Software License - Proprietary Software Licenses

Proprietary Software Licenses

The hallmark of proprietary software licenses is that the software publisher grants the use of one or more copies of software under the end-user license agreement (EULA), but ownership of those copies remains with the software publisher (hence use of the term "proprietary"). This feature of proprietary software licenses means that certain rights regarding the software are reserved by the software publisher. Therefore, it is typical of EULAs to include terms which define the uses of the software, such as the number of installations allowed or the terms of distribution.

The most significant effect of this form of licensing is that, if ownership of the software remains with the software publisher, then the end-user must accept the software license. In other words, without acceptance of the license, the end-user may not use the software at all. One example of such a proprietary software license is the license for Microsoft Windows. As is usually the case with proprietary software licenses, this license contains an extensive list of activities which are restricted, such as: reverse engineering, simultaneous use of the software by multiple users, and publication of benchmarks or performance tests.

The most common licensing models is per single user (named user, client, node) or per user in the appropriate volume discount level, while some manufacturers accumulate existing licenses. These open volume license programs are typically called Open License Program (OLP), Transactional License Program (TLP), Volume License Program (VLP) etc. and are contrary to the Contractual License Program (CLP), where the customer commits to purchase a certain amount of licenses over a fixed period (mostly two years). Licensing per concurrent/floating user also occurs, where all users in a network have access to the program, but only a specific number at the same time. Another license model is licensing per dongle which allows the owner of the dongle to use the program on any computer. Licensing per server, CPU or points, regardless the number of users, is common practice as well as Site or Company Licenses. Sometimes you can choose between perpetual (permanent) and annual license. For perpetual licenses one year of maintenance is often required, but maintenance (subscription) renewals are discounted. For annual licenses, there is no Renewal, a new license must be purchased after expiration. Licensing can be Host/Client (or Guest), Mailbox, IP-Address, Domain etc., depending on how the program is used. Additional users are inter alia licensed per Extension Pack (e.g. up to 99 user), which includes the Base Pack (e.g. 5 user). Some programs are modular, so you have to buy a base product before you can use other modules.

Software licensing also includes maintenance. This, usually with a term of one year, is either included or optional, but must often be bought with the software. The maintenance agreement (contract) contains Minor Updates (V.1.1 => 1.2), sometimes Major Updates (V.1.2 => 2.0) and is called e.g. Update Insurance, Upgrade Assurance. For a Major Update the customer has to buy an Upgrade, if not included in the maintenance. For a maintenance renewal some manufacturers charge a Reinstatement (Reinstallment) Fee retroactively per month, in case the current maintenance has expired. Maintenance normally doesn't include technical support. Here you differentiate between e-mail and tel. support, also availability (e.g. 5x8, 5 days a week, 8 hours a day) and reaction time (e.g. three hours) can play a role. This is commonly named Gold, Silver and Bronze Support. Support is also licensed per incident as Incident Pack (e.g. five support incidents per year).

Many manufacturers offer special conditions for schools and government agencies (EDU/GOV License). Migration from another product (Crossgrade), even from a different manufacturer (Competitive Upgrade) is offered.