Types of software licences for business
Understand the different types of software licences, how to comply with licensing terms and conditions, legal considerations and risks to your business.
When using software, it's important to understand software licences. A licence outlines the rules for using and sharing the software. Virtually all proprietary software comes with licences.
What is proprietary software?
Proprietary software is commercial software that you buy, lease or license from a specific supplier or developer. Legally, the software remains the property of its creator, but you can use it according to the rules specified in an end-user licence agreement. You effectively accept these terms when you install the software on your device.
Common types of software licences
There are three main types of proprietary software licenses:
Per device licences
These licences are for installing software on a single device, like a server, computer or phone. This is the most common type of software licence. Some versions may require activation to ensure the software is installed on one device only.
Per user licences
These licences allow multiple users to use the software at the same time. The licence usually specifies a maximum number of users.
Site licences
Site licences are less restrictive than per device or per user licence. They typically allow unlimited users or devices at one location.
Licensing also applies to open source software, but the terms are generally more flexible - see more on open source licensing.
Software licensing and legal considerations
It is important for users to understand the law around software licensing. When you buy proprietary software, you are essentially buying the right to use it in a specific way. The software company retains full ownership of the software.
The licence protects the intellectual property rights of the software creators, and ensures fair usage by the end user. It typically restricts actions such as:
- making and distributing copies
- selling your licence to someone else
Most proprietary software is copyrighted, meaning you do not have access to the source code. Without this code, you cannot modify the software.
Risks of unauthorised duplication
Software licences can be expensive, but don't be tempted to copy a single licence for several users - this is considered 'unauthorised duplication'. This violates the licence agreement and can result in fines and legal action against you and your business. Always buy the correct number of licences for your needs to stay compliant.
Avoid software piracy risks
Using pirated software poses serious risks to businesses. Be cautious of very cheap software or operating systems. Prices that seem too good to be true often indicate unauthorised or pirated copies, which may come with malware or viruses, potentially putting your systems at risk. To avoid these issues, buy software from reputable sources, and make sure that it comes with proper licensing documentation.
Consider using legitimate software to monitor your applications and maintain an inventory. This investment can help you manage resources and reduce legal risks associated with unlicensed software.