Why does software have EULA?

Question

This is the only product that I know that a consumer must agree to something that only lawyer can (something) understand. I'm sure car accidents kill more people each year than software accidents. But I don't sign anything like an EULA when I buy a car.

So why does software have EULA? Were there a bad accident that triggered the need for software companies to protect themselves? (and what was the first software that had EULA?)

[Update] Just to clear my point: I don't understand why software have EULA. No other product that I can think of does (not even gun)! So what makes software different that this product needs some sort of "liability limitations"?

By the way, Wikipedia says that "The legal status of shrink-wrap licenses in the US is somewhat unclear."

Answer 1

The difference is that you are purchasing a license to use software, not the software itself (which the software company still owns). The EULA stipulates the method with which you can use the software. Similar agreements are in place when you rent things (e.g. a home), lease equipment, etc.

Answer 2

An EULA is designed to be a contract that conveys or limits “usage” rights, hence the name End User Licensing Agreement. It has nothing more to do with a copyright than the mortgage loan contract that I have with my bank. That is why the legality of shrink-wrapped licenses is questionable. It is a contract that you do not get to read until after you purchase a product. It is clear from many responses here that the vast majority of people have not wrapped their heads around the idea the copyright does not extend to “usage” rights.

One responder wrote “Actually, the book is yours but the rights to the book are not. Just as in software, you purchased the physical media, but are bound by law on how you can use it.” Nothing could be farther from the truth. There is no law that restricts how you can use the book. Any restriction on usage would have to be agreed upon by you and the retailer as part of the sale.

Consider that in the absence of copyright, the copying and distribution of books would be perfectly legal. A book would be typical tangible property and nothing more. Copyright limits your ability to legally copy and distribute the content of the book. No additional agreement is necessary. Copyright in no way dictates how you can use your book and copyright law does not convey to the author the power to convey, limit, or negotiate “usage” rights. The only way that they can limit usage rights is through a separate contract that would have to be completed as part of the sale or rental.

There was some confusion regarding the GPL. The GPL is not an EULA. It is a copyright license that permits copying and distribution of the content so long as you comply with the restrictions of the license. In absence of the GPL (say you choose not to accept it), you can still use the software, but you are restricted from copying or distributing the software by Copyright Law.

EULA exist for various purposes. Companies that develop software want to negotiate a position that puts them at the least risk and gives them maximum leverage.

Answer 3

It depends on the exact wording of the EULA. Often, it's written to reinforce existing laws, such as copyright, by directly informing the user that it's unlawful to copy the program. It also adds on other restrictions such as no reverse engineering, restricting the intellectual property.

Additional clauses may include "not to be used in nuclear projects" or similar. This is merely covering the developer's bases, as it is extremely unlikely that a nuclear system developer would use a non-realtime, non-approved system without extreme amounts of research.

A further clause could restrict certain classes of users, such as military or government, which the developer feels strongly against.

As for which software had the first EULA, I have no idea.

Answer 4

If a consumer receives software without any license, consider what they might consider their rights:

• They may believe they can copy the software, as many times as they want.
• They may consider re-selling the software, and still keeping a copy for them self.
• They may believe the software must work perfectly, with zero bugs (as they understand a bug)
• They may believe it is fully waranteed against any perceived defect, and try to return it, for a full refund, at any point in the future.

In short, the EULA disabuses consumers of these notions. It defines ownership and copyright of the software, limits on its use, distribution, features, and quality.

Now it is true that as lawyers get involved in the EULAs more and more, stranger and stranger provisions creep in, such as provisions that you cannot review the software on a blog, or you cannot bad-mouth the software to the press, or that the publisher owns content created with the software.

But fundamentally, the EULA is supposed to be about the producer and the consumer coming to an understanding of what is, and is not, an acceptable use of the software.

Answer 5

There are basically three reasons for EULAs:

1. Software is much more copyable than any other product I can think of. It is almost never left on its distribution medium. That creates a huge temptation to, for example, buy one copy of Windows and install it on all of a company's thousand computers. Developers want to explicitly lay out how many computers the software may be installed on.
2. Software often has undetected problems. Even the best QA department never finds all the bugs in a software product. Developers know this and want to be legally covered.
3. Software can often be easy to take apart to discover a developer's trade secrets or other information the developer doesn't want others to know. Developers want to legally restrict this to protect their advantage over competitors.

Of course, there are sometimes other reasons for other terms. EULAs for Apple's Mac applications, for example, usually state that you can only install the software on an Apple-branded computer; this ensures that Apple's software (which is usually sold much cheaper than it would be from any other developer) increases sales of Apple hardware. The GNU GPL tries to ensure that the innovations in derivative software remain available to the community that developed the original. There are as many reasons as there are clauses.

Answer 6

Cars and guns technically have something like a EULA... we just call them "licenses". You have to learn the limitations and rules of their operation, then take some tests and sign some papers.

Answer 7

Nobody has mentioned the obligations of the provider, which are often in the EULA too. If I make your software a critical piece of my corporate infrastructure and you go bust I want to be able to get my hands on the code so your failure doesn't precipitate mine.

As someone said, this is more akin to a rental agreement than a purchase agreement, which is why the analogy with a gun does not really apply.

Answer 8

For proprietary software, License tells about your right to use specific software copy and impossibility to re-sell it, also your and software authors rights and charges

For open source software, License also tells about your right and charge about source code (distribute, do not do that, do that with limitations)

Answer 9

Actually, what is quite funny, in Germany EULAs are pretty much legally-non binding, since you only get to see them after the purchase, so for us the answer to your question is: To intimidate the user from doing stuff the company does not want

Answer 10

When you use a gun at a firing range, don't you have to sign some type of release or waiver? The logic is similar.