Here are a few terms you need to be familiar with when trading software on the second-hand market.
Click wrap: this term is used to describe licence agreements which appear to the user during the installation of the software. The user must click “accept” to continue with the installation.
Copyright: is the exclusive right, granted by law, to produce copies and control a product for a specified period of time.
Declaration of destruction: is a signed statement by the seller of a software licence on the Digital Exchange warranting that the software product has been removed or made unusable on the seller’s systems.
Decompilation, disassembly or reverse engineering: generally, this is the process by which computer programmers attempt to translate the object code of a computer program and translate it into the original programming language. The reverse engineered code will resemble the source code of the program, but, as the notes, explanations and comments contained in the original source code are lost in the translation from source code to object code, these are not recoverable by reverse engineering the object code. Virtually all licence agreements require the licensee of the software to agree not to decompile, disassemble or reverse engineer the computer program.
EDU/GOV licences: are licences granted to eductional establishments and government organisations. These licences are usually at lower rates that standard end-user or enterprise licences. Such licences remain restricted to eductional establishments and government organisations and can, therefore, only be sold as such on The Digital Exchange.
EULA, (End-User Licence Agreement): is a licence agreement between the software publisher and the user of that software which sets out the terms on which the software can be used.
Exhaustion rule: also referred to as “right of first sale” or first-sale doctrine. It creates an exception to the copyright holder’s distribution right. After a legal copy of a copyrighted work is lawfully sold, the exhaustion rule exhausts copyright holder’s right to control the ownership of that copy.
Maintenance agreements: under a maintenance agreement the software vendor provides modifications, improvements, updates, error corrections and bug fixes provided to the licensee of the software after the delivery of the software program to correct faults or enhance the program. If the licensee has a term or subscription licence, then the cost of these updates is included in the licence fee. For perpetual licences, the updates to the code are provided via a maintenance offering from the software vendor, which is usually bundled with support. The new computer code provided under the maintenance agreement forms part of the software product, and so maintenance should be seen as an extension of the licence grant to cover the code released subsequent to the original licence sale. If the licensee of software, holding a perpetual licence, stops paying maintenance at any point in time, then his/her right to updates also stops, and the licence to use the software is frozen at the latest version of the software to which that licensee had the right when he/she stopped paying maintenance.
ProCADIS certified licence: Before posting any software on the Digital Exchange, ProCADIS legal experts will verify that the software is a perpetual licence (and therefore can be lawfully re-sold), that it does actually belong to the seller and that the first sale took place in the EEA. In order to comply with the ECJ decision in the UsedSoft v Oracle case, sellers will also have to demonstrate that they have discarded the licence when the sale takes place.
OEM software: is software sold by the software publisher who owns the intellectual property in the software product (i.e. not a reseller of those products or other partner of the software publisher).
OEM (Original Equipment Manufacturer): a manufacturer of equipment, products or components that may be marketed by another company.
Open Source Software: is software which is subject to licence terms that require, as a condition of use, modification, or distribution of the software that such software or other software combined or distributed with such software be (i) disclosed or distributed in source code form, (ii) licensed for the purpose of making derivative works, and (iii) redistributable at no charge.
Perpetual licence: is a licence grant to use a software program indefinitely. A perpetual licence can be contrasted with a term or subscription licence which only grants a right to use the software program for a limited period of time. The perpetual licensing model requires the licensee to make an initial investment to purchase the right to use the software in perpetuity, and thereafter the licensee will typically pay maintenance and support on that licence. The maintenance and support costs are normally much less than the annual cost of a subscription or term licence.
Proprietary software: is software which is licensed to users under a licensing agreement governing the user’s rights and restricting rights to modify the source code which is proprietary to the software publisher. This is contrasted with open source software which is usually also governed by a licensing agreement, but were the user has access to and can modify the source code.
Reinstatement fee: is a fee which software vendors charge customers who have stopped paying for maintenance and support services to reinstate those maintenance and support services. Often this amounts to the same costs as the licensee would have paid during the period when the maintenance and support services were stopped, but can vary and is, of course, subject to negotiation.
Shrink wrap: this term is used to describe licence agreements which cannot be read by the user until after the software has been purchased (because the printed agreement is contained within the box which is wrapped in shrink wrap plastic).
Software Specifications: are the technical and functional attributes of the software program documented by the software vendor.
Support: refers to the service provided by software vendors to assist the end-users of their products to work with the software effectively. Generally, contacting support means calling, emailing or instant messaging with a support or helpdesk agent. The agent will assist in resolving the issue that the end-user is experiencing. Often software vendors have three levels of support and with more experienced agents or engineers resolving level two or level three issues.