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by Cherish Benton

Top 7 Considerations When Buying or Selling Software

By Hunter Freeman – Buying and selling enterprise application software (EAS) can be especially tricky and the consequences of getting it wrong can be colossal. Whether you’re a developer or business owner, it’s likely you will find yourself negotiating a contract involving the use, sale, or license of software. These considerations help protect the rights and interests of both parties and ensure a smooth transaction. Here are some key legal aspects to consider:

1. Intellectual Property Rights: Software is typically protected by intellectual property laws, such as copyright and sometimes patents. It is important to establish who owns the intellectual property rights to the software being bought or sold. Sellers should ensure they have the necessary rights to sell the software, while buyers should confirm that they are acquiring the appropriate licenses or ownership rights.

2. Licensing Agreements: Software is often licensed rather than sold outright. The license agreement outlines the terms and conditions under which the software can be used. Both parties should carefully review the license agreement to understand the permitted uses, restrictions, and any additional obligations or fees. The agreement should be clear on whether the license is perpetual or time-limited, and any renewal or termination provisions.

3. Compliance with Laws and Regulations: Software must comply with applicable laws and regulations, such as data protection and privacy laws. Sellers should ensure that their software meets legal requirements and regulations in the jurisdictions where it will be used. Buyers should verify that the software being purchased complies with relevant laws to avoid potential legal and regulatory issues. If the software involves the collection, processing, or storage of personal data, clear provisions should be included in the purchase agreement regarding data protection obligations, consent requirements, data security measures, and any data transfer restrictions.

4. Warranties and Limitations of Liability: Sellers often provide warranties regarding the quality, performance, and functionality of the software. The terms and extent of these warranties should be clearly stated in the purchase agreement. Sellers may also include limitations on liability to protect themselves from certain damages or losses. Buyers should review and negotiate these provisions to ensure they are adequately protected.
5. Open Source Software: Open source software has its own set of legal considerations. It is crucial to understand the terms of the open-source licenses that govern the software and any potential obligations or restrictions that come with using or distributing open-source components. Buyers and sellers should ensure compliance with open-source license requirements and understand the implications for their proprietary software.

6. Data Protection and Privacy: Software may involve the collection, processing, or storage of personal data. Both buyers and sellers should consider data protection and privacy laws that apply to the software and ensure compliance with those laws. Clear provisions should be included in the purchase agreement regarding data protection obligations, consent requirements, data security measures, and any data transfer restrictions.

7. Dispute Resolution and Governing Law: Purchase agreements should often include provisions for resolving disputes between the buyer and seller, including alternative dispute resolution methods like mediation, or arbitration and forum selection clauses dictating where the dispute will be resolved. A choice of governing law provision can help avoid inconsistent interpretations of the agreement. Both parties should carefully consider these provisions to ensure a fair and effective resolution process.

It is highly recommended to consult with legal professionals experienced in software transactions to ensure all legal considerations are appropriately addressed and the interests of both parties are protected.  And if your company routinely sells or licenses software, it is a good idea to consult an attorney to ensure that your legal strategy for that software will advance your business goals.  Whether that consultation is to determine how best to protect your software or to prepare a stock agreement that the company uses when negotiating transactions involving its software, a law firm with technical know-how, business acumen, and a client-centric approach can be an asset.

by Kim, Lahey & Killough Law Firm

Kim & Lahey Law Firm Named to “Best Law Firms” List 2021

by Kim, Lahey & Killough Law Firm

Doug Kim Shares Legal Strategies for Entrepreneurs

The pandemic has forced many changes in the business world, from closings and layoffs for some, to successful pivots for others. One surprising outcome is the surge of new startups in America, which had increased by almost 50% for the year by October.

To celebrate this renaissance, i4Series is hosting a free online event as part of Global Entrepreneurship Week on November 19 from 11am – 12pm. Whether you’re a startup or looking to scale your business, join us to learn about software and legal strategies that put you on a path to success.

Doug Kim has been supporting the entrepreneurship community for more than 20 years, helping innovative businesses of all sizes thrive. Now, more than ever, during this time of rapid innovation and uncertainty, entrepreneurs need legal strategies that empower them to succeed, strategies like protecting inventions and your brand, protecting your work from being copied, and using contracts to safeguard your interests to name a few.

He is joined by fellow speaker, Zac Muma, a Business Solutions Specialist for Microsoft. Zac works with entrepreneurs to identify what they need in their software stack and helps them get set up. With so many apps available, it’s hard to know which ones you may need and how they work together. Whether you’re B2B, eCommerce or offer professional services, Zac will show you ways to streamline operations and get new clients.