10 Keys To A Successful International Software Distribution Agreement

software distribution agreementWhether you own software as the copyright owner or have distribution rights that you can delegate to others, you may want to increase sales by entering into an international software distribution agreement with one or more distributors in other countries.

What to include in your international software distribution agreement

Here are 10 important issues your distribution contract should cover in order to protect you while making the deal beneficial to your foreign distributor(s) too.

1. Software Localization. Will your software need to be localized? For example, will the software need to be translated into another language for local users to understand and use it? If so, who is responsible for the localization? You or the distributor? Who owns the intellectual property rights to the localized software?

Related Article: Software Development Agreement – 10 Legal Issues To Cover

2. Geographic Scope of License. What country or countries will your distributor have the right to sell the software? Is the license exclusive for that region or can there be other distributors for that reach with whom you enter into distribution agreements? Will online distribution of software be permitted? If so, how will you limit sales beyond the geographic territory covered by the agreement?

3. Wholesale or Retail Distribution. Will your foreign distributor be a wholesaler who provides the software to local retailers? Is your distributor a retailer?

4. Manufacturing Rights. Will your distributor be able to make copies of the software to sell (e.g. OEM software) or is your distributor limited to distribution rights for software copies you provide?

5. Marketing and Advertising. Who is responsible for marketing and advertising the software in the covered territory?

6. Sales Targets. Will there be certain sales milestones that must be achieved in order to remain a distributor? If a distributor fails to meet sales targets, will the distributorship end and under what circumstances?

7. Payments. How will you be paid? In what currency? If a currency exchange must occur, how will the distributor’s local currency be valued for exchange into your currency?

8. Competing Software. Will your distributor be allowed to sell a software that competes with your software? If not, for how long after termination of the distribution agreement will the distributor be barred from selling your competitor’s software?

9. Records and Auditing. What type of records must your distributor keep? What auditing rights will you have to ensure you’re being paid what you’re owed for software sales?

10. Taxes. Who is responsible for collecting and remitting sales taxes, use taxes, VAT taxes, and other fees imposed on software sales made under the distribution agreement?

Related Article: Software Lawyer – How One Can Help Your Business

Of course, there are other legal issues you’ll want to address in your international software distribution agreement. An experienced software lawyer will include those in the contract to protect you.

Author Mike Young, Esq.

Internet Lawyer Mike Young provides contracts and other efficient legal solutions to business owners and C-level executives of privately held companies. To get legal advice from Mike, click here to set up your phone consultation with him.

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