Contracts: Online Software Licensing in Minnesota


This post is part of a series of posts entitled A Legal Guide to the Internet. For a comprehensive list of articles contained in this series, click here.

There are some key issues for any business to consider relative to online distribution of software or other products.

  • How can you be assured that the person you are dealing with is that person?
  • How do you authenticate and avoid repudiation?
  • How do you avoid electronic forgery?
  • How do you confirm integrity of information shared online?
  • How to preserve confidentiality?
  • How can you enforce the terms of the contract?
  • How do you preserve evidence in case of future disputes?

Software vendors are now both marketing and actually distributing software online. The more common approach, however, still remains ordering of the software product over the Internet or by telephone with hard copies delivered to the user. This off-line arrangement may be more convenient than online delivery, which may require users to download the software onto tangible media themselves. Off-line distribution also avoids any online technical delivery problems. Trade secret protection may also be lost if delivered online without any encryption. For this reason, many vendors still utilize the Internet to market their software products and not for actual distribution.

Businesses that use online distribution should consider writing a procedure guideline for distributing software online. Topics of this guideline may include procedures for monitoring the Internet for pirated copies of their software, devising a method to encrypt the software with registration material that makes the software inoperable without registration, and effectively writing licensing terms.

This and the following posts have been copied or adopted from A Legal Guide To The INTERNET – Sixth Edition, published through a collaborative effort by the Minnesota Department of Employment & Economic Development and Merchant & Gould.