End-user license agreement
An end-user license agreement or EULA is a legal contract between a software supplier and a customer or end-user.
The practice of selling licenses rather than copies of software predates the recognition of software copyright, which has been recognized since the 1970s in the United States. Initially, EULAs were often printed as shrink wrap contracts, where tearing the shrink wrap indicated acceptance. Software distributed via the internet is more commonly licensed via clickwrap or browsewrap.
Most companies prefer to sell licenses rather than copies of the software because it enables them to enforce stricter terms on the end user in a number of domains, especially by prohibiting transfer of ownership or use on multiple computers, and by asserting ownership of the copyright of derivative works, such as user-generated content in video games.
Enforceability of EULAs has been a controversial issue and varies by jurisdiction. In the United States, it is possible to enforce a EULA that is shown to the customer after purchase, but this is not the case in Germany. European Union law only allows for enforcement of EULAs insofar as they do not breach reasonable customer expectations.
Software copyright
The source code of a computer program is protected by copyright law that vests the owner with the exclusive right to copy the code. The underlying ideas or algorithms are not protected by copyright law, but are often treated as a trade secret and concealed by such methods as non-disclosure agreements. Software copyright has been recognized since the mid-1970s and is vested in the company that makes the software, not the employees or contractors who wrote it.The tendency to license proprietary software—to sell the right of use of the software rather than a copy of the software—dates from the time period before the existence, then the scope of software copyright protection was clear. These licenses have continued in use after software copyright was recognized in the courts, and are considered to grant the company extra protection compared to copyright law. Virtually all proprietary software is not sold as a copy but rather as a license with associated EULA.
Delivery of EULAs
Initially, end-user license agreement were printed on either the shrinkwrap packaging encasing the product or a piece of paper. The license often stipulated that a customer agreed if they did not return the product within a specified interval. After the advent of the internet, EULAs are more often found in clickwrap format where the user only needs to click an agree button. Without the constraints of having to print the license, the length of the agreements ballooned. Another type of license, browserwrap, intuits the user's consent after they simply visit a website and are made aware of the terms of use.EULAs are often written in vague language, and do not inform the customer of the limitations on the agreement's enforceability. Most EULAs have been designed so that it is very difficult to read and understand them, but easy to agree to the licensing terms without reading them. Regardless of how easy it is to access, very few consumers read any part of the license agreement. Most assume the terms are unobjectionable or barely notice agreeing while installing the software. Companies take advantage of consumers' inattention to insert provisions into EULAs. Many assert that the purchaser is an adult and takes responsibility for minors' use of the product, to relieve the vendor of the issue of contracting with a minor and liability from minors' use of the product.
EULAs, almost always offered on a take-it-or-leave-it basis as a non-negotiable condition for using the software, are very far from the prototypical contract where both parties fully understand the terms and agree of their own free will. Proponents argue that the contracts streamline purchases and that savings for the company could be passed to the consumer. Enterprises buying software for a large number of employees often negotiate the licensing agreement with the vendor.
Common provisions
According to one study, economic competition from different software services leads to EULAs more favorable to the customer.Resale
According to United States federal law, a company can restrict the parties to which it sells but it cannot prevent a buyer from reselling the product. Software licensing agreements usually prohibit resale, enabling the company to maximize revenue. Proprietary software is usually offered under a restrictive license that bans copying and reuse and often limits the purchaser to using the software on one computer. Source code is rarely available. Derivative software works and reverse engineering are usually explicitly prohibited. The issue of reuse is particularly important in the copyright law of English-speaking countries.Data collection
Many EULAs allow the vendor to collect information about the user and use it in unrestricted ways.Derivative works
Some EULAs restrict the ability of users to exercise copyright over derivative work made using the software, such as creative creations in the virtual worlds of video games.Although most video game EULAs assert that the developer holds the copyright on any user-generated content, this is contested by users and has not been tested in the court system. Legal scholar Anthony Michael Catton suggests that user-generated content should be considered jointly authored by the video game developers and the users.
Some companies do allow video footage of their games to be distributed online, even for profit.