Software Agreements

Structuring Technology Transactions That Balance Innovation and Protection

Software agreements form the contractual foundation for how technology is developed, licensed, distributed, and supported. These agreements must address complex technical, commercial, and legal considerations while accommodating the unique characteristics of software as intellectual property. This practice represents both technology providers and customers in negotiating and structuring the full range of software transactions, from enterprise license agreements to custom development contracts to distribution arrangements.

Enterprise Software Licensing

Enterprise software licenses grant organizations rights to deploy and use software across their operations. Key commercial terms include license scope and metrics—whether licensing is based on users, devices, processors, or other measures—and how growth is accommodated. Pricing structures may involve perpetual licenses with upfront fees, subscription models with recurring payments, or hybrid arrangements. Deployment rights address on-premises installation, private cloud deployment, or access to vendor-hosted environments. License agreements must also address technical matters including delivery and installation, acceptance testing, integration with existing systems, and ongoing maintenance and support. Counsel negotiates terms that meet client operational needs while managing cost and risk.

Custom Software Development

Custom development engagements create software tailored to client requirements rather than licensing existing products. Development agreements must clearly define scope through detailed specifications, statements of work, and change order procedures. Ownership provisions determine whether the client owns the resulting code outright, the developer retains ownership and grants licenses, or some hybrid arrangement applies. Background technology—pre-existing code that developers incorporate—requires separate treatment, typically with licenses that survive the engagement. Acceptance criteria establish how completed work is evaluated, and payment terms often tie to milestone acceptance. Warranty provisions address bugs and defects, while limitation of liability provisions allocate risk for problems that may arise.

Software Maintenance and Support

Software requires ongoing maintenance to address bugs, provide updates, and ensure compatibility with evolving environments. Maintenance agreements establish service levels for response times and resolution, scope of covered issues, update and upgrade policies, and term and renewal provisions. Support agreements may be bundled with licenses or contracted separately. Effective agreements balance vendor obligations against realistic service expectations, provide clear escalation procedures for critical issues, and establish metrics for measuring performance.

Reseller and Distribution Agreements

Software vendors reach customers through various channel arrangements including resellers, distributors, value-added resellers, and referral partners. Channel agreements establish the scope of authorized distribution, pricing and margin structures, marketing and sales responsibilities, training and certification requirements, customer ownership and handoff procedures, and performance metrics and termination rights. Well-structured channel programs expand market reach while maintaining appropriate control over how products are represented and sold.

Open Source Considerations

Modern software development routinely incorporates open source components, creating licensing obligations that must be understood and managed. Open source licenses range from permissive licenses allowing broad use with minimal restrictions to copyleft licenses requiring that derivative works be distributed under the same license terms. Counsel helps clients understand open source license obligations, implement compliance programs, conduct audits to identify open source usage, and address compliance issues that may arise in transactions or litigation. Effective open source management enables the benefits of open source participation while managing associated risks.

Software Escrow

Customers depending on software from third-party vendors face business continuity risk if the vendor fails or discontinues support. Source code escrow arrangements deposit source code with neutral third parties for release to customers upon specified trigger events. Escrow agreements must define appropriate release conditions, verification procedures to ensure deposited materials are complete and usable, and ongoing update requirements. Counsel structures escrow arrangements that provide meaningful protection while remaining acceptable to vendors.

International Software Transactions

Software transactions frequently cross borders, raising issues of applicable law, export controls, data protection, and local regulatory requirements. International deals require attention to which jurisdiction's law governs, how disputes will be resolved, export control compliance, data localization requirements, and local licensing and registration requirements. Counsel helps clients structure international software transactions that comply with all applicable requirements while achieving commercial objectives.