Learning from updating Software Licence Agreements

Posted on Thursday, January 30, 2014, by Noric Dilanchian

In the late 1970s or early 1980s software regularly became something sold, and not just given away with hardware or programming services. This generated the need for agreements to be drafted by lawyers for software.

When I started to regularly draft software agreements in the mid-1980s the most common type involved variations on the theme of "Software Licence Agreement". Remember that title.

Early on a template variation from that emerged, which for template management purposes I titled "Software Licence (Shrink Wrap) Agreement". (Prior to the innovation of a "shrink wrap licence" the accepted thinking was that copyright in software was licensed only after a non-virtual meeting of minds, eg a negotiation or other dealing between the licensor and the licensee.)

Shrink wrap licences were short, often one page documents. This was in line with the realisation over time (supported by copyright court decisions, especially in the United States) that there were no negotiations or dealings needed for a contract to come into force. This was made easier by the facts that typically a very generic bundle of licensed rights were granted in shrink wrap licence agreements. Negotiation was not anticipated. The rights granted to licensees were also non-exclusive and limited. They are akin to the rights granted to this day to licensees of most office productivity software.

The need for shrink wrap licences arose because as software in shrink wrap boxes or other packages proliferated lawyers innovated by evolving the concept that unboxing, or breaking of the shrink wrap or use of the enclosed software, equated to acceptance (a key contract concept) of the displayed or enclosed terms and conditions of use. This took us up to the late 1990s.

Then from the late 1990s a new template variation emerged for software licensing, with titles like "Software Licence (Click Wrap) Agreement". This took the legal theory and practice evolved for shrink wrap physical products, and accepted by some courts in the USA, and applied it to software which was downloaded rather than delivered in a box or other package.

The context for template updating

All this came to mind this month while I was updating my large collection of software licensing templates. I found myself deleting the shrink wrap and click wrap titles and templates. They are now only present in archived historical backups. They'd became redundant as the vast majority of software is now downloaded and so lawyers are now rarely asked to draft shrink wrap licences. 

What's old is new. I've revived the bare simplicity of the template title "Software Licence Agreement".

The opportunity for template updaters

The rise, variation and return of templates titled software licence agreement tells us many things central to the mission of Annexium. 

  1. Decades of reading and practical experience was applied to this month's templates updating task.
  2. The task would simply not be feasible except by lawyers with specialist, substantial and up-to-date subject matter expertise.
  3. Yet while the supply side is limited to a small community of lawyers, I believe a substantial though latent market of clients exist globally who would wish to acquire software licence templates of the right type for their ventures.
  4. However, to serve that market the price, nature and context for acquisition of a template has to be right. 

It's thinking about that opportunity which inspires Annexium. 

Artificial intelligence for contract drafters

As does a news story today.

Google has made a $400 million artificial intelligence acquisition of DeepMind Technologies. 

Let's consider briefly the implications, first to contracts and then for Annexium. In doing so we are not alone, there are a growing number of ventures involved in applying IT to legal work, drafting, decision making, collaborative creation and consumption of legal work product, and legal elearning.

Consider this question. What contract law and drafting decisions could artificial intelligence help make more quickly or effectively? Questions like this prompt us to keep a watching brief on what artificial intelligence can do for legal work done in private practice, corporates, government and elsewhere.

The quantity and complexity of law affecting contract drafting alone creates the need or pain calling for better treatment. Business contracts are in a constant state of moving into redundancy as change rolls on in business models, practices and technologies. I've discussed above the case of information technology contracts. Today I visited my local law society's law library and looked at a set of IT contracts in a loose-leaf ring-binder service at the library. With the perspective of having spent time updating IT contracts this month, I saw quickly that the vast majority in the loose-leaf were either redundant, no longer very useful or only a bit useful though mostly out of date. 

You might think IT contracts are an extreme case of change making contracts constantly redundant.

But consider what crowdfunding is doing to product development and funding contracts; what social media has done to marketing, public relations and advertising contracts; or what the flavour of the month - Bitcoin and other cryptocurrency - is doing to business start-up financing.

Change is at such a pace that the right machine intelligence could give an opportunity to those who get their hands on it. This is part of the mission of Annexium and its network of collaborators.

Photo credit: "Amon Ra" is a sculpture by Theo Kamecke, an artist in the United States. See http://www.theokamecke.com and http://www.theokamecke.blogspot.com.au/ It combines ancient Egyptian art with the familiar shapes of computer circuit boards. Like software licence agreements, with creativity what's old has been made new again.

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