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Net Law Roundup #21

by Jeremy Malcolm, Internet lawyer

[This month's Net Law Roundup is excerpted, with minor amendments, from a paper, Problems in Open Source Licensing, presented at the 2003 Linux Technical Conference ( on 24 January 2003.]

A software licence isn't necessarily a contract. It can be, but that requires a couple of preconditions to be satisfied. One of those preconditions is the existence of consideration on both sides. Consideration is a legal concept that simply means a quid-pro-quo, or something of value given by each party in exchange for what the other party provides. In the case of freeware or open source software, there usually isn't anything provided by the licensee of the software (that is, the person who uses it) back to the licensor (usually, the person who wrote it). Because of this, there is no contract between the licensee and licensor.

Although we don't have a contract, we do still have copyright. Copyright automatically exists in computer software, and it lasts for 50 years, or in the USA 70 years, after the death of the author. It gives the licensor the exclusive right to control who makes copies of the software and who creates modified versions of it. If he wanted to, the licensor could use copyright to stop anyone from receiving a copy of the software at all.

As it happens, developers of freeware and open source software are more generous than that, and want to encourage people to copy (and sometimes to modify) their software. But they are allowed to put conditions on their generosity. Unlike in the case of a contract, the conditions that are placed on a licence can't give the licensor any more rights or powers than he already has. All they can do is place limits or conditions on the licensee's entitlement to exercise the rights that copyright law grants to the licensor.

So what kind of licence conditions can a licensor legally impose on the use of software, in the absence of a contract? In general, he can impose conditions that restrict the right to copy the software, because this is one of the exclusive rights that copyright grants to the licensor. He can also impose conditions that restrict the licensee's ability to modify the software. But he probably can't restrict their right to run the software.

A little-known consequence of this is that in general, if the licence to a freeware program that tells you that you may not use the program in a particular way or for a particular purpose (for example, commercial purposes), then that restriction is not enforceable under Australian law. There are some exceptions to this, and it does not usually apply to shareware, but it can be useful to know that if a freeware licence tries to prohibits you from using the software in a certain way, it can't necessarily be taken at face value!

Please Note: The information contained in this article is general in nature and cannot be regarded as anything more than general comment. Readers of this article should not act on the basis of this comment without consulting one of iLaw’s legal practitioners who will consider their particular circumstances