Tips to avoid software IP infringement

Posted on 17 Apr 2014 by The Manufacturer

Dan Hedley, solicitor at Thomas Eggar LLP gives his tips on avoiding software intellectual property infringement.

Dan Hedley
Dan Hedley, solicitor, Thomas Eggar LLP

Scope of use
Software is usually licensed for use within a particular scope. Because most of the acts of “using” computer programs (copying to a hard drive, loading into memory, causing a processor to execute instructions, displaying on screen and so on) are acts restricted by copyright law, it is important not to exceed the scope of the licence you have been granted. Here are some common scope of use restrictions which you may come across:

  • A limit on number of users or computers, which may be a simple limit or may be based on “concurrency” (i.e. live users at any given point in time).
  • A limit on which legal entities can use the software; do not assume that, because one group entity is licensed to use a piece of software, others are too.This sounds like a subtle point but it actually becomes critical in the context of a restructuring or a mergers and acquisitions transaction.
  • A restriction on geographical territory, perhaps to particular premises, or within a particular country. Geographical restrictions are not usually problematic, but may become so if the software in question is used by mobile workers.
  • A restriction on the purposes you can use the software for; for example, it is very common for programs offered free of charge to be restricted to non-commercial use, with a paid-for commercial use licence being offered as an alternative.

The key message is that when you enter into software licence agreements, make sure the scope of use offered meets your actual needs.

Third party rights
Because computer software is very complicated, software developers will regularly build on and incorporate into their products components developed by third parties. For the same reasons, software developers will sometimes reuse code they wrote for a previous employer or for a previous project, which isn’t necessarily theirs to use. Programs can also potentially infringe patents held by third parties, especially in the USA where broad patents on computer software proliferate without much restriction.

That being so, it is possible that a third party may seek to bring a claim against you on the basis that software you have licensed from a vendor infringes that third party’s rights. It is customary for vendors to indemnify their customers against this eventuality, and you should always ensure that software licence agreements you enter into deal adequately with this point.

Free/ libre/ open source software
Software licensed on free/ libre or open source terms is usually fine to use within your organisation, but if you redistribute it to third parties there can be additional requirements which you have to comply with.

For instance, if you happen to be a software developer, it is very important to understand (and, if necessary, audit) use of free/ libre or open source code in your own products, as programmers can be prone to just “getting something free off the internet” without much consideration for the terms on which that “something” is in fact made available. This can cause problems down the line; for example, if code licensed under the GNU general public licence (the “GPL”) ends up in your product, you can become obliged to distribute the whole, or a large part, of your product, including the source code, on the same terms as the GPL-licensed code was made available to you (i.e. effectively for free, with source code and with no restrictions on redistribution), with potentially serious consequences for the business.

This is obviously not meant to be an exhaustive list of the issues to consider in relation to software infringement. However, it highlights some of the key issues which frequently crop up.