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End-User License Agreement


Authored By- Meghana Vuttaradi

Keywords: License, infringement, Copyright

Abstract

The amount of software that hosts Spyware has significantly increased. In order to prevent legal consequences, providers need to warn consumers of the presence of spyware by End User License Agreements (EULAs) during the implementation of an application. Ignoring End User License Agreements (EULAs) for internet platforms because of their duration and scope is a chance that both web and smartphone consumers should not consider.


Introduction:

An end-user license agreement (EULA) is a legal agreement between a software company or software developer (called a licensor), and the end-user using the software (called a licensee) in compliance with the Indian Contract Act of 1872. A website (music portal) where music can be legally downloaded has signed a music license agreement with the copyright owner and other music portals to demonstrate this makes the end-user agree to an agreement called an end-user license agreement (EULA) to ensure the copyright owner. If a business produces any software or has a website, then an enforceable agreement with the end-users is required to protect the intellectual property of the business and to limit potential liability. Such agreements are commonly referred to as End-user License Agreements. These EULAs are still being interpreted by the courts as legal contracts, valid contract formation and other common laws are applicable around the contract.


Users accept EULA in two ways.

1. Shrinkwrap agreement

If it is a physical product, such as software that was bought in a package with an installation disc, the customer would have approved it when the packaging is removed. This is called a shrink-wrap agreement.

2. Clickwrap agreement

The courts are becoming more comfortable enforcing the EULA, especially when it's in a click-wrap deal form. A clickwrap agreement is a type of contract contained in a digital form that is widely used with software licenses and online transactions where the user has the option of accepting or rejecting the terms and conditions before using the product or service in question. These are generally enforceable, so long as the terms are clear and conspicuous.


In the famous case, the issue of the validity of Click-wrap agreements first came up for debate in 1998 of Hotmail Corporation v. Van $ Money Pie Inc[1], where the court for the northern district of California implicitly upheld the validity of such licenses where it claimed that "the defendant is bound by the terms of the license as he clicked on the box containing "I agree" indicates that he agrees to be bound. In a catena of judgments like Groff v. America Online[2], Inc., this decision was followed and upheld.


Key terms in EULA

The most common and important clauses required by each EULA to get users to accept such EULA are licensing, usage restriction, related agreements, copyright infringement / intellectual property, termination of licensing, disclaimer of warranty, and liability limitation.


1. Duration

The license duration in a EULA is vitally important. Some software programs like Anti-virus programs are licensed annually. It is therefore important to state clearly the length of the EULA when planning the EULA, as it can open up for users to be able to alter the time and settings and damage EULA length. To avoid such, one may also consider requiring the user to register his software copy online on your company website once the software is installed. In case the license is only valid for a limited time.


2. License Granting

A EULA's primary purpose is to grant an end-user a license of use for the software.


3. Legal Jurisdiction

The EULA must state that both the licensor and the end-user are bound by Indian laws and must mention the court which will have jurisdiction over the matter in case of a dispute or violation arising. The agreement must also specify whether the licensor to which the user agrees would prefer any alternative dispute resolution methods.


The enchanting thing about contract law is that it even gives the choice of the law that would govern a deal. Unfortunately, the end-user rarely gets such a chance. And the judicious court that may be approached in case of a dispute is also under the jurisdiction of a civil court.


4. Basic License Clauses

The software company or developer still owns the software and all the associated intellectual property, by having a proper license clause that clarifies the scope of the license is crucial.


Usually, a basic license gives terms such as:

1. Where the user can use the license, for example in India or around the world.

2. Exclusive or non-exclusive use, especially if the license is only available to one person.

3. Transferable or non-transferable, particularly where the user is able to transfer the license to another party.

4. Revocable or irrevocable, specifically if the license can be terminated and revoked.

5. Perpetual or non-perpetual, like the license, only lasts indefinitely for a specified term.


From the point of view of a software company or developer, recognition, warranties, and representation are of paramount importance as an agreement by the user that the software company has control so that the license does not transfer any ownership and from the point of view of the user the software company or developer wishes to ensure that the user agrees that the software does not infuriate.


Restriction of Use

The Restrictions clause details any restrictions when the software is used or operated. Those restrictions could be as follows:

1. Reproduction of the software, except where permitted by EULA.

2. The codification, modification, or creation of new software setup.

3. Disabling any safeguards.

4. The Software Reduplication.

5. Distribution, sale, sub-licensing, or lease of the software, except where permitted by EULA.


Related Agreements

The EULA prescribes the guideline on how the software should be operated by a user, but there should be other legal agreements that include restrictions that it would be most useful to link to all other EULA agreements.


1. Copyright Infringement/Intellectual property

Because software programs have been completed, infringement issues are universal and therefore essential in order to avoid any such issues, most EULA, therefore, includes extensive but specific language which makes it evident that in the case of such an infringement, the consumer will be held liable for legal matters arising from the infringement


2. Termination

It is of paramount importance for the software Company or developer to maintain the right to terminate the license in the event of a usage violation or similar problems and such clauses tend to be unconditional and grant a firm right to the software provider or licensor rather than to the end-user.


3. Warranty disclaimer

Customers who order the software often face a problem when it comes to supporting and maintaining the finished product, therefore, an utmost important clause in a EULA is a disclaimer of warranties. Such a provision defines the software being made "as is" and that it is not the duty of the licensor or vendor to supply the software to satisfy the end-user.


4. Limitation of liability

Many EULA's adhere to substantial liability restrictions. In general, most EULA would try to keep the software licensor harmless if the program damages the user's device or data, and some software also suggests limitations as to whether a licensor may be held liable for damage caused by improper use, but important terms should be highlighted in a manner that is easy to recognise and still readable. The liability limitation clause clarifies the extent to which each party will be legally liable if there are erroneous events with the software.


5. Settlement of dispute

Binding arbitration shall resolve a dispute clause in the EULA which covers any and all disputes arising in connexion with the EULA.


In Microsoft Corporation and Anr. V. Mr. S.K. Das And Anr.2013[3], the suit had been filed for a permanent injunction restraining infringement of copyright, distribution of earnings, rendering of accounts, damages which had been incorporated and registered under the Indian Companies Act, 1956.


Conclusion

Most often forgotten is the fact that acceptance of the aforementioned EULA terms implies that the user agrees to purchase or rent the license from the company or developer to use the software. The EULA allows the user to use the software publisher's intellectual property and must therefore be drafted in such a way that it protects the user's interests, protecting the Licensor primarily from any infringement of intellectual property rights. EULAs are typically lengthy and written in a very specific legal language, which makes informed consent difficult for the average person. If the company designs the EULA in a way that intentionally discourages users from reading it, and the use of complex legal terminology makes it difficult to understand, this may result in many users not giving informed consent. Currently, improving the implementation of law enforcement with respect to the music industry where Section 58 of the 1957 Indian Copyright Act may not be sufficient since the practicality of implementation made available is largely superfluous.

[1] 1998 WL 388389 (N.D.Cal.) [2] C.A. No. PC 97-0331 (R.I. Super. May. 27, 1998) [3] CS(OS) 611/2009 & I.A. 4322/2009


References

1. https://blog.ipleaders.in/end-user-license-agreement-key-terms/

2. https://www.legistify.com/blogs/view_detail/end-user-license-agreement/

3. https://legalvision.com.au/q-and-a/what-is-an-eula/

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