Ten Tips for Smart Licensing
To provide protection for your company and goodwill to your customers, language matters.
1. Be sure to set different price points for node-locked and floating licenses, advises Macrovision’s Dan Stickel.
2. For complex licensing arrangements, you may decide that your shop’s strengths lie elsewhere. If you choose a packaged license solution or an online licensing, billing and distribution service, make sure that the tool vendor’s pricing makes sense with your expected transaction volume. Also, rigorously test all components that integrate with your code to find any deployment environment bugs before product release.
3. Be open and honest with your customers about software components that implement your licensing or product activation scheme and that are included in the initial installation. These should be named, and their functions described, in all appropriate product documentation.
4. The FTC’s High-Tech Warranty Project includes a link to a valuable manual, “Writing Readable Warranties”.
5. If you choose an open-source approach, carefully read every license that accompanies the individual components you’re building on, and find a software IP lawyer to double-check your interpretation of both existing licenses and the license for your offering. The nonprofit OSI’s OpenSource.org contains a guide to approved open-source licenses. To exercise the free software option, go to the Free Software Foundation’s www.gnu.org.
6. Given the recession, be flexible and don’t try to recoup your R&D cost with your licensing scheme, advises Joe Panther, executive vice president for Browsersoft, a developer tool vendor in Kansas City, Mo. “Keep an open mind on pricing. Some firms don’t have the money to purchase software, so payment may even be some form of trade. To constrain how you seek revenue only constrains your opportunity to keep revenue.”
7. Whenever possible, help your customers choose the most advantageous licensing arrangement for their needs. As an example, identify the different classes of employees who will use the product and how their usage patterns may vary, and construct a mix of licenses that accommodates the customer’s demand without excessively penalizing miscalculations. The arrangement can always be modified as the customer’s needs evolve, but the goodwill benefit from trying to get it right will far outweigh the incidental revenue gained from nickel-and-dimeing.
8. Elucidate the necessary hardware configuration to support any computationally intensive software so that customers aren’t unpleasantly surprised when your software runs inefficiently on their overloaded computers.
9. Before you decide that you need to write your own open-source license, check with OSI, which has approved almost 50 to date. “We get four or five licenses a week that represent someone’s attempt at writing one,” says Sun’s Cooper. “We try to tell them that they shouldn’t be proliferating licenses. One of the reasons everyone wants to write their own is that corporate lawyers don’t like the ambiguity in them—they want the intellectual property rights to be very clear.”
10. Whenever possible, resist your counsel’s efforts to include clauses prohibiting product disparagement or allowing for contractual changes to be noted only on your website. If you have to hide behind a dialog box filled with potentially unconstitutional legalese, something’s not right with your product or company.
—A. Weber Morales
