Practical Rules for Drafting E-Contracts- (Part 2) – Femi Daniel

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End User License Agreement (EULA) 

EULAs have become regarded as a symbol of oppression of consumers.[1] Despite this negative sentiment, a lot of service providers would rather press their advantages within the ambits of the law, howbeit morally repugnant than to act otherwise. Some clauses in a EULA include:

  1. License: The Service provider grants to the user a limited, non-transferable, and non-exclusive license to execute the purchased copies of the software for personal, commercial or non-commercial uses. The license is the heart of the EULA, care must be therefore taken in its crafting. The following examples of license clauses would help to drive home the point.

The Licence

 2.1      The licensor grants to the licensee a non exclusive, non transferable licence to use the Software subject to the conditions set out in this Agreement. The licence to use the Software is perpetual, unless the whole of this Agreement is terminated pursuant to the provisions of Section 9. 

 2.3 The licensee may use the Software and the Serialisation Code to load and run the Software only on the Designated Equipment at the Location (specified in Schedule 1). The licensee may not install the Software on any computer hardware other than such Designated Equipment or at any site other than such Location. However, if the Designated Equipment becomes temporarily inoperable, then the licensee may use the Software (and the Serialisation Code) on back up equipment until the Designated Equipment is repaired. 

2.4 Only the licensee and its Users have the right to use the Software. The licensee may not make the Software available for use by any third party, may not use the Software to process data of or carry out functions for any third party other than (as may be applicable) it’s parent or any of its subsidiary companies and only the number of employees for each Location set out in the applicable Schedule 1 may be on the Software database at any one time. Additionally, the licensee may not rent, lease or timeshare the Software. 

2.5 The licensee may not copy the Software in any circumstances except to make a reasonable number of back up and archive copies and the licensee may only use a back up or archive copy by substituting it for the copy it is using. The licensee must keep the back up and archive copies in a secure place under it’s control and must mark them with the same copyright notice as that which appears on the media containing the Software.[2] 

Consider another example from Takada application[3]

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License.   Subject to the terms of this EULA, Wayne & Malcolm grants to you a limited, non-transferable, and nonexclusive license (without the right to sublicense) to execute one (1) copy of the Licensed Software, in executable object code form only, and (b) for your use of the Takada Service, in each case for your personal, non-commercial purposes. 

The following elements must be included in a License clause (or somewhere in the EULA) to ensure clarity and to protect your client’s business-

a) State that the service is non-exclusive, non-transferrable

b) State whether license is perpetual or not. If perpetual then state the restriction.

c) Is the service equipment specific or agnostic? If specific state number and specification.

d) State restriction of use, if any

e) Generally, restrict copying and specify exceptional cases

f) Number of permitted users

FN:

[1] Annalee Newitz Dangerous Terms: A User’s Guide to EULAs https://www.eff.org/wp/dangerous-terms-users-guide-eulas (accessed on 28th August, 2017)

[2] This is an abstraction of the HumanManager software EULA, a popular corporate payroll solution. This term is for the onsite hosted version of the software. The license terms is comprehensive. 

[3] Produced by Wayne & Malcolm Limited

Read Part 1 Here

Femi Daniel Esq. LL.M; B.L
Technology Lawyer; Author- COMPUTER LAW IN NIGERIA (2015)

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