Instructional Course on 
Software Licensing 
and 
Related General Copyright Law

I. Software Piracy and the Consequences

A. Software Piracy - Software piracy is the unauthorized duplication, distribution or use of computer software. For example, copying and installing software onto more than one computer (more accurately, onto a number of computers that is greater than the number of licenses held for that software) can constitute software piracy. Copyright law protects software. Violations of copyright law (copyright infringement) can carry both civil and criminal penalties.

B. Discovering Piracy - There are a number of ways for someone to get caught making or using illegal copies of software. Illegally copied software can be discovered (i) during software audits by computer support personnel, network administrators or by the Office of Internal Audits, (ii) during software audits by software publishers or (iii) after a report is filed by other employees. All University owned and leased computers are subject to audit at any time without notice.

C. University Policy - Software piracy contradicts the fundamental principles of Temple University and violates University policy. The University will not tolerate software piracy. Possible sanctions for violations can include expulsion (for students) and termination (for employees). While this instructional course is offered to educate users about software piracy, it is not comprehensive. Users are responsible for reading, understanding and complying with all applicable University policies governing software and computer usage. Those University policies include the following:

·         Software Policy

·         Computer Usage Policy

·         Web Usage Terms and Conditions

D. Consequences - The consequences of copyright infringement can be quite severe. The law provides for statutory damages of between $750 and $30,000 for each act of copyright infringement and up to $150,000 for each willful act of copyright infringement. The copyright holder is not required to prove that it suffered any actual lost profits or damage in order to collect statutory damages from infringers. While a copyright holder may attempt to take action against the University as a licensee, the individual responsible for any unauthorized use remains liable under the law and under University policy. The University will not defend or indemnify violators, but rather will seek indemnity (payment for any amount the University is required to spend on penalties, settlements and legal fees) from violators.

II. Software

A. What Is It - When most people think of Software, they think of a computer program. A computer program is a "set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result." (Copyright Act, 17 U.S.C.A. Section 101). Software differs from hardware, which is the physical device on which the programs run (e.g. the personal computer). Software programs can be installed onto a hard drive or copied onto diskettes or a CD-ROM and may even be downloaded (copied onto a hard drive or diskette) directly from the Internet. 

1. One type of commonly-used software is application software. This includes programs used on personal computers (e.g., MS Word ^®). These programs help the user accomplish tasks; for example, word processing, spreadsheet analysis, or database management.

2. Application software is distinguished from system software (e.g., MS Windows XP ^®), which controls the computer and runs the application programs; and utilities (e.g., Adobe Flash Player), which are small helper programs. 

B. Classifications of Software - Software that is widely distributed generally falls into one of the following four categories: Commercial, Shareware, Freeware, and Public Domain. The following are descriptions of how these terms are used in practice rather than strict legal definitions.

1. Commercial Software is generally developed for license to users for a fee. An example of commercial software is MS Word ^®, whose licensor is Microsoft Corporation. Companies that develop and distribute commercial software have become increasingly vigilant about guarding their valuable corporate assets (software copyrights) by pursuing unauthorized users.

2. Shareware is different from commercial software in that it can be copied (usually by downloading from the Internet) at no cost for a trial period. However, Shareware is still protected by copyright. After the copy of the software is tested or the free trial period expires, the user must purchase a license for the shareware or delete, uninstall or otherwise destroy the copy of the shareware. The software is still protected by copyright law and is subject to the terms of the licensing agreement.

3. Freeware is software that is protected by copyright but can be copied as either an archival copy or for use as long as the use is not for profit. Some Freeware can be de-compiled and modified without the permission of the copyright holder, but generally any new program derived from Freeware must also be designated as Freeware and not sold for profit. It is important to understand that all software that is freely attainable is not Freeware. For example, while Microsoft currently distributes Internet Explorer software for free, it is not Freeware.

4. Copyrighted software enters the Public Domain when a copyright holder specifically surrenders all rights to the software. This kind of software is not protected by copyright and can be freely copied, modified or de-compiled without license or permission. Any new programs derived from this software are not subjected to limitations or conditions on distribution. All intellectual property works are assumed by law to be copyrighted. Therefore, for software to become public domain software the holder must explicitly designate such software as being public domain. A user's incorrect assumption that certain software was in the public domain will not likely constitute a valid defense against a charge of copyright infringement.

III. Software Copyright

A. Copyright Law - The Copyright Act applies to software just as it does to literary, musical, and dramatic works like books, articles, music, and movies. Copyright law also protects pictorial, graphical, and sculptural works like images, videos, illustrations, layouts, and designs.

B. Illegal Acts - Because the Copyright Act protects software, copying software without the consent of the copyright holder is illegal. The Copyright Act also prohibits the loan, rent, or lease of a copy of software for direct or indirect commercial advantage.

C. Fair Use - The Fair Use doctrine is an exception to the protections afforded copyrighted works that allows certain copying or use of a copyrighted work "for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research" (Copyright Act, 17 U.S.C.A. Section 107). To determine whether use of copyrighted material falls within the "fair use" exception, a court would apply a complicated "Four Factors Test." The Fair Use exception is unlikely to apply to copies of complete or working portions of software programs. Certainly, no user of University computers or software should assume that the exception applies without first receiving approval from the licensor or legal counsel.

IV. Software Licensing

A. License Agreements - The terms for authorized use of Software are generally found in a license agreement provided with the software. A software license agreement is a binding legal contract.

B. Ownership vs. Limited Right to Use - Almost invariably when you buy software you are obtaining not the ownership of the software but rather a license to use the software and, sometimes, possession of media on which the software is stored (a diskette or CD-ROM). The copyright owner (who may also be called the "licensor," "software publisher," or "vendor") retains the copyright to the work. What the consumer is actually paying for is the limited, nonexclusive right to use the software only in accordance with the terms of the license agreement.

C. Shrinkwrap and Click-on Licenses - Shrinkwrap software is commercial software that comes packaged in transparent shrinkwrap plastic. The package includes a printed license agreement visible through the shrinkwrap, which provides that the purchaser's removal of the shrinkwrap indicates consent to the terms of that license agreement.

Click-on licenses are licenses that appear (usually in a pop-up display) when an application is initially downloaded, installed or launched. The display instructs the user to read the license and indicate his/her (i) acceptance of its terms by clicking on an "I Accept" or "OK" box or (ii) non-acceptance, in which case the user is prevented from using or accessing the application further unless or until he/she accepts the license (again by clicking on the acceptance box).

Do not assume that shrinkwrap or click-on licenses are not enforceable. At least one recent court decision upheld the enforceability of a shrinkwrap license. Recently enacted Pennsylvania state law (The Electronic Transactions Act, 73 Pa.C.S. 2260.101 et seq. [1999]) and federal law (The Electronic Signatures in Global and National Commerce Act [sometimes referred to as the "E-SIGN Act"], 114 Stat 464 [2000] [to be codified as 15 USCS Section 7001]) covering electronic commerce would also appear to support the enforceability of click-on licenses.

D. Perpetual vs. Term - A perpetual license lasts forever (although any given software program is likely to become functionally obsolete within a few years). A license for a specified term lasts only for the defined term (often, one year). Shrinkwrap software usually has a perpetual term.

E. Where to Find the License - For non-bulk purchases, a hard copy of the license almost always comes with the software. Sometimes a license agreement for a particular software program may be viewed within the program by selecting "Help" from the menu bar at the top of the Window, then selecting "About [XYZ Software Program]." Many vendors or licensors of popular software post copies of their licenses on the World Wide Web.

F. Reading the Software License - To understand the terms of the licensing agreement, you must read the entire agreement carefully. Unfortunately, these agreements are too often written in an overly legalistic style with hard to understand legalese and unfamiliar computer jargon. However, your failure to understand the terms does not excuse your noncompliance with them. In addition, what you think the agreement should say or what you think is "fair" or "logical" is not important. Neither is what the salesperson (that sold you the software) told you of any significance. What is important is the language of the written license agreement. Be sure that you understand what the agreement says you may do (e.g., install and use one copy of the software on a single computer, make one copy of the software for archive or backup purposes) and what it says you may not do (e.g., the software may not be used by more than a single user at one time). The agreement will probably restrict you from renting, leasing, assigning, or transferring the software. Remember that you are starting out with no rights and you will end up with only those rights that are explicitly granted to you in the agreement.

G. Secondary Use Rights - Some software licenses permit installation on more than one computer subject to certain restrictions ("Secondary Use Rights"). Secondary Use Rights may allow you to use a copy of the software on a home or portable computer if that copy of the software is never loaded (ready for active use) at the same time the software is loaded on your primary computer. Do not assume that your license grants you Secondary Use Rights. Be careful. Some Secondary Use Rights permit a user to install a copy of software from "work" at "home" but does not permit the reverse. Unless the license expressly provides you Secondary Use Rights, you do not have them. Even if the license does provide Secondary Use Rights, you will be subject to the particular restrictions contained in the license agreement. These restrictions vary from license to license.

H. Network Systems and Concurrent Use - Software that is incorporated in a University network or computer system must be covered by a licensing agreement. Some licenses permit installations on multiple computers provided that the software program is not used by more than a certain number of users at any one time (concurrent users). Only authorized employees of the Office of Computer Services and certain other duly authorized University employees may install or otherwise copy software that is subject to a concurrent use license.

I. Site License - A site license is a license that allows an organization to copy and use a software package on multiple computers at one business site. The cost of a site license is more than the cost of one copy of the software, but much less than the cost of buying one copy of the software for each computer. Only certain duly authorized employees may install or otherwise copy software that is subject to a site license. No user should assume that the University has a site license for a software program that enables him or her to copy that software.

V. Alternatives to Making Illegal Copies

A. University Purchase - The University can often acquire software under a site license or educational bulk purchase agreement at prices that are a fraction of standard retail prices. These volume and educational programs allow the University to distribute copies of software at discounted prices for official use by University personnel and, in some cases, for academic use of students. Under one of these licenses, the Office of Computer Business Services can usually provide an authorized copy of a software application within one business day. The Microsoft Select Program is a program available to Temple University pursuant to a contract between the University and Microsoft Corporation. Under this contract, the University has committed to purchase a certain amount of licenses from Microsoft including those for Office, Word, Excel, Access and many other applications. The program allows discounted prices on specified software. Employees who have questions regarding the University's Microsoft Select Program or other purchasing programs may visit the web site for the Office of Computer Business Services for more information.

B. Labs and Loaners - If a member of the University community does not have a license that authorizes him or her to install and use a particular program on a home computer, that user may access that program by using a computer in one of the University's computer laboratories or libraries that has an authorized copy of the program already installed. In addition, the University library and some schools and colleges lend laptop computers that come with popular software installed.

C. Free Programs - Users may visit the Office of Computer Services Help Desk's Download Center to find useful free programs.

VI. Documentation of Valid License

A. Original Documentation - In order to avoid claims of software piracy, it is important to maintain documentation regarding software purchase and license. To effectively manage software licenses, keep the following information and documents for each copy of the software you buy or use:

1. The software product name, version number, and serial number.

2. Proof of purchase such as sales orders, invoices, purchase receipts, packing slips that denote the product(s) and quantity purchased. This can include an invoice delivered with a computer that already had software installed.

3. A letter from the manufacturer and/or publisher denoting what comes with the computer.

4. Purchase Orders that the University's Purchasing Department has approved and processed.

5. Software Site License Agreement and/or Software Site Licensing Program Summary of Order that shows the customer number assigned. 

6. All unexpired license documentation (for commercial software, this is usually a printed form that may have an embossed seal; for shareware and freeware, you probably will need to print out the license agreement).

7. All original diskettes or CDs you buy or receive along with all original manuals and reference documentation included with the software.

B. Registration - Licensors of many commercial software products offer purchasers the opportunity to register with the licensor. This usually involves sending the licensor the purchaser's name, e-mail or street address and product name and serial number and other related information. Registration enables the licensor to contact the purchaser regarding software bugs (errors) and patches (fixes for the bugs), updates and upgrades. It also provides the purchaser with additional proof of license. The purchaser should copy (or print the on-line version) and retain the completed registration form.

C. Transfer - It is not unusual for an owner of software ("Transferor") to transfer the software to another person or entity ("Recipient"). Recipients should take care to obtain from the Transferor the documentation (listed in section VI.A. above) prior to accepting a transfer of software or hardware (on which software is installed). It is a good practice for the Transferor to retain duplicate copies of some of the documentation such as copies of purchase receipt with the product name, version number and serial number. The Transferor should not, however, retain any copies of the software itself. This requires that the Transferor uninstall the software from his/her hardware if the hardware is not also being transferred to the same Recipient. Some licenses may have additional restrictions on transfer. The Transferor and Recipient should review the applicable license.

D. Additional Information - For a detailed discussion on setting up individual and departmental procedures to maintain software licensing, refer to the Temple University Software Management and Compliance Guidelines.  Note: To view this document, you will need Adobe Acrobat Reader, which you can download for free.

VII. Questions and Reporting Software Piracy

A. Contact Information - Individuals who have questions about software piracy or who wish to report possible software piracy are encouraged to contact any of the following: their supervisor (employees only), the Office of Student Affairs at 215-204-6556 (students only), the Office of Computer Services Help Desk at 215-204-8000 or the Office of Internal Audits at 215-204-7559. 

VIII. Copyright Basics

A. Copyright Act - The basis for copyright lies in the Copyright Act of 1976 (as amended). This is an expansive Federal law contained in section 17 of the United States Code and is known simply as the "Copyright Act."

B. Licensor's Rights - The holder of the copyright in a work has the exclusive right to do and to authorize any of the following: 

1. To reproduce the copyrighted work in copies; 

2. To prepare derivative works based upon the copyrighted work; and

3. To distribute copies of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.

C. Copyright Creation - Copyright in a work arises at the time the work is created and fixed in a tangible medium of expression (e.g., written on paper, recorded on audiotape or videotape or saved in electronic form on a floppy disk, hard drive or CD-ROM). 

D. Who Is The Owner - The owner of the copyright may be (i) the author or (ii) the author's employer if the work is a "work made for hire" or (iii) another party to whom the original (or a succeeding) copyright holder has assigned the copyright.

E. What Is Not Copyrighted - All works of intellectual property are presumed by the Copyright Act to be protected by copyright unless they are specifically designated otherwise.

F. What Can Be Copied - Generally, software can only be copied (i) in the process of installation on a single computer (for each authorized license) provided the original copy is not used elsewhere or (ii) to make a single archival (backup) copy. This archival copy can only be used if the original software fails or is destroyed.

G. Additional Information - For more information visit the web site for the United States Copyright Office.

IX. Frequently Asked Questions (FAQs) Regarding Software Licensing at Temple University

The following is a list of frequently-asked questions related to software licensing at Temple University:

1. What documentation is accepted as legal proof of purchase and licensing for software?

Always keep the following information and documentation to show that your software is "legal":

·         All original diskettes or CDs

·         All original manuals and reference documentation

·         All licensing documentation (For commercial software, this is usually a printed form that came with the software. For shareware/freeware, you will need to print out the license agreement.)

·         Invoices, purchase receipts, and any other proofs of purchase for software

(See Section VI, Documentation of Valid License.)

2. Are all software licenses the same?

No. Each software license is a unique contract and terms may vary among software packages. You should read the licensing agreement carefully for full details. (See Section IV, Software Licensing.)

3. What's the difference between commercial, site-licensed, shareware, freeware, and public domain software?

·         Commercial software (such as Microsoft Word) is generally licensed to users for a fee. Such software is typically sold in retail stores. Commercial software publishers have become increasingly vigilant about monitoring licensed use of software. Commercial software publishers sometimes license the use of their software on an institution-wide basis (rather than for individual users). This is referred to as "site licensed" software. Terms of the site license may vary from institution to institution.

·         Shareware is software that can be copied (usually by downloading from the Internet) and used at no cost for a trial period, after which the user must purchase a license (typically a small fee). Shareware is still protected by copyright law and licensing agreements.

·         Freeware is software that is distributed at no charge, but is still protected by copyright law and licensing agreements. Freeware can be distributed freely, but cannot be re-sold for profit.

·         Public Domain software are programs in which the developer has surrendered all rights. It may be freely copied, distributed, and modified. Public domain software is the exception rather than the rule. You should never assume that a software package is public domain unless it is explicitly designated as such.

(See Section II, Software for full details.)

4. Can I use the software that I have at work on my home computer if I'm using it for work-related projects?

No, unless stated otherwise in the license agreement. Some software packages have "secondary use rights" that allow the user to install software on a home or portable computer, but this is the exception rather than the rule. Unless the license specifically gives you secondary rights, you do not have them. (See Section IV, Part G, Secondary Use Rights.)

5. I have two offices in my department. If I buy a software title for one of them can I also install it in the other?

No, unless stated otherwise in the license agreement. Some software packages have "secondary use rights" that allow the user to install software on a second computer, but this is the exception rather than the rule. Unless the license specifically gives you secondary rights, you do not have them. (See Section IV, Part G, Secondary Use Rights.)

6. Can I transfer my software license to another person at Temple?

If software is transferred from the computer of one Temple University employee to another, all documentation (see question 1) should also be transferred to the new user. All copies of the software should be removed from the former user's computer. Some licenses may have additional restrictions on transfers. You should always review the license before transferring software. (See Section VI, Part C, Transfer.) 

© 2008. Temple University. All rights reserved.

Reviewed 11/08