by Wayne M. Krakau - Chicago Computer Guide, June 1998


This is yet another episode in my continuing saga of piracy on the high Cs (as in the programming language C) - and you thought that War and Peace was long. As in previous installments in this series, this is a practical guide, not qualified legal advice.

This article covers the various types of licensing agreements that I have encountered. I will assure you ahead of time that I am not making up any of these agreements. The descriptions are based on actual products.
The most basic license is for free software, or its closely related companion Freeware. They’re not the same thing. Freeware is a more specific term with its own special rules, while just plain, free software can have any rules. Except in Unix environments, free software usually comes with some restrictions on commercial use. It is often aimed at individuals. If companies want to use it, they might have to pay.
At the very least, the license forbids use within a commercial program. It prohibits distribution in return for money, though you can give it away. Even if you give it away, you usually have to provide the complete package, including advertising, documentation, and any related programs that were bundled with it. It is important to remember that you can be sued or even prosecuted for violating the license on free software or true Freeware. (And it wouldn’t hurt to put it high on your candidates’ list for files to be scanned for viruses prior to turning them loose on your computers or network!)
The next step up the software food chain is Shareware. This is also a very specific term and its rules and even its use are governed by the Association of Shareware Professionals. (ASP - Isn’t that what killed Cleopatra?) Shareware is a try-it-before-you-buy-it system. You get a limited amount of time to try the software and then must either delete the program from your disk or fill out the included form and pay the appropriate price for your usage (for example, single-user noncommercial, single-user commercial, multi-user, site license, corporate-wide site license, and so forth).
As you might expect, Shareware has restrictions on use and distribution similar to those of Freeware - no sales, except by authorized agents and no reuse within other products without a pre-signed agreement. Shareware holds my personal observation record for most abused software license category. For instance, it seems that everybody I encounter, seems to have a copy of PKZip, but I seldom meet people who have actually paid for it.
Shareware vendors go after license violators much more frequently than free software or Freeware vendors. Their association allows them access to much more legal resources, and provides additional validity to them when they talk to prosecutors. As ASP grows and becomes more organized, I expect them to increase their license enforcement efforts.
Next up are the fully commercial categories, starting with simple single user licensing. If you want their software, you buy enough copies for everyone who uses it. This category and the others that follow can be tricky in their wording regarding what constitutes a user. For some, a user is an actual person in the act of using the software. For others it is a person with the potential to use the software because it is loaded on a particular computer. The former allows you to load the software on multiple workstations as long as it is not simultaneously in use while the latter requires you to physically remove the software from one workstation before using it on another. The two methods are often referred to as per-user versus per seat licensing, though I have seen these terms used differently.
Some software automatically allocates itself for the per-user licenses, but many others require some type of license management utility to control access. In fact, the lack of license management software for companies using honor-system (as opposed to self governing) per-user licensing can be enough to start a piracy investigation. Many companies, including Microsoft, are very suspicious of customers who have more workstations than licensed users but don’t control them with utility software. I’ve even seen cases where the presentation of evidence of regular and thorough use of license management software was successfully used to ward off impending piracy investigations.
While there is usually a quantity discount of some type offered for these licenses, there is no special pricing for networks. You have to get network-specific versions of software to get network pricing. Both per-seat and per-user variations also show up in this category.
A common pattern is to buy one copy of the software that covers the server and the first user (or workstation), and then buy enough network node licenses to cover the rest of the users (or workstations). That initial copy might be the same as the single-user software or it might be a special network master software. Falling behind on the user (or workstation) license count in a growing company is both very common and very illegal.
Quantity-based "packs" (as in 5-pack, 10-pack, etc.) are also quite common for network-based schemes, as are site licenses. Sometimes the "packs" are more restrictive in that they make you pay separately for the server and the client side of client-server software. A 25-user license for the server might include the server software and an allowance for 25 workstations, but if you need only 25 concurrent users, but have 50 workstations, you would have to purchase 25 extra workstation licenses. (One of my favorite specialty programs uses this method, and it makes it a very hard sell to cost-conscious potential buyers.)
A more generous type of network license is the per-server variety. This usually is very cost effective and has the added benefit of being easy to budget for future planning. You just count your servers and ante up.
In addition to these common variations on licensing, there are both precalculated and custom site licenses as well as corporate versions of site licenses that cover multiple locations. There is a lot of activity here, since, by using the latest license management software, you can allocate per-user licenses over a Wide Area Network (WAN) to save money. Software companies, particularly Microsoft, have been changing their licensing structure specifically to restrict this trick, much to the displeasure of corporate America (like Bill Gates really cares about offending customers - or for that matter, even the government).
Next month, we’ll play the software piracy version of Truth or Consequences, with an emphasis on the consequences. Meanwhile, I’m trying to find an AA chapter that will accept my parrot. That rum seemed to bring out the worst in him.
�1998, Wayne M. Krakau