Software licensing flexibility complements the digital age

Fred Greguras and Sandy J. Wong

Abstract

This paper summarizes our observations on current and future trends in software licensing practices. While U.S. issues are emphasized, some global issues are also addressed because of the trend toward global computing environments and the importance of international revenues to the U.S. software industry.

Our observations reflect the changes in computing environments, particularly the on-going transition to client/server computing which will ultimately move toward enterprise-wide computing environments. Distributed processing may ultimately create a seamless virtual global computing environment in which new licensing approaches will be needed. The U.S. software industry is evolving toward more flexible licensing practices and pricing methods that reflect the overall business value of software to users. At the same time, vendors must be able to implement a reasonable degree of protection for their intellectual property and produce enough revenue to fund the next generation of products to sustain its global lead in information technology. Because of the growing use of mass market methods for software distribution, statutory intellectual property protection such as copyright and patent protection is extremely important since no agreement is needed for implementation. While statutory intellectual property protection provides proprietary protection for software assests, insurance is the possible safety net for potential liability for mass-market software when no contractual limitations on liability and warranty disclaimers can be implemented.

Other observations include that licensing approaches must accommodate the emerging market requirements for electronic delivery of software. The paper concludes with discussion of a number of other licensing issues, including licensing beyond the application level to the object level, the use and enforcement of shrinkwrap licenses and a proposal for establishing standard licensing practices for shareware and freeware.

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