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This article is written by Kapil Nikam, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com. Here he discusses “How should a Software Development Company draft evaluation license terms for its software?”.

Introduction

Evaluation License Terms are the most essential terms in the software industry. Software development is challenging and critical software developers make a lot of effort to develop relevant software. Evaluation license terms for software are also an important factor, for using and installing software terms set out in evaluation licenses are important for an owner of the particular software. In this article, we will review how a software development company draft evaluation license terms for its software. When we use any app on our mobiles such as Paytm, IRCTC ticket booking app or any health-related tracker app’s. After submission of data, there are certain terms that users should accept by I Accept button, there are several terms for using said particular apps, those are the evaluation license terms. Some evaluation license is sold but the majority are licensed instead of sold.  It can also define that it means access to evaluation software and documentation subject to licensing terms as mentioned in the agreement. In this article, we will see how software development companies draft evaluation license terms for software. Evaluation license terms should be clear, precise and specific since it is for protection for the software development company. Sometimes hackers try to harm the system so that evaluation license terms should be carefully drafted.

The following are the important factors and points that should be considered by software development companies while setting up evaluation license terms for its software. 

1. Awareness of Software

Users should be aware of the software, a clause stating that the user has read entire terms and conditions should be incorporated in evaluation license terms. Also, if the user is acting on behalf of any entity it should be mentioned that he has authorized by and on behalf of said entity, and by accepting such terms and conditions said entity is liable. Also, particulars regarding software should be there 

2. Definition Clause

All terms incorporated in the evaluation license should be clear and defined. There should not be any ambiguity regarding the definition clause, said terms may be defined in capitalized to avoid any confusion. 

3. Usage Rights

The clause regarding usage rights should be incorporated in evaluation license terms which stipulates that user has non-exclusive usage rights, said rights are non-transferable,  user can not transfer rights to anyone if particular rights for limited period then timeframe should be mentioned and it is for evaluation purpose and effective date needs to be added effective date may be the acknowledgement receipt of email sent by the Company. Also, the customer should not violate the trademark of the company because the trademark is the identity of the development of a software company. It should be mention that the user should not be done any modifications to the data of software.

4. Customer Agreements

User or customer should agree on certain terms as specified in the evaluation license agreements, these terms should be explicit. Following terms can be added:

1. The user will not make any attempt to harm the product or software, the user should not use the product for any criminal or unlawful activities, the user should not make any attempt to introduce any virus or use any harmful code. 

2. Users should not use any other system or software by which the user can copy the data or information from the software/product.

3. Users should not interfere with the right of another user who is using or availing the software. The software should be affixed at the designated place.

4. Users should keep secrecy about the user ID and password he or she should not share said details with anyone. If the Company becomes aware of the breach of secrecy then the company can terminate the agreement or suitable legal action against the user.

5.Termination

Termination clause should be specific, suppose evaluation license is for a particular trial period then it should be mentioned that upon completion of trial agreement would be terminated automatically. Upon termination, the customer should immediately delete all the data from its computer or hard copies. Also, there are some clauses in the agreement that shall survive upon the termination of the agreement also such clauses are confidentiality, actions regarding the use of the trademark.

6. Security

This clause stipulates that the software company is not liable to the security content of the user. The user shall solely responsible for his security. Also, the user will configure and use evaluation software. The user will maintain appropriate, security with respect to his content.

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7. User’s Obligation

User will only be responsible for obtaining and installing hardware and support software if it is required. The user should be responsible for maintaining all software and hardware which are necessary for him to exercise the license. The Company should not be responsible for any defect. Users should be responsible for creating and maintaining backups and security updates. The Company should not be obligated to provide any support system. The company should not responsible to provide any service unless it is agreed by the Company. This clause is essential so that it should be added in evaluation license terms.

8. Title

It should specifically be mentioned that the Company is the exclusive owner of the particular product and the user should not claim any ownership rights over the product or software. This clause is a significant clause as it is related to ownership of the title.

9. No warranties or representations

To avoid any legal obligation the software company in its evaluation license agreement mentioned that there shall not be any warranties or representations from the company pertaining to the product. Users can use it on actual or as is where is basis. It can clearly be stated that there would not be any express or implied guarantees.

10. Indemnification

This clause should be incorporated mentioning that in the event of any harm or loss, damages caused by the company then the user will indemnify the company as well as it’s officers, directors, and employees. An indemnification clause is very important as it’s protecting the interest of the company. This clause should not be diluted. 

11. Confidentiality

This clause is the most important clause, it also survives upon the termination of the agreement. The user should maintain the confidentiality pertaining to any data derive while using the software also it should not be shared with anyone. A period of confidentiality can be mentioned in the confidentiality clause.

12. Governing law

In the event of dispute governing law should be there it should be cleverly drafted and it should be as per the convenience of the software development company since the user may be from across the world. In case of arbitration clause then the seat of the arbitration should mention. Seat triggers the governing law of that particular country.  Some companies are flexible with respect to governing law as they are also giving comfort to their clients. If readers view the Microsoft evaluation license they have mentioned in their governing law clause is two-fold. Clause title as applicable law if software acquired in the United States then Washington State laws is applicable and if the software is acquired in other than the United States then in that event law of that particular company is applicable. 

13. General Clauses

General clauses should be added that the user should not be assigned its rights and obligations to any third party, notices should be in writing, it should be addressed to whom, manner of addressing notice ina software-related contracts it should be accepted by email it should be mention that evaluation is for limited purpose and during the period of evaluation term, if anyone is using beyond the evaluation term then appreciate legal action may be taken against that particular user.

Aforesaid clauses are important to draft the evaluation license agreement by the software development company.

Conclusion

There are various types of Agreements in relation to the software industry. Software is one of the important industries in India as well as globally. While drafting evaluation license agreement we need to consider various legal and commercial aspects since applicability and scope of these agreements are not related to India only as users may be from across the globe. 

An evaluation license terms several obligations on the user, the software company should have cautious to draft this agreement. We have discussed how should software development company draft evaluation license terms for its software. Apart from aforesaid clauses software company may add the process of installation and use rights, demonstration rights, mandatory activation, internet-based services, consent for internet-based services, cookies, digital certificates, error report, malicious software removal, network awareness, search provider update, smart screen filter, digital management rights extension, use of information, product key, time-sensitive software, scope of license, export restrictions these clauses should be considered by software company while drafting evaluation license agreement.

We have tried to cover all important clauses and how software development companies should draft evaluation license terms for its software.


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