1. Computers Within Your Business

Computer systems are necessary business tools for every business. Your company is likely to rely heavily on such systems. This section of the guide addresses: Different forms of licences for software Support, maintenance and back-up arrangements Agreements that govern the development of software

a Licensing Software
Software is licensed rather than sold. This allows the developer to maximise profits and to control the use of the product. When you purchase new computer equipment it should come with the appropriate software pre-installed. You should ensure that you have the appropriate licences for the software that is installed on your computer system.

There are a number of different types of software licence agreements. Among the more common are:

Bespoke Agreements
This type of licence agreement is used when a licensee - the end user of the product - commissions a software developer to write a particular piece of software for the business. Therefore, these agreements are normally negotiated between the two parties, and the terms and conditions will be particular to the parties.

'Shrink-wrap' Agreements
Off-the-shelf software is normally covered by the so-called 'shrink-wrap' agreement. Normally, this involves software which is distributed on CD-ROM, wrapped in a package containing the licence agreement. Clearly, this type of agreement will not have been individually negotiated between the parties, and the terms and conditions are normally the standard terms and conditions of the licensor.

Click-wrap Agreements
This type of agreement normally applies to software which is downloaded from the Internet. The user is brought to a set of terms and conditions. He/she clicks an agreement button to indicate consent.

Even within these categories, there are further distinctions:

• A 'Multiple User Licence' will allow the software to be installed on several computers but will limit the number of users that can use the software at any one time
• A 'Site Licence' or 'Company Licence' will generally allow use of the software across a company's network but may limit the number of computers on which the software can be installed

Most businesses will use off-the-shelf software, so will find their use governed by a 'shrink-wrap' agreement drawn up by the developer. These type of agreements are rarely favourable to the licensee - the business. Because they are not individually negotiated, they are often not studied by anyone within the business.

However, it is often useful to review these agreements, even if only to familiarise yourself with their restrictions and exclusions of liability. They usually set out that the licensor won't accept responsibility for certain instances.

For example, it is quite common for licensors to state in their terms and conditions that they have no liability for losses or claims arising from an inability to access its website, or for any reliance on the data transmitted from the website. Many agreements licence software for a particular use, or for use with other specified software. In addition, most if not all shrink-wrap agreements will seek to:

• Exclude liability for loss of profits arising from any defect in the software, or from
• Using the software for purposes (or in conjunction with programmes) other than those for which it was intended.

Given that defective software can affect an entire computer system within your company, it is important to be aware of the potential impact this can have on your business.

Most off-the-shelf programs for consumers are sold on the basis of payment of a one-off licence fee. However, business software can often be sold for an initial fee, plus an annual user's licence fee. This latter fee may also incorporate an upgrade fee, which would entitle your business to automatic software upgrades, as these are developed. Because licence agreements vary, you should study all agreements related to the software in use in your business, and act accordingly.

Copyright
At the heart of software licensing is the concept of copyright. The Copyright and Related Rights Act 2000 defines a computer program as a "literary work" enjoying the full protection of copyright laws. The developer of a computer software program will retain copyright in that program until 70 years after his death.

Any user of the software must have permission to use it. Therefore, each and every employee or terminal in your business will need to be covered by a licence agreement. The business itself also needs to be covered. If the business comprises one or more limited companies then each company should also be covered by the licence.

This is an area of very major importance for businesses. It is one that is best monitored by a single individual within a company. Many software licences will have to be renewed annually. Failure to do so can leave you open to civil proceedings.

The owner of the software copyright may prohibit use and/or sue in the event of a breach. In the case of a serious breach - for example where the user attempts to make a profit from unlicensed use by re-selling or re-programming the software - prosecution may follow. A district court judge can issue a warrant to the gardai to enter and search a premises where it is suspected that a breach of software copyright is occurring.

What if you commission an independent software developer to write software specifically for your business? The copyright in this software will remain with the developer, unless there is a specific provision in your contract that you are being granted an exclusive licence in the software.

You should assume that the licence you have to use the software is non-exclusive, unless your contract expressly specifies that you have purchased an exclusive licence in the software. An exclusive licence would be appropriate when a program is developed specifically for your business. This is to
prevent it from being offered for sale by the software developer to other users, including your competitors! An important reason for obtaining an exclusive licence is that you get the benefit of subsequent fixes as the software is developed and tested by the programmer.

The terms of a licence under which software was supplied will often prohibit changes or amendments to the software or will require that changes have the consent of the copyright holder. As holders of the copyright, the licensors will want to prevent any reprogramming of the software's source code - the hidden, core programming script that makes the software run as it does.

However, certain uses are legally permitted by the Copyright Act. This Act permits licensees - those who have purchased the right to use the software - to modify it in order to allow it to operate on their individual systems. In addition, you are also permitted to make a back-up copy of the software.

This serves to protect your interests in the event that your system suffers technical problems which would necessitate erasing and then reloading a program. This is a specific exception to the normal rules of copyright. However, if you foresee a possible need to extend or adapt the functionality of the software, particularly when it involves changing the source code, you should first ask the licensor about an additional licence that allows this.

Open Source
The previous section deals with commercially produced software. An alternative to this is open source software where the source code is made available to users. Open source software is freely available to those who would use it on the understanding that any alterations and improvements to the software are passed on to subsequent users.

Related Links

Learn more about open source software

Read the Copyright and Related Rights Act 2000