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Are You Selling Software Or Licenses?

software license agreement

When you (or your developer) creates a software application for a market, what exactly do you plan to sell to that market?

Chances are you’ll want to sell licenses to use the software, not the application itself. Because you want to retain intellectual property ownership of the application.

There’s a difference? Absolutely.

If you’re selling the application itself, you getting paid for the intellectual property ownership and probably retaining no rights to it.

That’s an awkward and dangerous legal situation…like selling the your home to 500 different buyers even though you own just the one house. What happens when all 500 buyers believe they own it?

The smart move is to sell multiple licenses to use the application while regaining ownership of the software.

Of course, there are many different types of licenses with various rights and responsibilities. For example, there’s an end user license agreement (EULA), resale license agreement, private label license, etc.

And if you do decide to sell ownership of the application to a buyer, that can be done with a software acquisition agreement. This is typically for a sales price much higher than each license you sell for the application’s use.

Regardless of what you plan to do, the first move should be to discuss it with an experienced software lawyer in order to identify the right software agreements to use. And if you need legal help now, set up a phone consultation with Attorney Mike Young.

Mike Young, Esq.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

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