A EULA is a license that grants a user the right to use computer software in a specific way. It outlines how many computers a user can use the software on, how he can use the software, and any legal rights he waives by accepting the EULA. EULAs may be presented with the software in hard copy or digital form. They seek to limit a user’s rights in copying software and reduce the liability of companies from harm caused by using their software. The law surrounding EULAs continues to evolve and is a sensitive area.
A EULA is an end user license agreement and is a license that grants a user the right to use computer software in a specific way. Usually, a EULA outlines how many computers a user can use the software on, how he can use the software, and any legal rights he waives by accepting the EULA.
A EULA may be presented with the software in hard copy form, usually as a piece of paper or a sticker on a sealed product. Often this type of EULA will be a more limited form of a longer EULA that is presented later, on the computer itself. Physical EULAs of this nature are sometimes referred to as shrink licenses, because they are often found within a foil-wrapped product. Since this means that a customer cannot actually read the license until they have purchased the product, some lawsuits have been filed against this type of EULA.
The most familiar form of a EULA is a software EULA, sometimes playfully called a click-wrap, in reference to paper licenses. Typically these licenses are presented when opening a software installer. You receive a digital copy of the EULA to read and must agree to the terms set forth to install the software.
In recent years, the EULA has become increasingly broad in the realm of rights they seek to claim for themselves. Modern EULAs often seek to limit a user’s rights in copying software, even for backup purposes, even though 17 USC 117 specifically grants that right to users. The companies claim they are able to do this because 17 USC 117 states that the owner has this right and the companies claim that they are actually only leasing the software to the user, and therefore the user never becomes the owner, as such .
A number of EULAs also seek to reduce the liability a company might have from a user who suffers some type of harm using software. Essentially, it’s just saying that if a user misuses the software in a way that puts them in harm’s way, such as by using chat software to break the law, the company that made that software is not liable. At the next level, a EULA can state that even if the software itself is faulty, such as with accounting software that rounds off improperly, the business is still not liable.
A precedent was established to support this type of liability release in a fairly important case, MA Mortenson Co. v. Timberline Software Corp. The plaintiff was a construction company and they used Timberline’s software to prepare a bid. They later discovered that the software caused them to underbid by over a million dollars and they sued Timberline over a defective product. The judge upheld a summary judgment order, acquitting Timberline of any damages.
The law surrounding EULA continues to evolve. It’s a very sensitive area and many courts disagree at lower levels. The Supreme Court has set very little precedent in the area of the EULA, and when they do intervene they tend to do so with great caution, leaving the entire realm looking rather grey.
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