and between Licensor, and Licensee.

Pay attention to the parties. If you want limited liability, put your limited liability entity here. Only the software owner can license the software. Does the other company have limited liability? Does the other company include subsidiaries or affiliates?

WITNESSETH:These are called "recitals." They don't have that much legal weight, but they give the reader a preview of the contract.

WHEREAS, Licensor is engaged in the business of designing and developing computer-related software and hardware systems and related products and has created and developed a software package called name of product that is intended to track consumer responses using a specify type of computer system system and is described in greater detail in the attached Exhibit "A" (the "Software"); and

Modify this to match the description in Exhibit A. Be precise about what product and version you are licensing to avoid any later arguments.

WHEREAS, Licensee desires to utilize such Software in conjunction with tracking its consumer responses to questions presented in its name of product video game;

WHEREAS, Licensor and Licensee believe it is in their mutual interest and desire to enter into an agreement whereby Licensee would use Licensor's Software on its PC LAN in tracking consumer responses pursuant to the terms and conditions hereinafter provided.

NOW, THEREFORE, in consideration of the premises and the mutual covenants of this Agreement, the parties hereto agree as follows:

1. LICENSE This section describes what you are giving away. The more you give, the more money you get in return. Talk to your client about what they need and what budget they are contemplating. Compare that information to your business plan and see if they are compatible. There are many other ways to modify what you are giving away that the paragraphs below do not cover. You can modify the "size" of what you're giving away by geographic territory, industry, application (e.g., as a component of a larger application), etc. Remember, it's all about the understanding between you and your client.

A. Licensor hereby grants to Licensee, for the term of this Agreement, a nonexclusive, nonassignable, right and license to use the Software in connection with its business of tracking consumer responses on its specify type of computer system (e.g., PC LAN) system in location (the Site). Licensee's PC-LAN system at the Site currently includes current number personal computers, the serial numbers of which are identified in Exhibit "B." Licensor will place the Software on the LAN Server.

"Nonexclusive" means that you can license the software to someone other than this client. Nonexclusive licenses are less valuable than exclusive licenses. "Nonassignable" means that the client cannot "sell" the rights it receives in this contract. This restriction makes this license less valuable to the client. These two terms have many implications that go beyond the scope of this annotation. Right to "use" is a bit too vague. Define more precisely: can the client make copies or distribute the software? 

B. This license is expressly limited to licensed number personal computers on Licensee's LAN. In the event that Licensee desires to add more PCs to the LAN, it shall notify Licensor of such fact, provide Licensor with the serial numbers of the additional PCs to be added, and agree to pay the Additional User Fee recited in Schedule A attached hereto.

You can make what you're giving away "smaller" by limiting the number of computers on which cleint can use this software.

C. No right or license is being conveyed to Licensee to use the Software at any other location. Licensee is prohibited from making any copies, archival or otherwise, of the Software. Licensee is further prohibited from using the Software in any manner other than as described above.

This clause narrows the license grant by location. You can do that, or get creative and limit it in other ways. Be sure to clearly specify what the "location" is.


This Agreement shall be effective as of the date of execution by both parties and shall extend for the period of term year year(s) thereafter (Initial Term). This Agreement shall be automatically renewed for additional automatic renewal number of years-year Extended Terms unless Licensee shall provide the Licensor in writing of its intention not to renew the Agreement, said notice to be provided at least number of days notice days prior to the expiration of the then in-effect Term.

Ttiming can be crucial. You want a shorter term if you anticipate that your software will become more valuable - you want to be able to renegotiate for better terms sooner. Also, who can terminate?(this goes hand-in-hand with the TERMINATION section)

3. COMPENSATION This is what the client is giving you in return for your software license. Gauge the client's budget, name a price that is in line that budget AND make sure that price fits your business plan.

A. In consideration for the licenses granted hereunder and during the Initial Term of the Agreement and for each Extended Term, Licensee agrees to pay to Licensor the User Fee recited in Schedule A (the User Fee) in accordance with the Fee Payment Schedule recited in Schedule A. In the event that Licensee should add additional personal computers to the LAN currently being licensed, Licensee agrees to pay Licensor an Additional User Fee per computer as recited in Schedule A attached hereto, prorated in accordance herewith when such additional computers are added to the LAN.

Make sure that the payment schedule allows you to pay your bills as they come due and to pay your employees on time. You have a business to run.

B. At the time of installation, Licensee agrees to pay Licensor the Installation Fee recited in Schedule A attached hereto. In the event that additional installations are required, Licensee agrees to pay the Additional Installation Fee recited in Schedule A prior to such additional installation.

Make sure you get paid for set-up tasks. You can incorporate them in the license fee, or provide for them separately.

4. CONFIDENTIALITY Keep your source code secret. This confidentiality clause can help. You should couple this contractual strategy with copyright registration, which can give you enormous advantages that go beyond the damages you can get pursuant to this agreement. Another option is to obtain a software patent - if you choose that option, your code will be disclosed to the world, but you get a 20-year (in reality about 17-year) monopoly.

A. Licensee recognizes that the Software is the proprietary and confidential property of Licensor. Accordingly, Licensee shall not, without the prior express written consent of Licensor, during the term of this Agreement and for additional years years thereafter, disclose or reveal to any third party or utilize for its own benefit other than pursuant to this Agreement, any Software provided by Licensor concerning Products, provided that such information was not previously known to Licensee or to the general public. Licensee further agrees to take all reasonable precautions to preserve the confidentiality of Licensor's Software and shall assume responsibility that its employees, sublicensees, and assignees will similarly preserve this information against third parties. The provisions of this clause shall survive termination of this Agreement.

This clause is enforceable only if you have kept your code secret. It's important to obligate your client to impose confidentiality on others. Note the mention of "assignees" - it is contradictory to the wording in the LICENSE section of this contract. That's because this contract isn't customized. Eliminate all inconsistencies even if it's time-consuming because they can become big points of contention. You can write a so-called "liquidated damages" clause in here so that you will get a fixed amount of money in case the client breaches the confidentiality clause (or any other clause in this contract, for that matter).

B. Licensee shall take no steps in attempting to reverse engineer the Software.

This clause can be helpful, although the Copyright Act expressly allows reverse engineering in certain narrow circumstances.


A. Licensor shall install the Software on Licensee's server in accordance with the Delivery Schedule recited in Schedule A attached hereto. At the time of such installation, Licensor shall provide Licensee with appropriate documentation for the Software reasonably acceptable to Licensee and a sufficient number of user manuals for each PC on the LAN.

B. At the time of installation of the Software and for no additional consideration, Licensor shall train at least number of employees employees of Licensee in the use of the Software at Licensee's facility.

C. Subsequent to the installation of the Software, Licensor agrees to provide additional training to Licensee's employees at Licensor's facilities for a fee of Training Fee Dollars ($__ ) per day per employee.

D. In the event that Licensee fails to notify Licensor of any difficulties or problems with the Software within Acceptance Period days after installation thereof, Licensee shall be deemed to have accepted the Software. Prior to acceptance of such Software, Licensor shall have the right to repair or replace the Software at its discretion. Upon acceptance of such Software, Licensor shall be under no obligation to repair or replace such Software except as provided for in the Warranty provision in this Agreement.

6. WARRANTIES This section is extremely important yet too often overlooked. This is where disputes that lead to litigation will usually arise. This section must be drafted with utmost attention to detail.

A. Licensor further represents and warrants that it has no actual knowledge that the Software infringes any valid rights of any third party.

Here, you are saying that you don't actually know you used code from another source without proper authorization. Your client won't be too impressed with this guarantee because your client wants you to be responsible for any infringement or unauthorized use. Essentially, your client does not want to pay for software that could make them liable for copyright infringement. In all likelyhood, a careful client will want you to change this clause.

B. Licensor warrants that the Software will perform in accordance with the specifications provided by Licensor to Licensee, a copy of which will be added to this Agreement. THE WARRANTY PROVIDED FOR HEREIN IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, THAT MAY ARISE EITHER BY AGREEMENT BETWEEN THE PARTIES OR BY OPERATION OF LAW, INCLUDING THE WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

You are guaranteeing that the software will perform to specifications. Make sure that the the software can live up to the specifications in your promotional materials, user guides (online and print), and the specifications added to this agreement. Otherwise you are in breach of this agreement. Also, there are very subtle and important ways in which you are not allowed to replace implied or express warranties even if you write it in a contract. This area of warranties is highly specialized and beyond the scope of this annotation.  

C. In the event of a claim by Licensee under this warranty, Licensor shall have the option to either repair or replace the Software. In the event that Licensor fails to repair or replace the Software within a reasonable period, Licensee's sole recourse shall be to terminate the Agreement and Licensor's sole obligation shall be to return any Licensee and Installation Fees paid by Licensee. In no event shall Licensor be liable for any incidental, consequential, or punitive damages as a result of its performance or breach of this Agreement.

This clause favors the software developer, but to what extent this is enforceable can be debated.


Any improvements or modifications made by Licensor to the Software shall be promptly provided to Licensee and shall be automatically included in this Agreement.

This sentence is short, but has many implications. You must, for no additional charge, provide client with software updates, and you are providing the same warranties for these improvements.

8. TERMINATION Keep in mind that termination triggers certain clauses/obligations - it doesn't make the contract null and void.

The following termination rights are in addition to the termination rights that may be provided elsewhere in the Agreement:

A. Right to Terminate Upon Notice. Either party may terminate this Agreement on Number Days Notice of Termination days' written notice to the other party in the event of a breach of any provision of this Agreement by the other party, provided that, during the Number Days Notice of Termination-day period, the breaching party fails to cure such breach.

Here, it looks like there are enumerated events that trigger the right to terminate. As written, this contract does not allow you to terminate upon convenience. Put that option in if you want it. The client (licensee) can terminate for any reason (see B. below).

B. Licensee Right to Terminate. Licensee shall have the right to terminate this Agreement at any time on Month's Notice of Termination months' written notice to Licensor for any reason.


A. Upon the expiration or termination of this Agreement, all rights granted to Licensee under this Agreement shall forthwith terminate and immediately revert to Licensor and Licensee shall discontinue all use of the Software and the like.

B. Upon expiration or termination of this Agreement, Licensor may require that Licensee transmit to Licensor, at no cost, all material relating to the Software, provided, however, that Licensee shall be permitted to retain a full copy of all material subject to the confidentiality provisions of this agreement.

10. INDEMNITY This section goes hand-in-hand with the WARRANTIES section. Essentially, you are saying to the client (licensee): "If you get sued for any warranties I made about the software, I'll take the blame." So make sure you only make those  warranties you can deliver. Again, warranties are extremely important and can be fertile ground for litigation.

Licensor agrees to defend, indemnify, and hold Licensee, and its officers, directors, agents, and employees, harmless against all costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims of third parties against Licensee based on a breach by Licensor of any representation and warranty made in this Agreement as well as for any third-party claim for infringement of its intellectual property rights based on Licensee's use of the Software.

As written, this clause is not very friendly to the software developer. You may wind up paying for your client's attorney's fees even if the claim against your client is not very strong. You can negotiate this clause with your client.


A. Any notice required to be given pursuant to this Agreement shall be in writing and mailed by certified or registered mail, return receipt requested, or delivered by a national overnight express service.

B. Either party may change the address to which notice or payment is to be sent by written notice to the other party pursuant to the provisions of this paragraph.


A. This Agreement shall be governed by the laws of State.

Name the state that is friendly to software developers and where you can easily get to in case of a dispute in court.

B. All disputes hereunder shall be resolved in the applicable state or federal courts of State. The parties consent to the jurisdiction of such courts, agree to accept service of process by mail, and waive any jurisdictional or venue defenses otherwise available.

You don't necessarily want to accept service of process by mail (service of process the method by which someone starts a lawsuit). If you make it easy on the other party to start a lawsuit, then there's a better chance they will resort to litigation if disputes arise. On the other hand, this clause makes it easier for you to sue the client. It's a double edged sword.

13. AGREEMENT BINDING ON SUCCESSORS This is self-explanatory.

This Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors, and assigns.


No waiver by either party of any default shall be deemed as a waiver of any prior or subsequent default of the same or other provisions of this Agreement.

Example of default: client doesn't pay by a specified date. This clause says that (for exaple) if you accept late payment, it doesn't mean that you agree to accept late payment in the future.


If any provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other provision and such invalid provision shall be deemed to be severed from the Agreement.


The license granted hereunder is personal to Licensee and may not be assigned by any act of Licensee or by operation of law unless in connection with a transfer of substantially all the assets of Licensee or with the consent of Licensor.


This Agreement constitutes the entire understanding of the parties, and revokes and supersedes all prior agreements between the parties and is intended as a final expression of their Agreement. It shall not be modified or amended except in writing signed by the parties hereto and specifically referring to this Agreement. This Agreement shall take precedence over any other documents that may be in conflict therewith.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have each caused to be affixed hereto its or his/her hand and seal the day indicated.




Signature of Licensor


Signature of Licensee


Title of Licensor


Title of Licensee


Date Signed by Licensor


Date Signed by Licensee




DATED date






During the Initial Term of this Agreement, the User Fee shall be Initial User Fee Dollars ($__ ). For each Extended Term, the User Fee shall be Extended User Fee Dollars ($__ ).


For every PC in excess of Licensed Number on Licensee's LAN that will have access to the Software, Licensee shall pay Licensor an Additional User Fee of Additional User Fee Dollars ($__ ) per PC per Term of this Agreement.


For the installation of the Software by Licensor on Licensee's LAN, Licensee agrees to pay Licensor an Installation Fee of Installation Fee Dollars ($__ ).


For each additional Installation made by Licensor after the initial installation, Licensee agrees to pay Licensor the sum of Additional Installation Fee Dollars ($__ ).

This fee covers subsequent installations of the software on the server.


Licensee agrees to install the Software on Licensee'S LAN within # of Days days after execution of this Agreement.


The User Fee and Installation Fee shall be payable as follows:

Agreement execution (text) Percent (Agreement execution (#) %) of User Fee

Upon execution of this Agreement

Software install (User Fee) (text)  Percent (Software install (User Fee) (#) %) of User Fee

Upon installation of the Software on the LAN

Software install (Install Fee) (text) Percent (Software Install (Install Fee) (#) %) of Installation Fee

Upon installation of the Software on the LAN

Licensee Accept (User Fee) (text) Percent (Licensee Accept (User Fee) (#) %) of User Fee

Upon acceptance by Licensee

Licensee Accept (Install Fee) (text) Percent (Licensee Accept (Install Fee) (#) %) of Installation Fee

Upon acceptance by Licensee




DATED date





[Attach detailed description of the computer system, including operating specifications.]




DATED date





[Attach list of all PC serial numbers currently on the LAN.]