Contracts & Agreements, AI & Technology Law

Software Licensing Agreements Simplified: Key Insights & Sample

software licensing agreement
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Sep

Last updated on August 7th, 2026 at 03:42 pm

TL;DR: A software licensing agreement gives someone permission to use software without transferring ownership of it. The owner keeps the copyright; the licensee gets defined rights to use it, within limits. The biggest and most expensive confusion is between three different things that get treated as interchangeable: a software licence (permission to use), SaaS (access to hosted software as a service), and an assignment (an actual transfer of ownership). They are not the same, and choosing the wrong one, or drafting a perpetual licence when you meant a subscription, causes real disputes about who owns and controls what when the deal ends. This guide explains what a software licensing agreement is, the licence-versus-SaaS-versus-assignment distinction with a decision guide, the key clauses, the India and cross-border legal position, and a sample licence-grant clause.

Quick overview: Almost every business licenses software, and many license out their own. Yet the agreements are routinely misunderstood in ways that surface at the worst moment: at renewal, at exit, or during an acquisition’s due diligence. The single most common mistake is confusion between a perpetual licence and a subscription, who keeps the right to use the software, and on what terms, once payment stops. This guide clears up that confusion, sets out the clauses that matter, and gives you a decision framework for choosing the right structure.

What is a software licensing agreement?

A software licensing agreement is a contract by which the owner of software (the licensor) grants another party (the licensee) permission to use that software, on defined terms, without transferring ownership of the underlying intellectual property. The licensor keeps the copyright and other IP; the licensee receives a defined right to use the software within the boundaries the agreement sets.

This is the crucial concept: a licence is permission, not a transfer. When you license software, you are not selling it or buying it; you are granting or receiving the right to use it in specified ways. Software itself is protected as a literary work under copyright law in India and most other countries, so the owner’s exclusive rights, to reproduce, distribute, adapt, and license it, all flow from copyright. A licence is how the owner lets others use those rights without giving them away. Understanding what a patent is and how IP protection works more broadly helps place this in context: copyright protects the software code, and the licence controls how others may use it.

The confused trio: software licence vs SaaS vs assignment

This is where most of the expensive mistakes happen, and it is the heart of this guide. Three different arrangements get used interchangeably, and they are fundamentally different in what the customer actually gets.

A software licence grants the right to use software, usually installed or deployed by the licensee. The licensor keeps ownership; the licensee gets defined usage rights. Think traditional installed software, or an on-premise enterprise deployment.

SaaS (software as a service) does not grant a licence to the software at all in the traditional sense. The customer gets access to software hosted and operated by the provider, delivered over the internet as a service. The customer never possesses a copy; they have a subscription to access a service. A SaaS agreement is therefore more like a service contract than a licence, which is why it has its own distinct structure. Our SaaS agreement guidance and the service level agreement that usually accompanies it cover this in detail.

An assignment is a transfer of ownership. The IP itself changes hands: the assignee becomes the new owner of the copyright in the software. This is completely different from a licence. Where a licence is “you may use my software,” an assignment is “the software is now yours.” Our guide on the IP assignment agreement covers when a transfer of ownership is what you actually need.

Here is a simple decision guide. If you want someone to use your software but you keep owning it, use a licence. If you want to deliver your software as a hosted online service that customers access rather than install, use a SaaS agreement. If you want to actually transfer ownership of the software to another party, for example when a developer builds something for a client who must own it outright, use an assignment. Getting this choice wrong, licensing when you meant to assign, or treating a SaaS relationship as a software licence, creates ownership and control disputes that are difficult and costly to untangle later.

The most common mistake: perpetual vs subscription confusion

Within software licences specifically, the single most common mistake we see is confusion between a perpetual licence and a subscription, and it centres on one question: what happens when payment stops?

A perpetual licence grants the right to use the software indefinitely. The licensee pays once (or pays for a defined period of maintenance and support on top) and keeps the right to use that version of the software forever, even after any support period ends. The right to use does not evaporate when payments stop, because the licence itself is perpetual; only the support and updates lapse.

A subscription licence grants the right to use the software only for as long as the subscription is paid. When the subscription ends, so does the right to use the software. Stop paying, and you lose access, legally as well as practically.

The confusion blows up at the worst time. A business assumes it has bought software “forever” (a perpetual licence) when it actually signed a subscription, and is then shocked when access ends on non-renewal. Or a licensor intends a subscription but drafts language suggesting a perpetual grant, and cannot cut off a non-paying customer. The agreement must state, unambiguously, whether the licence is perpetual or subscription, and exactly what rights survive termination or non-payment. This is not a detail; it is the core commercial bargain, and it must be explicit.

The key clauses in a software licensing agreement

Beyond the licence type, a well-drafted software licensing agreement turns on a handful of clauses.

The licence grant. The precise definition of what the licensee may do. This is the heart of the agreement and the clause the sample below illustrates.

Scope and restrictions. The limits on use: number of users or seats, permitted devices, territory, permitted purpose, and whether the licensee may copy, modify, create derivative works, reverse-engineer, or sublicense. Well-drafted restrictions define exactly what is not allowed.

Exclusivity. Whether the licence is exclusive (only the licensee may use the rights, even to the exclusion of the owner), non-exclusive (the owner can license the same software to others), or sole (only the licensee and the owner). Most software licences are non-exclusive.

Term and termination. How long the licence lasts, whether it is perpetual or subscription, the renewal mechanism, and critically what happens to the licensee’s rights on termination. Our guide on the termination of a contract and its consequences covers the survival-of-rights point that matters here.

Fees and payment. The licence fee, whether one-time or recurring, maintenance and support charges, and any usage-based pricing.

Warranties and disclaimers. What the licensor promises about the software (often that it will perform substantially as documented) and what it disclaims (usually an “as is” position beyond the express warranty).

Limitation of liability and indemnity. How much either party can be liable for, and who covers third-party claims, for example an IP infringement claim by someone alleging the software infringes their rights. Our guides on the indemnity clause and why a limitation of liability clause matters so much cover these.

IP ownership and open-source. Confirmation that the licensor owns or has the right to license the software, and disclosure of any open-source components, whose licences can impose obligations on the licensee.

For the general drafting discipline, our guide on what should be included in every business contract applies here too.

A sample licence-grant clause

Here is a simple, illustrative licence-grant clause showing how the core permission is typically framed. This is an example for understanding only, not a drafting template for use without advice, because the right wording depends entirely on your software and commercial terms.

Grant of Licence. Subject to the Licensee’s compliance with this Agreement and payment of the applicable Fees, the Licensor grants the Licensee a non-exclusive, non-transferable, non-sublicensable licence to use the Software solely for the Licensee’s internal business purposes, limited to the number of Authorised Users specified in the Order, for the Term. The Licensee shall not copy, modify, adapt, translate, reverse-engineer, decompile, or create derivative works of the Software except to the extent expressly permitted by this Agreement or by applicable law. All rights not expressly granted are reserved by the Licensor.

Notice how much this short clause settles: it is non-exclusive, tied to payment, limited in purpose and user count, time-bound to a term, and closes with a “reservation of rights” so anything not granted stays with the owner. The full agreement then builds the scope, restrictions, warranties, and liability around this core grant.

Software licensing in India

In India, software is protected as a literary work under the Copyright Act, 1957, and the licensing framework flows from that Act.

Licence versus assignment under the Copyright Act. Section 14 defines the exclusive rights of the copyright owner. A licence under Section 30 grants an interest in the copyright to the licensee without transferring ownership, and it must be in writing signed by the owner. An assignment, under Sections 18 and 19, transfers ownership of the specified rights. The Supreme Court has confirmed the practical significance of this distinction: a licence from a copyright owner that confers no proprietary interest on the licensee, such as a standard end-user licence, does not amount to parting with the copyright itself, which is why payments for shrink-wrap or end-user software licences were held not to be royalties in the well-known software-royalty ruling.

Default duration and territory. A crucial trap: if a licence or assignment is silent on duration, the Copyright Act deems the term to be five years (Section 19(2), applied to licences via Section 30A), and if silent on territory, it is presumed to extend only to India (Section 19(6)). So an agreement that does not state its duration and territory may not mean what the parties assumed. Always state both expressly.

Exclusive, non-exclusive, or sole. Indian law recognises all three, and the agreement should specify which applies.

Registration and stamp duty. Registration of a software licence is not mandatory under the Copyright Act, but the agreement should be adequately stamped under the applicable state stamp law to be admissible in evidence. For the data dimension, where licensed software processes personal data, the DPDP Act obligations attach as well.

Software licensing across other jurisdictions

Because software is licensed across borders constantly, the governing-law position matters.

In the United States, software licensing is largely contractual and well-developed, with the perpetual-versus-subscription distinction central, and courts generally enforcing the licence terms as written. Our contract lawyers in the USA advise on US-governed software licences.

In the European Union, licensing operates against a backdrop of strong copyright harmonisation and consumer and data-protection rules, with GDPR affecting any licence involving personal data and specific case law on the exhaustion of rights for downloaded software. Our contract lawyers in the EU advise there.

In Singapore, a leading technology hub, software licensing is largely contractual within a sophisticated commercial and IP framework, making it a common choice of governing law for cross-border software deals in Asia. Our contract lawyers in Singapore advise on Singapore-governed licences.

For businesses licensing AI systems specifically, the licence structure raises additional questions about model ownership, training data, and outputs, covered in our guides on AI vendor contracts and who is liable when an autonomous AI agent causes harm. For any technology deal of significance, working with technology lawyers who focus on software, SaaS, and AI is worthwhile, and our guide on why you need a contract lawyer for AI and tech agreements explains why.

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Software License Agreement
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SOFTWARE LICENSING AGREEMENT

FOR LICENSED SOFTWARE PRODUCTS

This Software Licensing Agreement ("Agreement") is entered into as of [ EFFECTIVE DATE ] ("Effective Date") between:

Licensor:
[ LICENSOR NAME ]
[ LICENSOR ADDRESS ]
(hereinafter "Licensor")		 Licensee:
[ LICENSEE NAME ]
[ LICENSEE ADDRESS ]
(hereinafter "Licensee")

Licensor and Licensee are individually referred to as a "Party" and collectively as the "Parties".

WHEREAS Licensor owns or controls the intellectual property rights in the Software described below; and WHEREAS Licensee wishes to obtain, and Licensor is willing to grant, a licence to use the Software on the terms set out in this Agreement;

NOW THEREFORE, in consideration of the mutual covenants set out below, the Parties agree as follows:

1. DEFINITIONS

1.1 "Software" means the software product known as [ SOFTWARE NAME ], in object code form, together with any updates, upgrades, and Documentation provided by Licensor under this Agreement, as further described in Schedule A.

1.2 "Documentation" means Licensor's standard technical and user documentation for the Software.

1.3 "Authorised Users" means the Licensee's employees, contractors, and agents permitted by Licensee to use the Software, up to the number of users or seats specified in Schedule A.

1.4 "Licence Fee" means the fee payable by Licensee for the licence granted under this Agreement, as set out in Section 4 and Schedule A.

1.5 "Intellectual Property Rights" means all patents, copyright, trademarks, trade secrets, database rights, and all other intellectual property rights, whether registered or unregistered.

1.6 "Permitted Purpose" means the Licensee's internal business purposes as described in Schedule A, and no other purpose.

2. GRANT OF LICENCE

2.1 Licence Grant. Subject to Licensee's compliance with this Agreement and payment of the applicable Licence Fee, Licensor grants Licensee a [ LICENCE EXCLUSIVITY ], non-transferable, non-sublicensable licence to use the Software solely for the Permitted Purpose, limited to the number of Authorised Users specified in Schedule A, for the Territory and Term set out in this Agreement.

2.2 Licence Type. The licence granted under this Agreement is a [ LICENCE TYPE ] licence.

If the licence is a subscription licence, the Licensee's right to use the Software continues only for so long as the Subscription Term is in effect and the Licence Fee is paid; upon expiry or termination of the Subscription Term, the Licensee's right to use the Software ends. If the licence is a perpetual licence, the Licensee's right to use the version of the Software delivered under this Agreement continues indefinitely following payment of the applicable one-time Licence Fee, provided that any right to updates, upgrades, and support continues only for so long as any applicable maintenance and support fees are paid.

2.3 Territory. The licence is granted for use in the following territory: [ TERRITORY ].

2.4 Reservation of Rights. All rights not expressly granted to Licensee under this Agreement are reserved by Licensor. This Agreement does not transfer any ownership of, or Intellectual Property Rights in, the Software to Licensee.

2.5 Delivery. Licensor shall deliver or make available the Software to Licensee by [ DELIVERY METHOD ] within the timeframe set out in Schedule A.

3. RESTRICTIONS ON USE

3.1 Except to the extent expressly permitted by this Agreement or by applicable law, Licensee shall not, and shall not permit any third party to: (a) copy, reproduce, or duplicate the Software except for a reasonable number of back-up copies; (b) modify, adapt, translate, or create derivative works of the Software; (c) reverse-engineer, decompile, or disassemble the Software, or otherwise attempt to derive its source code; (d) sublicense, rent, lease, resell, distribute, or otherwise make the Software available to any third party; (e) remove or alter any proprietary notices or labels on the Software; or (f) use the Software beyond the scope of the licence granted, including in excess of the number of Authorised Users.

3.2 Licensee shall be responsible for all use of the Software by its Authorised Users and shall ensure that its Authorised Users comply with this Agreement.

4. FEES AND PAYMENT

4.1 Licence Fee. Licensee shall pay Licensor a Licence Fee of ₹[ LICENCE FEE ] (Indian Rupees, exclusive of applicable GST and taxes), payable [ PAYMENT TERMS ].

4.2 Maintenance and Support Fee. Where applicable, Licensee shall pay a maintenance and support fee of ₹[ SUPPORT FEE ] per annum for the updates, upgrades, and support described in Schedule A.

4.3 Taxes. All fees are exclusive of applicable taxes including GST. Licensee shall be responsible for all applicable taxes imposed in connection with the licence, other than taxes on Licensor's income. Licensor shall include applicable GST in its invoices.

4.4 Late Payment. Undisputed invoices not paid when due shall bear interest at [ LATE FEE ] from the due date until the date of actual payment. Licensor may, upon fifteen (15) days' written notice, suspend the licence if undisputed amounts remain unpaid for more than thirty (30) days past the due date.

5. INTELLECTUAL PROPERTY AND OWNERSHIP

5.1 Ownership. As between the Parties, Licensor exclusively owns all right, title, and interest in and to the Software, the Documentation, and all Intellectual Property Rights therein, including all updates, upgrades, and improvements. The Software is licensed, not sold.

5.2 Open-Source Components. Where the Software incorporates any open-source software, such components are provided subject to the terms of their respective open-source licences, which are set out or referenced in Schedule A. In the event of a conflict between such open-source licence terms and this Agreement in respect of those components, the open-source licence terms shall prevail to the extent of that conflict.

5.3 Feedback. If Licensee provides Licensor with feedback or suggestions regarding the Software, Licensor may use such feedback without restriction and without obligation to Licensee.

6. CONFIDENTIALITY

6.1 Each Party ("Receiving Party") agrees to: (a) hold in strict confidence all Confidential Information of the other Party ("Disclosing Party"); (b) not disclose such information to any third party without the prior written consent of the Disclosing Party; and (c) use such information only for the purposes of this Agreement.

6.2 "Confidential Information" means all non-public information disclosed by one Party to the other, whether orally or in writing, that is designated as confidential or that reasonably should be understood to be confidential given the nature of the information and the circumstances of disclosure, including the Software's source code and structure.

6.3 Confidentiality obligations shall survive termination of this Agreement for a period of three (3) years, save that obligations in respect of the Software's source code and trade secrets shall survive for so long as the information remains confidential.

7. WARRANTIES AND DISCLAIMERS

7.1 Mutual Warranties. Each Party represents and warrants that: (a) it has the legal authority to enter into this Agreement; (b) the execution and performance of this Agreement does not violate any applicable law or any agreement with a third party; and (c) it shall comply with all applicable laws in performing its obligations hereunder.

7.2 Licensor Warranties. Licensor warrants that: (a) it owns or controls the Intellectual Property Rights necessary to grant the licence under this Agreement; and (b) the Software shall perform materially in accordance with the Documentation for a period of [ WARRANTY PERIOD ] from the date of delivery. Licensee's sole remedy for breach of the warranty in (b) shall be repair or replacement of the deficient Software, or, if that is not commercially practicable, a refund of the Licence Fee attributable to the deficient Software.

7.3 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SOFTWARE IS PROVIDED "AS IS". LICENSOR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT, AND DOES NOT WARRANT THAT THE SOFTWARE WILL BE UNINTERRUPTED OR ERROR-FREE.

8. LIMITATION OF LIABILITY

8.1 NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, INCLUDING LOST PROFITS OR LOSS OF DATA, REGARDLESS OF THE CAUSE OF ACTION AND WHETHER ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

8.2 EACH PARTY'S TOTAL CUMULATIVE LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL NOT EXCEED [ LIABILITY CAP ].

8.3 The limitations in this Section shall not apply to: (a) a Party's indemnification obligations; (b) a Party's breach of its confidentiality obligations; (c) Licensee's breach of the licence restrictions in Section 3; or (d) gross negligence or wilful misconduct.

9. INDEMNIFICATION

9.1 Licensor Indemnity. Licensor shall indemnify, defend, and hold harmless Licensee from any third-party claim alleging that the Software, as used in accordance with this Agreement, infringes any Intellectual Property Right of a third party. Licensor's obligations under this Section shall not apply where the alleged infringement results from: (a) Licensee's modification of the Software; (b) use of the Software in combination with products not supplied or approved by Licensor; or (c) Licensee's continued use of the allegedly infringing Software after receiving notice of infringement.

9.2 Client Indemnity. Licensee shall indemnify, defend, and hold harmless Licensor from any third-party claim arising from: (a) Licensee's use of the Software in violation of this Agreement or applicable law; or (b) any data or materials provided by Licensee.

10. TERM AND TERMINATION

10.1 Term. This Agreement commences on the Effective Date and shall continue for [ CONTRACT TERM ] (the "Term"). Where the licence is a subscription licence, the Agreement shall automatically renew for successive periods of equal length unless either Party provides written notice of non-renewal at least [ NOTICE PERIOD ] prior to the end of the then-current term.

10.2 Termination for Cause. Either Party may terminate this Agreement upon written notice if: (a) the other Party materially breaches this Agreement and fails to cure such breach within thirty (30) days after receiving written notice thereof; or (b) the other Party becomes insolvent or makes an assignment for the benefit of its creditors.

10.3 Effect of Termination. Upon termination or expiry of this Agreement: (a) the licence granted under this Agreement shall terminate, save that a perpetual licence for which the full Licence Fee has been paid shall survive termination of the maintenance and support obligations except where this Agreement is terminated for Licensee's material breach; (b) Licensee shall cease all use of the Software to the extent the licence has terminated and, at Licensor's election, return or destroy all copies of the Software and Documentation; and (c) each Party shall return or destroy the other's Confidential Information.

10.4 Survival. Sections 5 (Intellectual Property and Ownership), 6 (Confidentiality), 8 (Limitation of Liability), 9 (Indemnification), and 12 (Governing Law and Dispute Resolution), together with any accrued payment obligations, shall survive termination or expiry of this Agreement.

11. DATA PROTECTION

11.1 Where the use of the Software involves the processing of personal data, each Party shall comply with the Digital Personal Data Protection Act, 2023 and all other applicable data protection laws.

11.2 Where Licensor processes personal data on behalf of Licensee in connection with the Software, the Parties shall enter into a separate data processing agreement setting out the terms of such processing.

12. GOVERNING LAW AND DISPUTE RESOLUTION

12.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of India, and the courts of [ GOVERNING LAW ] shall have exclusive jurisdiction over any disputes arising hereunder, subject to the arbitration clause below.

12.2 Dispute Resolution. Any dispute, controversy, or claim arising out of or in connection with this Agreement shall be resolved by [ DISPUTE RESOLUTION ]. The seat of arbitration shall be [ GOVERNING LAW ]. The language of arbitration shall be English.

12.3 Injunctive Relief. Notwithstanding the foregoing, either Party may seek injunctive or other equitable relief in any court of competent jurisdiction to prevent irreparable harm, including in respect of any breach of the licence restrictions or confidentiality obligations.

13. GENERAL PROVISIONS

13.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to its subject matter and supersedes all prior or contemporaneous agreements, understandings, negotiations, and representations, whether written or oral.

13.2 Amendments. No amendment to this Agreement shall be effective unless in writing and signed by authorised representatives of both Parties.

13.3 Waiver. No waiver by either Party of any breach of this Agreement shall constitute a waiver of any subsequent breach.

13.4 Severability. If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.

13.5 Force Majeure. Neither Party shall be liable for failure to perform its obligations due to causes beyond its reasonable control, including acts of God, natural disasters, acts of government, or pandemic events.

13.6 Assignment. Neither Party may assign this Agreement without the prior written consent of the other Party, except that Licensor may assign this Agreement in connection with a merger, acquisition, or sale of all or substantially all of its assets.

13.7 Notices. All notices shall be in writing and delivered by email or registered post to the addresses set forth in this Agreement.

14. EXECUTION

IN WITNESS WHEREOF, the Parties have executed this Software Licensing Agreement as of the Effective Date.

For and on behalf of [ LICENSOR NAME ]

 
Signature

Name: [ LICENSOR SIGNATORY ]
Designation: [ LICENSOR DESIGNATION ]
Date: _______________ 		For and on behalf of [ LICENSEE NAME ]

 
Signature

Name: [ LICENSEE SIGNATORY ]
Designation: [ LICENSEE DESIGNATION ]
Date: _______________

SCHEDULE A — SOFTWARE DESCRIPTION AND LICENCE DETAILS

The Software licensed under this Agreement and the licence details are as follows:

Software Name: [ SOFTWARE NAME ]

Description: [ SOFTWARE DESC ]

Licence Type: [ LICENCE TYPE ] ([ LICENCE EXCLUSIVITY ])

Permitted Purpose: [ PERMITTED PURPOSE ]

Number of Authorised Users / Seats: [ AUTHORISED USERS ]

Territory: [ TERRITORY ]

Licence Fee: ₹[ LICENCE FEE ] ([ PAYMENT TERMS ])

Maintenance and Support Fee: ₹[ SUPPORT FEE ] per annum

Warranty Period: [ WARRANTY PERIOD ]

Delivery Method: [ DELIVERY METHOD ]

Open-Source Components (if any): [ OPEN SOURCE COMPONENTS ]

This template is provided for general reference only and does not constitute legal advice. Software licensing terms should be tailored to the specific software, commercial arrangement, and governing law. In particular, the choice between a perpetual and a subscription licence, the scope of use, and the liability and indemnity provisions should be reviewed by a qualified lawyer before signing. For a licence agreement drafted or reviewed for your situation, contact My Legal Pal.

Generated by MyLegalPal, your trusted legal partner for startups. This document is a starting-point draft and should be reviewed by a qualified lawyer before execution.
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Frequently asked questions

What is a software licensing agreement?

A software licensing agreement is a contract by which the owner of software grants another party permission to use it, on defined terms, without transferring ownership. The licensor keeps the copyright and other IP; the licensee gets a defined right to use the software within set limits, such as the number of users, the permitted purpose, the territory, and the term. A licence is permission to use, not a sale or transfer of the software.

What is the difference between a software licence, SaaS, and an assignment?

A software licence grants the right to use software while the licensor keeps ownership. SaaS (software as a service) gives the customer access to software hosted and operated by the provider, delivered as a service rather than a licensed copy, so it is more like a service contract. An assignment transfers ownership of the software’s IP to another party. In short: a licence is permission to use, SaaS is access to a hosted service, and an assignment is a transfer of ownership.

What is the difference between a perpetual and a subscription software licence?

A perpetual licence grants the right to use the software indefinitely; the licensee keeps the right to use that version even after any support period ends, though updates and support may lapse. A subscription licence grants the right to use the software only while the subscription is paid; when it ends, so does the right to use the software. The agreement must state clearly which applies and what rights survive termination or non-payment, because confusing the two causes disputes when payment stops.

Is a software licence the same as owning the software?

No. A software licence grants the right to use the software; it does not transfer ownership. The licensor keeps the copyright and can license the same software to others (unless the licence is exclusive). Owning the software requires an assignment, which transfers the IP itself. This distinction matters most at the end of a deal or during due diligence, when the question of who actually owns what becomes critical.

Does a software licensing agreement need to be registered in India?

Registration of a software licence is not mandatory under the Copyright Act, 1957. However, the agreement should be adequately stamped under the applicable state stamp law so that it is admissible as evidence. Importantly, if the agreement is silent on duration, the Copyright Act deems the term to be five years, and if silent on territory, it is presumed to extend only to India, so both should always be stated expressly.

What are the most important clauses in a software licensing agreement?

The most important clauses are the licence grant (exactly what the licensee may do), the scope and restrictions (users, territory, purpose, and prohibitions on copying, modifying, reverse-engineering, or sublicensing), the exclusivity type (exclusive, non-exclusive, or sole), the term and termination (including whether the licence is perpetual or subscription and what survives termination), fees, warranties and disclaimers, limitation of liability and indemnity, and IP ownership including disclosure of any open-source components.

Authored and reviewed by Prakhar Rai, Advocate, founder of My Legal Pal. Prakhar is enrolled with the Bar Council of India and has over ten years of experience advising technology companies and businesses on software licensing, IP, and commercial contracts across India and cross-border. He is an alumnus of the National Law School of India University, Bangalore, where he completed his Master of Business Laws, and of La Martiniere. Connect on LinkedIn.

This article is general information, not legal advice. The sample clause is illustrative only and should not be used without advice tailored to your software and commercial terms. For advice on your own software licensing, speak to a qualified lawyer.

If you need a software licensing agreement drafted or reviewed so it protects your IP and says exactly what you intend, our team can help with contract drafting and contract review and revision, and you can speak to our contract lawyers in India or the jurisdiction that governs your licence.

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Prakhar Rai

Prakhar Rai is the founder of My Legal Pal and a licensed attorney. He started the practice after watching businesses that operate across borders get legal advice in fragments: a clause here, a reaction to a problem there, with no one looking at the whole picture or thinking a few steps ahead. With more than a decade in business and corporate advisory, he came to a simple view. As companies started running on cross-border deals, digital platforms and overlapping regulation, they needed legal strategy built around how they actually work, not just documents drafted after the fact. My Legal Pal is built on that idea: foresight and clarity first, paperwork second. He studied at La Martiniere College, holds an LL.B, and earned a Master of Business Laws from the National Law School of India University, Bangalore, specialising in corporate, banking, intellectual property, finance and securities law. That mix of academic grounding and hands-on advisory work shapes how he and the team approach every matter: commercially, not just technically.

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