Legal Basis
Further information: Software law, Software copyright, Software patent, and End-user license agreementMost software is covered by copyright which, along with contract law, patents, and trade secrets, provides legal basis for its owner to establish exclusive rights.
A software vendor delineates the specific terms of use in an end-user license agreement (EULA). The user may agree to this contract in writing, interactively, called clickwrap licensing, or by opening the box containing the software, called shrink wrap licensing. License agreements are usually not negotiable.
Software patents grant exclusive rights to algorithms, software features, or other patentable subject matter. Laws on software patents vary by jurisdiction and are a matter of ongoing debate. Vendors sometimes grant patent rights to the user in the license agreement. For example, the algorithm for creating, or encoding, MP3s is patented; LAME is an MP3 encoder which is open source but illegal to use without obtaining a license for the algorithm it contains.
Proprietary software vendors usually regard source code as a trade secret.
Free software licenses and open-source licenses use the same legal basis as proprietary software. Free software companies and projects are also joining into patent pools like the Patent Commons and the Open Invention Network.
Read more about this topic: Proprietary Software
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