While this is a complex legal issue, as a software copyright attorney,  let me try to simplify it so it can be useful for software company or IT based company (i.e. do I need a software licensing agreement or not)

Essentially, one way to protect and provide information technology is via copyright law alone, which means that there is no contract and the IP owner is relying on federal copyright law to provide the buyer with their necessary rights (and to protect the owner).

– For example, if you buy a book you own the tangible book (that is what you bought), but the author/publisher still owns the copyright to the book. You can read the book, write on the book, tear up the book, and transfer the book, but you can’t copy, prepare derivatives works (e.g. movies), publicly perform, etc. the book. You have to look at copyright law for more answers.

– On the other hand, if you buy software and agree to a license agreement (=contract) then the contract and federal copyright law protect the owner of the software and determine your rights. If you want to use the software, you should read agreement first as it will explain what you can and can’t do. You probably can use it and destroy/delete it, but how you can use it, whether you can transfer the software and in general what your rights are depend on the contract and copyright law (you can see that this can get complicated).

Music owners learned about this issue the hard way (remember the original Napster), that not having a contract (and only relying on copyright law) can have a real negative consequence in the digital world (i.e. it is really easy to copy and transfer digital files). As a result, right now music provided through iTunes is licensed, digital images are licensed (e.g. istockphoto.com), and software is still licensed.

All software and IT based companies should understand how their contracts and copyright law (1) protect their IP and (2) provide the users with the rights to use the technology. The key here is to have the right mix of contract and copyright law, and to understand the benefits to your users and the risks to your IP. Prystar sued Apple over this issue (I think they were a little confused between contracts and copyrights), and got the short end of the stick (i.e. they currently have an injunction against them).

Note: I am not addressing open source copyright licensing (without contracts), as that is something for another blog post.

Disclaimer: This is for informational and educational purposes only, and is not legal advice.