About Licensing a Product vs. Selling it
A License Agreement is an agreement between the owner of a product and the user (licensee). This Agreement outlines terms for acceptable use of the items. It is usually to the publisher's advantage to license copies of their electronic products, such as software or e-books, rather than to sell copies.
United States copyright law allows the owners of physical objects that contain copyrighted material, for example, books, compact discs or movie DVDs, to resell the physical objects that they own. This phenomenon explains the legality and proliferation of used book and used compact disc sales.
Unfortunately for the copyright owner, each sale of a used book or CD potentially represents a lost sale that the copyright owner might have been able to consummate with the consumer. By licensing electronic products rather than selling a physical copy to the user, the user does not "own" a copy of the electronic product, and the copyright owner is able to prevent the user from re-selling the items. This is an important distinction because, while there are strict limitations on the distribution and resale of physical items, which are purchased and sold one at a time, there are no such limitations on the resale of electronic items. One item could be resold numerous times, undermining the financial stability of the producer. If you do that, I am out of business.
Therefore, it is to the publisher's advantage to license the use of their electronic products rather than to sell copies to users. By creating a Software License Agreement rather than a sale, the publisher defines the terms and the limits of the use of the copyrighted materials.
In defining the terms and limits of use, the copyright owner is also able to set forth limited warranty information and disclaimers of liability. Such provisions may or may not be included in a given license agreement.
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Modified and based on the definition found at: <https://www.rocketlawyer.com>
Reviewed and edited 4/23/2019
United States copyright law allows the owners of physical objects that contain copyrighted material, for example, books, compact discs or movie DVDs, to resell the physical objects that they own. This phenomenon explains the legality and proliferation of used book and used compact disc sales.
Unfortunately for the copyright owner, each sale of a used book or CD potentially represents a lost sale that the copyright owner might have been able to consummate with the consumer. By licensing electronic products rather than selling a physical copy to the user, the user does not "own" a copy of the electronic product, and the copyright owner is able to prevent the user from re-selling the items. This is an important distinction because, while there are strict limitations on the distribution and resale of physical items, which are purchased and sold one at a time, there are no such limitations on the resale of electronic items. One item could be resold numerous times, undermining the financial stability of the producer. If you do that, I am out of business.
Therefore, it is to the publisher's advantage to license the use of their electronic products rather than to sell copies to users. By creating a Software License Agreement rather than a sale, the publisher defines the terms and the limits of the use of the copyrighted materials.
In defining the terms and limits of use, the copyright owner is also able to set forth limited warranty information and disclaimers of liability. Such provisions may or may not be included in a given license agreement.
___________________________
Modified and based on the definition found at: <https://www.rocketlawyer.com>
Reviewed and edited 4/23/2019