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Software Licensing

What is an Exclusive vs. Non-Exclusive License?

An exclusive license grants rights to only one licensee (even excluding the owner). A non-exclusive license allows the owner to license the same software to an unlimited number of customers simultaneously.

How do you structure royalties for software licensing?

Royalties can be a one-time fee (perpetual license), a recurring subscription (SaaS), or usage-based (per transaction/seat). We help structure this to maximize revenue and comply with tax laws.

Can I restrict who uses my software?

Yes, licenses can be restricted by territory, number of users (seats), purpose (commercial vs. educational), or time period. These restrictions must be clearly defined in the agreement.

Do I need a reseller agreement to sell through partners?

Yes, a reseller agreement is crucial. It defines the partner's scope, margins, support obligations, and ensures they don't misrepresent your product or claim ownership of the IP.

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Software licensing is a critically important legal process that defines the terms of use, distribution, and modification of computer programs. In the digital age, where intellectual property is the primary asset of technology companies, a properly drafted licensing agreement protects the rights of developers and IT firms, ensures stable revenue generation, and minimizes legal risks. In Georgia, where the tech sector is developing rapidly, software licensing is relevant for both startups and large corporations looking to legally commercialize their products locally and internationally. Licensing does not mean selling the software; it is the transfer of rights under specific conditions, which requires detailed legal regulation.

What Software Licensing Services Cover

This service covers a wide range of legal documentation and strategic consulting surrounding software products. Specialists on Legal.ge offer assistance in the following areas:

  • Drafting End User License Agreements (EULA): Preparing agreements that regulate the rules and restrictions for end-users operating the software.
  • SaaS (Software as a Service) Agreements: Defining terms for cloud service delivery, including data protection and Service Level Agreements (SLA).
  • Distribution and Reseller Agreements: Regulating relationships with partners who resell or distribute software in various jurisdictions.
  • Open Source Compliance: Analyzing compatibility with open-source libraries used in the software (e.g., GPL, MIT, Apache) to avoid legal disputes.
  • Software Development Agreements: Delineating rights between the client and the contractor (developer), especially regarding the transfer of intellectual property.
  • White Label Licensing: Transferring rights to a third party to brand and distribute the software under their own trademark.

Practical Examples and Scenarios

The need for software licensing arises in many different situations:

  • Globalization of a Georgian SaaS Startup: A Tbilisi-based company creates an HR management platform and wants to offer it to European and American users. They need robust "Terms of Service" and a Privacy Policy that comply with both Georgian and target country laws.
  • Corporate Software Acquisition: A bank commissions a specialized banking software from an IT company. It is essential for the contract to specify exactly whether ownership of the source code transfers to the bank or if the bank receives only a usage license.
  • Hiring a Freelancer: A company hires a freelance developer to create an app. If a written contract is not executed, copyright may remain with the developer, potentially causing problems for the company in the future.
  • Using Open Source in Commercial Products: A developer uses a library with a "Copyleft" license in their commercial product. Without legal advice, they might violate license terms, which could compel them to make their proprietary code public.

Georgian Legal Framework

Software licensing in Georgia is regulated by several key legislative acts. Primarily, the Law of Georgia on Copyright and Related Rights protects computer programs as literary works. The law defines the author's economic and moral rights, as well as permissible limits for decompilation and copying. The Civil Code of Georgia regulates contractual relationships, including the form and content of licensing agreements. Also significant is the Law of Georgia on Personal Data Protection, especially for SaaS models where the software processes user personal information. From a tax perspective, the Tax Code of Georgia defines rules for royalty taxation, which is particularly important during cross-border licensing.

The Process: Working with a Specialist

Involving a professional lawyer makes the licensing process structured and secure:

  1. Audit and Analysis: The lawyer studies the software product, its technical specifications, and any third-party components used.
  2. Choosing a Licensing Model: Based on business goals, the license type is determined (exclusive, non-exclusive, perpetual, subscription).
  3. Drafting the Agreement: A detailed contract is drawn up covering rights, restrictions, liability, warranties, and dispute resolution mechanisms.
  4. Negotiation: In B2B deals, the lawyer participates in negotiations to agree on terms with the other party.
  5. Implementation: Integrating the document into the product (e.g., "Click-wrap" agreement on a website).

Why Legal.ge?

Legal.ge is a platform connecting you with lawyers experienced in IT Law. Our database includes specialists who understand both code and the law. With the help of verified lawyers, you can protect your intellectual property, avoid expensive litigation, and ensure the unimpeded growth of your tech business from Georgia to the international stage.

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