Intellectual Property

The Low Down on End User License Agreements (EULAs)

If you’ve used the Internet any time recently, you’ve likely had to click “I accept” or “I agree” in order to use a particular website or software application. Typically, you are accepting and agreeing to an “end user license agreement.” As a software developer, it’s incredibly important to protect the intellectual property behind the software, as well as reduce as much liability as possible. These end user license agreements spell out the terms of the license for your use of the particular software. Today’s post highlights some of the key characteristics of end user license agreements.

What is an end user license agreement?

EULA noticeAn end user license agreement (EULA) is an agreement between a software developer or author and an individual or company that intends to use the software. The EULA details how the software can and cannot be used and any restrictions that the software developer or author imposes on the user. The developer or author allows use of the software, but retains all ownership rights to the software.

What rights do end user license agreements give to the user?

An end user license agreement should clearly explain the rights granted to the end user. Specifically, the agreement should clearly highlight how the user can use the software, i.e. the uses the developer had in mind when it created and licensed the software. There should be specific details on how prohibited or unintended uses will be addressed.

EULAs often include restrictions on the ability of any additional users to use the software. For example, the developer may want to limit use by subsidiaries or parent companies, or limit the number of designated users under any one particular license.

How do end user license agreements usually restrict end users?

Software developers and authors often want to provide additional restrictions in end user license agreements. For example, developers often prohibit the distribution or modification of the software. Software developers also often wish to clarify that the user does not have any right to share the software either through sharing the software with other users or using the software to process data for third parties.

A good example on restrictions in EULAs is the one contained in Adobe’s general terms of use, which states that “…you must not…enable or allow others to use the Service, Software, or content using your account information.” Under their licensing agreement, users cannot pay for one account and let all of their friends use their account. These restrictions protect companies from wide-scale abuse where several users pay for and use one account.

Are EULAs enforceable? Shrink-wrap vs. Click-wrap

Click Wrap AgreementsThese type of license agreements are commonly referred to as “shrink-wrap” or “click-wrap” agreements. A shrink-wrap agreement is one where the user is bound by the terms of the EULA simply by opening the shrink-wrapped software. These type of agreements have received criticism over the years based on the fact that the user does not receive the ability to review the terms prior to agreeing to be bound by them. Click-wrap agreements, on the other hand, require the user to click a button to agree to be bound by the terms of the EULA—these type of agreements are common for downloadable software that you find online versus software you buy in a retail store. Regardless of whether the agreement is shrink-wrap or click-wrap, users are able to choose not to accept the terms of the EULA by deciding not to use the software.

If you’d like to learn more about end user license agreements and other license agreements, please feel free to contact us today.

Photo: Got Credit | Flickr
Photo: Brett L. | Flickr


Gavin Johnson

Gavin enjoys craft beer and is learning the art of brewing.

146 N Canal Street, Suite 350   |