End User Licence Agreement – EULA

End User Licence Agreement - EULA An end user licence agreement (EULA) is a contract between one or more parties based on the proprietary rights of a licensor to grant a right to the licensee to use or access the subject matter of the licence. EULA’s are those long documents which generally no one reads, but need to be brought to the users attention to be legally binding.  The proprietary right may be based on a variety of intellectual property (IP) including copyright, trade marks, patents, designs and trade secrets.  Generally EULA’s are common in the software development and web development industry where copyright subsists as a literary work in a computer program as defined in section 47AB of the Copyright Act 1968 (Cth).  The owner of the literary work will be the party entitled to exploit it.

EULA’s and the Competition and Consumer Act 2010 (Cth) (ACL)

When preparing a EULA to licence IP to consumers, care needs to be taken to ensure that the terms are not unfair, as defined by Part 2-3 of Schedule 2 of the ACL which regulates unfair contract terms.  Drafting terms which are unfair may result in a clause being deemed to be void pursuant to section 23 of the Schedule 2 of the ACL.  This is one of the reasons that you should consider using a lawyer to draft your EULA.

EULA’s and commercialisation of IP

One of the benefits of commercialising IP by using a EULA is the scalability of entering into a contract on this basis.  There is negligible marginal cost in adding one more licensee (clearly this will only be the case if the process is automated). Read more: Commercialisation of IP