What is a software license supposed to protect?

Based on my previous posts ( here, here, and here) discussing Movable Type licensing issues, I thought I'd post what I consider to be my basic understanding of software licenses and copyright law.

Note: I am not a lawyer. This is not legal advice and should not be construed as such. If you have legal difficulties in this area, seek out and consult with a competent attorney.

What is a "license"?

When a copyright owner wishes to commercially exploit the work covered by the copyright, the owner typically transfers one or more of these rights to the person or entity who will be responsible for getting the work to market, such as a book or software publisher. It is also common for the copyright owner to place some limitations on the exclusive rights being transferred. For example, the owner may limit the transfer to a specific period of time, allow the right to be exercised only in a specific part of the country or world, or require that the right be exercised only through certain media, such as hardcover books, audiotapes, magazines or computers.

If a copyright owner transfers all of his rights unconditionally, it is generally termed an "assignment." When only some of the rights associated with the copyright are transferred, it is known as a "license." An exclusive license exists when the transferred rights can be exercised only by the owner of the license (the licensee), and no one else -- including the person who granted the license (the licensor). If the license allows others (including the licensor) to exercise the same rights being transferred in the license, the license is said to be non-exclusive.

Basically, a software license is a granting of limited rights to a licensee in the interest of "commercially exploiting" the software protected by copyright.

What exclusive rights does a copyright owner have in a copyrighted work?

  1. Reproduction rights - The right to copy, duplicate, transcribe, or imitate a protected work.

  2. Distribution rights - The right to distribute copies of the protected work to the public by sale, rental, lease, or lending.

  3. Modification rights (also known as derivative works rights) - The right to modify the protected work to create a new work. A new work that is based on a preexisting work is known as a "derivative work."

  4. Performance and display rights - The public performance right is the right to recite, play, dance, act, or show the protected work at public place or to transmit it to the public. The public display right is the right to show a copy of the protected work directly or by means of a film, slide, or television image at a public place or to transmit it to the public.

An important limitation on those rights is the doctrine of "fair use": "...the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright."

A software license often contains provisions that restrict or grant rights other than those listed above. Those provisions exist outside the scope of what is protected and regulated by federal copyright law. As a software license is also an agreement (a contract), those provisions would be generally subject to applicable state law (the usual domain of contract law).

Note that copyright law protects a copyright owner's right to control and commercially profit from their software, but it does not in general "protect their business". A software copyright owner does not have any rights in the skills and knowledge acquired by a licensee during ordinary use of licensed software (and by extension, services provided using those skills and knowledge). Some examples of what a software copyright owner has no rights in (based on federal copyright law) include:

  1. Knowledge of how to install and use the software

  2. Performing installation of the software

  3. Training of other licensed users in how to use the software

  4. Troubleshooting of software issues and problems

  5. Charging of fees to provide items a through d ("support services")

  6. Designing new (i.e. not derivative) works with the software, where the software is used as a tool as it was intended

  7. The new works themselves, created via f. above

  8. Charging of fees to provide items f and g above ("design services")

Whether it is legal, legitimate, or "right" for a copyright owner to include license terms that go beyond the rights contained in federal copyright law is somewhat of a open question. The answer, I think, depends on what state the license is enforced in, the exact nature of the license terms, the applicability of the "fair use" doctrine, whether the license terms can be shown to have a legitimate basis in copyright law, and probably a dozen other things.

When I read a software license, I basically look at 1) how restrictive the license is with respect to the legitimate rights of the copyright owner, and 2) how many rights the copyright owner tries to assert outside the domain of copyright law. The less restrictive a license is, and the fewer rights a copyright owner asserts outside of copyright law, the more agreeable I am to its terms.

It is often said that a copyright owner can write any terms they want into a software license. Identifying which terms are granting you legitimate rights under copyright law and which license terms have nothing to do with copyright law is important in weighing the cost and value of that license. The ones that don't are more than likely taking away rights from you, and copyright law does not require you to give up any of your rights.

Links to sources:

Definition of copyright license and rights protected by copyright:
Copyright Ownership: Who Owns What?
Copyright Law: The Exclusive Rights

Update 01-Jul-2003: I was mistaken in an assertion that "fair use" did not derive from federal law. I had previously written:

"Fair use" does not derive from federal law - it issues from U.S. Supreme Court precedent. The doctrine of "fair use" does not grant any rights; it is instead an affirmative (legitimate) defense to allegations of copyright infringement.

Perhaps this was true sometime in the past; I don't know and it doesn't really matter. Section 107 of the Copyright Act specifically deals with "fair use" of copyrighted works. By accident (coincidence?), I became aware of the error while reading one of Eugene Volokh's posts at The Volokh Conspiracy.