Last updated: 11 August 2023
Are you looking to protect your mobile app and ensure your intellectual property rights remain secure? Then it’s crucial you have an End User Licence Agreement (EULA) in place. In this legal guide, we answer ALL your questions about EULAs and software licensing. Find out:
- What does a EULA do?
- What MUST you include in your EULA?
- Can you bypass the App Store EULA?
- What legal protections does a EULA give you? Etc.
So, if you’re ready to learn more about the importance of EULAs, read on.
TLDR: Quick Summary of this Legal Guide
- An End User Licence Agreement (EULA) is a legal contract setting out the terms and conditions under which a user can use software or an app installed on the user’s device.
- You are not required by law to have a EULA. Still, any EULA you create must comply with Australian Consumer Law, which contains several mandatory consumer guarantees that could render your EULA unenforceable if not adhered to.
- A EULA will provide you with legal benefits, such as protecting your intellectual property rights by specifying the software or app’s scope of use, whether copies are permitted and limiting your liability in case of any damage or harm caused by your software or app.
- Once accepted by a user, a EULA forms a binding contract between the software developer or publisher and the software’s end user, which can be enforced in court.
- You should have your EULA in a prominent or accessible location within your software or app and have users agree to it. This will help prove that users are aware of and have agreed to your EULA in the event of a dispute.
Legal issues covered in this guide
Click on any of the questions below to jump to that section of this legal guide.
- EULA Basics
- EULA Practicalities
- EULA Legalities
- Modifying, Transferring and Terminating EULAs
- EULA Common Misconceptions
If after reading this guide you still have a question, get in touch as we’d love to keep adding your questions to this comprehensive guide.
What is a EULA or End User Licence Agreement?
An End User Licence Agreement (EULA) is a legal contract setting out the terms and conditions under which a user is permitted to use the software. It is specifically used for mobile apps and similar software that is downloaded and installed on the user’s device – as opposed to a Software as a Service Agreement (SaaS) which is used for software that is accessed online.
The EULA is typically presented to the user during the software installation process or when the user first launches the software. You will most likely have agreed to many EULAs (as a user) while using apps and other software in the past.
Is it licence or license?
In Australian English, “licence” is the correct spelling for a noun; while “license” is the correct spelling for a verb. For example, “I have a driving licence” and “I need to license my dog”. But in American English, “license” is used for both the noun and verb forms.
Once accepted by a user, a EULA forms a binding contract between the software developer or publisher and the end user of the software. If you are a developer or publisher of software, then a EULA will state exactly how you are licensing your app or software to end users and purchasers.
The purpose of the EULA is to protect the intellectual property rights of the software developer or publisher, as well as to limit their liability in case of any damage or harm caused by the software. It also specifies the scope of use of the software, such as whether the user is permitted to install the software on multiple devices, and whether they can make copies of the software.
If you develop or publish software, a EULA is a very important document for you to understand. Read on for more information about what a EULA does, what to look out for and when to use one.
Why do I need a EULA?
There are several reasons why a software provider might want to use a EULA:
To protect intellectual property: A EULA can help to protect the software provider’s intellectual property by setting out the terms under which the software can be used. This can help to prevent unauthorised copying or distribution of the software. The EULA can clearly state that you are retaining ownership of the software and are only licensing it to the user subject to a number of strict rules (such as no copying, no reselling, no modifying, a limited number of users, etc.). If you do not have these rules set out in your EULA, then there is a risk that you lose ownership or control of your software.
To limit liability: A EULA can help to limit the software provider’s liability if something goes wrong with the software. It may specify that the software is provided ‘as is’ and that the provider is not responsible for any damages or losses that may result from its use. Also, you cannot control what happens when software is downloaded onto someone’s device so it is important to protect yourself from any issues with downloading.
To provide information about updates: A EULA may outline the terms under which the software provider will provide updates and maintain the software. It may also specify whether the end user is entitled to receive these updates and whether there is a fee for them.
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Overall, a EULA is a very important document that helps to protect both the software provider and the end user by outlining the terms and conditions of the software’s use:
- As a software provider, it is important that before you distribute software or make it available to users, you carefully prepare a EULA which is adapted to your situation and contains all of the rules and restrictions that you require.
- As a software user, it is important to review and understand the EULA before using software to ensure that you are aware of your rights and responsibilities.
Who is covered by a EULA?
A EULA applies to the software provider as well as the end user of the software. The end user is typically an individual or organisation that has purchased or otherwise acquired a licence to use the software. If the end user is an organisation, then the EULA may also apply to individuals within the organisation (such as employees).
Where should I display my EULA?
It is generally recommended to display your EULA in a prominent and easily accessible location, such as on your website or within the software itself. It is also a good idea to include a copy of your EULA with any physical copies of the software that you distribute.
If you are using a website to sell or distribute your software, you should include a link to your EULA on the homepage or on a dedicated ‘Legals’ page. You should also include a requirement for the end user to ‘actively’ accept the End User Licence Agreement as part of the purchasing or downloading process. For example, by scrolling to the bottom of the EULA and clicking a checkbox to confirm that they have read it and agreed to it.
If you are distributing your software through a third-party platform, such as an app store, you should ensure that your End User Licence Agreement is included in the app listing and that it is displayed to the end user before they purchase and/or download the software.
Both the Apple and Google App Stores make you agree to a standard EULA for your software. However, recently the Apple App Store has allowed App marketers to upload their own EULA as an alternative to their own EULA.
Apple App Store Standard EULA
We recommend Australian App marketers use their own EULA, as the standard Apple EULA uses Californian law and it’s not clear how far you are protected under Australian law. In the event of any claim by a user anywhere in the world, you would be required to engage Californian lawyers and may have to travel to California to settle the legal dispute!
Overall, the goal is to make it easy for the end user to access and review the EULA before using the software so that they are aware of the terms and conditions under which the software can be used.
How do users accept a EULA?
There are a variety of ways that users may accept a EULA.
The key point for software providers to consider is, if there is ever a legal dispute between them and a user, how would they prove that the user has actually read and consciously agreed to the EULA before accessing the software? On top of this, they need to consider how to make sure that users actually know what they can and cannot do with the software.
Many software providers require users to take some positive steps to agree to the EULA before accessing the software – such as scrolling to the bottom of the EULA and clicking on a checkbox to confirm that they agree to it. This can help to prove that the user agreed if there is ever a dispute about the software.
On the other hand, if the End User Licence Agreement is buried on a page of your website that is easily overlooked, and if users are able to download the software without ever viewing that page, then if there is ever a dispute over the software, it could be possible for users to argue that they did not agree to the EULA because they never even saw it.
Do EULAs apply to all software?
EULAs also generally apply to software that is downloaded by the user (such as Google Chrome), rather than software that is accessed online (such as Gmail). For software that is accessed online, a Software as a Service Agreement (SssS) may be more appropriate.
What is an example of a EULA?
You have probably agreed to many different EULAs while accessing software online. In fact, any time you click an ‘I agree’ box before downloading software, there is a good chance that you are agreeing to a EULA. Some common EULAs are for operating systems such as Microsoft Windows, macOS, Google Chrome and Google Android.
Case Study: Skype’s EULA Controversy
Background: In 2011, Skype, a popular voice and video communication platform, updated its EULA to include a clause that allowed Skype to access and use users’ content for various purposes. The vague language of the clause caused concern among users, as it seemed to grant Skype the right to monitor and even distribute private conversations.
Public Reaction: The media and users criticized Skype for the unclear language in its EULA, questioning the company’s intentions and raising privacy concerns. Skype’s reputation was at risk, as users felt their privacy was not being adequately protected.
Resolution: Skype responded to the public’s concerns by clarifying its position and updating the EULA to more clearly define its access to user content. The company explained that the clause was intended to enable Skype to provide necessary services, such as processing messages and managing call quality. Skype also reassured users that their privacy remained a top priority.
Conclusion: The Skype EULA controversy serves as a real-world example of the importance of having a clear, transparent, and user-friendly EULA. While this case does not involve the absence of a EULA, it demonstrates the potential negative consequences of having a poorly written or vague EULA.
What should be included in a EULA?
There are many important terms to include in an End User Licence Agreement, but ultimately, the terms need to be appropriate for your software, your business and your circumstances. Some common terms that you should strongly consider for your EULA include:
- Licence: The EULA should specify the terms under which the software can be used, and the scope of the licence being granted to the user.
- Restrictions on Use: The EULA should outline any restrictions on the use of the software, including limitations on the number of devices or users that can access the software and any restrictions on copying or distribution.
- Ownership: The EULA should make it clear that the software, functionality and any related intellectual property rights remain the property of the software developer or publisher.
- Disclaimer of Warranties: The EULA should include a disclaimer of any warranties, to limit the liability of the developer or publisher in case of software defects or errors.
- Limitation of Liability: The EULA should specify the extent of the developer or publisher’s liability in case of any damages arising from the use of the software.
- Termination: The EULA should specify the circumstances under which the licence can be terminated, such as a breach of the terms of the agreement.
- Governing Law: The EULA should specify the governing law that will apply to the agreement, which can be important if disputes arise between the developer or publisher and the user.
What are some legal advantages and disadvantages of EULAs?
Generally speaking, from the perspective of a software provider, a EULA is a very useful set of terms and the advantages far outweigh the disadvantages. With that said, here are a few things to consider.
Some common advantages of EULAs include:
Legal protection and limitation of liability: EULAs can provide legal protection to software developers/publishers by specifying the terms and conditions of use for their software and by limiting their liability in case of software defects or errors.
User accountability: EULAs can hold end-users accountable for their use of the software, by outlining any restrictions on use and by specifying the extent of the developer or publisher’s liability in case of any damages arising from the use of the software.
Intellectual Property protection: EULAs can help protect the intellectual property rights of the software developer or publisher, by specifying that the software and any related intellectual property rights remain the property of the developer or publisher.
Some common disadvantages of EULAs include:
Length and complexity: EULAs can be lengthy and complex legal documents that may be difficult for end-users to read and understand. This can result in users agreeing to terms they may not fully understand.
Misunderstanding by users: Due to the length and complexity of EULAs it can be difficult for users to understand their obligations. This can result in users doing things with the software that the software provider does not approve of. Even if the software provider has legal remedies available under the EULA – for example, they may be able to sue the user for breach of the End User Licence Agreement – in most cases, it is better for everyone if the users just understood what was required of them and complied with the rules in the first place.
Lack of negotiation: EULAs are typically presented on a ‘take it or leave it’ basis, meaning that end-users may not have the ability to negotiate the terms of the agreement. This is more of a problem for the user than the software provider.
Limited rights: EULAs can limit the rights of end-users, such as by restricting the number of devices or users that can access the software and by limiting the ability of end-users to modify or distribute the software. Again – this is generally more of a problem for the user than the software provider.
Is a EULA required by law?
No. In most countries, including Australia, End User Licence Agreements are not generally required by law. However, they can help protect the rights and interests of both the software provider and the end user.
In some cases, specific industries or types of software may be subject to legal requirements that mandate certain terms or conditions. For example, software that handles personal medical data may be subject to data privacy laws that require specific disclosures or consent from end users.
Is a EULA legally binding?
Yes, an End User Licence Agreement is legally binding but there are a couple of conditions. Firstly, the user will need to have actually agreed to the EULA (see above).
Secondly, the EULA will need to comply with relevant laws. For example, the Australian Consumer Law (ACL) contains a number of mandatory consumer guarantees which cannot be avoided. If the ACL applies, then any terms in a EULA that contradict the ACL will not be legally enforceable.
Thirdly, EULAs are not bulletproof. Unfortunately with software, it takes very little software coding to change software enough to be able to claim it as your own.
Does a EULA provide legal protection?
A EULA is a very important tool to help software providers manage their legal risk, but it is not a silver bullet. It should form part of an overall legal strategy for software providers, but you should not assume that just because you have a EULA you are protected from all legal risks. In addition to a EULA, you should consider:
- Limited liability legal structure such as Pty Ltd company or trust
- Risk management practices, for example, data handling and security
- Tailored professional advice, including legal advice, to identify specific risks
- Business Insurance
Can a EULA be enforced in court?
Yes. A EULA is a legally binding contract and it can be enforced in court if necessary. However, it is generally more cost-effective to resolve disputes related to a EULA through other means, such as mediation or arbitration.
Modifying, Transferring and Terminating EULAs
Can I modify a EULA?
EULAs are typically non-negotiable, provided on a ‘take it or leave it’ basis. The end user must agree to the terms of the EULA as written in order to use the software. It is not generally possible to modify the terms of a EULA. You can try contacting the software owner to discuss any modifications but otherwise, you agree or you do not use it!
If you are a software provider, then you can modify your EULA whenever you like and publish the updated EULA with your software product. Generally, users will be bound by whatever version of the EULA you had published at the time that the user downloaded the software.
Can I transfer my EULA to another person or organisation?
The terms of a EULA may allow for the transfer of the licence to another person or organisation, but this is not always the case and it is rare. It is important to review the terms of the EULA carefully to determine whether a transfer is permitted.
Can I terminate a EULA?
A EULA can generally be terminated by the end user at any time by uninstalling the software and destroying any copies in their possession. However, the terms of the EULA may also include provisions for termination by the software provider under certain circumstances, such as a breach of the agreement.
EULA Common Misconceptions
Is a EULA the same as a ‘Copyright Notice’?
No, a EULA is not the same as a Copyright Notice, although both documents are useful legal protection for software providers.
A Copyright Notice is a statement that identifies the owner of the copyright in a work and the year of first publication. The notice typically includes the symbol © or the word ‘Copyright’ followed by the name of the copyright owner and the year of first publication. The purpose of a Copyright Notice is to provide notice to the public of the copyright owner’s claim to the work and to discourage infringement.
A Copyright Notice is intended to protect the copyright owner’s rights in the work, while a EULA is intended to establish the terms and conditions for use of the software.
A EULA, as we have already discussed, is specific licensing terms for software use that are downloaded or otherwise accessible. It is quite narrow in scope and sets out the rules and conditions regarding the use of the software.
However, it is very important to ensure that you are using documents that are properly adapted to your business and your software. Therefore, if in doubt, seek legal advice about the most appropriate document to use for your situation and have something drafted which is tailored to your circumstances.
What are some other names for a EULA?
As we have mentioned above, the name of the document is just a name and what really matters is that the terms within it are properly adapted to your situation. A EULA may have a variety of other names, such as:
- Licensing Agreement
- Software Licensing Agreement
- Licence Agreement
- Software Licence Agreement
- Licensed Application End User Agreement
- Terms and Conditions Agreement
- Click-Wrap Licence
- Browse-Wrap Licence
- Shrink Wrap Licence, etc.
We hope you found this Legal Guide to End User Licence Agreements (EULAs) helpful.
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