How to Define Software

Apr 07, 2016

In technology agreements, common terms can be defined in uncommon ways. In a software transaction, understanding how software is defined should be one of the first steps in reviewing a contract.

It would be easy if the term “software” followed a dictionary-like definition. However, a publishers definition of their software can often raise questions and concerns that will need to be considered before concluding the transaction. 

Software could be defined simply as a product name, such as “Window Pains 2016” The issue with such a basic definition is that it may not be clear as to what specifically is included. So more detail should be provided. For example, if a license to Window Panes is purchased, and then there is an update or an upgrade, would the licensee be entitled to the update or upgrade? This additional information be addressed in other areas of a license agreement, or it may not be addressed at all.

In situations where software is being developed, it can be helpful to identify whether the purchaser will be entitled to the source code, or merely the object code. Sometimes, it may be a combination of both where a buyer would obtain a license to use object code for the publishers product, but may require use of the source code for customizations. 

Documentation is sometimes included in the definition of the software as the documentation is actually embedded in the software. If documentation is defined separately, it can be helpful to determine how the use rights are different between the software and the documentation. The documentation usually contains the policies, procedures and written instructions for operating the software 

Because all software has its own unique features and functionalities, the definitions are often customized to match the product. Generally, the more complicated the software, the more complicated will be the definition of software. 

When considering a software definition, it can be helpful to ask yourself questions such as: 

Is it provided by a party to the agreement, or a third party;

Where will the software come from;

Are ownership rights included in the definition;

What versions are included; and

Is documentation included?

Software definitions can significantly impact how a technology agreement will operate. When engaged in a software transaction, it can be helpful to employ the assistance of an attorney experienced in advising clients with software and other related technology transactions.