On this page you will learn:

- What a software licence is

- What elements make a licence

- Each element is important

- Proof of licence entitlement is key

What is a software licence?
A software licence grants the owner of the licence the right to run or access software.

Permission is granted by the software owner (publisher) to the licence owner (your organisation).

You never 'buy' or 'own' software outright.  Software is classed as intellectual property and copyright protects the publisher against anyone else 'owning' it.  You or your organisation will only ever purchase the right to use or access software (licences) unless you write the software yourselves.

In the simplest terms, think of software as what arrives on a CD (or downloaded file) and the licence as a piece of paper granting permission to use what is on the CD.

Software licences - what do you need to know?
All software licences should have three main elements:
  1. The Terms and Conditions of the licence.
  2. A schedule defining the quantity of licences owned.
  3. Proof of licence entitlement.

Terms and Conditions
in software licences tend to always cover the same points; outlining who the parties are, what rights you have and so on.
For off the shelf software there will NOT be an opportunity to negotiate any of these terms, it is very much take it or leave it.

If you engage with a software publisher or agent of a publisher to install and develop a system where bespoke needs are satisfied, then make sure you do negotiate terms.  There should be the opportunity to ensure you get a contract that works for you in terms of functionality, time scales, support and maintenance etc.

T's and C's can outline important clauses such as; what you have the right to install, how the software should be controlled, whether the publisher has the right to audit your organisation, what information you must submit to the publisher should they request it, and so on.

The Licence Schedule - Absolutely key is knowing how many installations (or users accessing the software) you have the right to set up.

We show you where to find the licence schedule for licence contracts in Licence entitlement in our Reconciliation section.

In general there are two types of licence contract:
1) Those that spend pages and pages discussing what you have the right to do and do not have the right to do in general legalise with no mention of how many of something you own.

2) Those that spend pages and pages discussing general legalise with possibly a page at the end detailing the licences that your organisation actually owns.
Proof of licence entitlement
Legally, your organisation does not have the right to use or access software unless it can prove that it owns a valid licence.

We go into much more detail in Prove it or Lose it as this point is hugely important.

Whether it is unintentional or not, if you install or grant access to software without being able to prove the ownership of the right number of licences, your organisation is NON COMPLIANT.

This is a non-negotiable point.  Unless the publisher in question agrees that you own a licence, you do not own it.

There are ways of making your case so that publishers do agree that you own a licence which we will cover in How to handle

The important point being that you must NOT assume that just because you think that your organisation purchased a licence once upon a time, a publisher will agree that you actually own that licence today.

Particularly as audit departments of publishers will tend to look at any inability to prove licence ownership as a revenue opportunity.

These are basics that need to be understood if you are to manage your licence compliance position.

It is important to appreciate that a licence has several components and often all of them have to be present for the licence to be valid.

Let us now look at how Software is not a licence and the consequences of any such confusion in more detail...