20 August 1998: An abridged version of the Software Licence Code drawn up by Computer Weekly with law firm Hammond Suddards.
All software licences should be written in plain English, particularly the restrictions on the scope of use and any schedule or order form in which the software is listed. Suppliers should seek to obtain "crystal mark" approval from the Plain English Campaign.
Restrictions on location
Provided the software is being used within the European Union, the supplier's consent should not be required and there should be no charge to change the physical location of the use of the software. Access by users located overseas should not be restricted.
If the supplier's licence fee structure is based on size of hardware rather than the number of users, the supplier must explain in advance the pricing structure and how changes in hardware affect licence fees. Subject to the payment of any additional licence fee the consent of the supplier should not be required.
Where the use of software is restricted to a number of users, the supplier should make it clear whether that is concurrent users or named users (see full guidelines for definitions). Where it is named users, restrictions (if any) on changing named users should reflect normal staff turnover within any organisation.
Whether the price structure depends upon number of users (concurrent or named) or hardware sizing, the pricing structure should be clearly set out so that a user is aware at which point they will be liable to pay additional licence fees.
Use of the software should not be limited to employees only, as many companies now "employ" contractors who should be entitled to use the software for the benefit of the user.
Where the user is effectively a group of companies, the software may be used by other members of the group of which the named customer is a member. A group relationship exists where the companies in the group are subsidiaries or holding companies of the others as defined in the Companies Act.
The named customer should be entitled to assign the licence to any member of the group of companies of which it is a member.
If a user outsources its IT services the supplier must agree to the assignment of the licence to the outsourcing supplier unless the outsourcing supplier is a direct competitor of the software supplier or if the outsourcing supplier has in the past committed a serious infringement of the software supplier's intellectual property rights.
Where testing of the software is necessary on a separate platform (for example, millennium or Emu compliance), such testing shall be permitted subject to the software supplier being notified.
The user should be permitted on an interim basis (a period not exceeding 12 months) to use the software to provide an IT service to any business or company which was formerly part of its group which has been sold unless the purchaser is a direct competitor of the software supplier or has in the past committed a serious infringement of the software supplier's intellectual property rights.
The continuation of a licence should not be dependent upon the continued payment for maintenance. Where maintenance is provided, the supplier should explain in advance what the maintenance service is, the structure of maintenance payments and how maintenance fees may vary over time.
Where access to the supplier's source code is required for the purposes of integration work, the supplier should either provide the source code or agree to do the integration work at a reasonable fee.
Where a licence agreement is renewed automatically at the end of a licence period (unless notice to terminate is given in advance by a user), the renewal term should not be greater than one year.
Term and termination
Given that substantial sums are paid for the right to use the software, minor breaches of the software licence should not permit the software supplier to terminate the licence. Only breaches which represent serious infringements of the software supplier's intellectual property rights or non-payment of licence fees which are undisputed should justify termination of the licence.
Disputes over charges
In the event that a dispute of charges cannot be agreed, the parties will submit the dispute to an independent expert for a decision.