What You Need to Know about Cancelling a Licensing Agreement

Cancelling a licensing agreement is a serious matter. It often has very little to do with whether you’re happy with what the software or equipment has done for you over the term of the license. Whether the licensing agreement can be cancelled depends on several factors. Two of those factors are the type of licensing agreement and what the licensing agreement has to say about cancellation. Let’s look at some of the most common licensing agreements as well as what they may say about cancellation.

Common Types of Licensing Agreements

Below is a short list of common types of licensing agreements. This is not a comprehensive list, you may find that we do not address the type of licensing agreement you’ve created or of which you are a party in this writing. If we do not address the type of licensing agreement you have or you just have questions about cancelling a licensing agreement, call Larsen Law today at 303-520-6030 to schedule your free initial consultation.

End user licensing agreement (EULA). An end user licensing agreement (EULA) is a licensing agreement that creates a contract between the developer and the end user of the software or other technology. It explains the rights and obligations of the end user and the developer in relation to the use of the software or technology. This type of license generally contains several clauses that address items such as the type of license granted, whether use is restricted, what constitutes infringement on the license or the intellectual property, limitations and warranties., and how the EULA may be cancelled or terminated.

Exclusive licensing agreement. An exclusive licensing agreement is defined as a licensing agreement where the licenses is the only person who holds licensing rights to the software or technology. There is no other person or business that will benefit from the software or technology other than the licensee.

Non-exclusive licensing agreement. A non-exclusive licensing agreement is a licensing agreement that may be used with more than one licensee. In short, more than one person or business may benefit from the licensing and the use of the software or technology.

Perpetual licensing agreement. A perpetual licensing agreement allows licensees to have indefinite use of the software or technology. This sort of license does not expire, but the licensee may still have to pay an additional fee for updates or technical support.

Subscription licensing agreement. A subscription licensing agreement provides access to the software or technology for a recurring fee. The fee could be charged weekly, monthly, quarterly, or yearly. Generally, this type of licensing agreement includes software updates and technical support.

Term licensing agreement. A term licensing agreement grants access to technology or software for a fixed period of time, known as a term. During that term, the user would receive software updates and technical support. The length of the term can vary.

Related: Licensing Agreements in a Changing Software World

The Act of Cancelling a Licensing Agreement

Cancelling a license agreement, as we mentioned in the opening of this article, depends on the type of licensing agreement as well as the terms of that agreement. Some types of licensing agreements are easier to cancel than others. Again, it depends on the actual terms within the agreement.

For example, cancelling a EULA agreement may be done by an end user merely by deleting or cancelling their account. The developer may cancel the EULA if they can show that the user somehow violated the terms of the agreement. Most EULA agreement include a termination clause that explains why and how the EULA may be cancelled by the involved parties.

Exclusive agreements, non-exclusive agreements, perpetual agreements, subscription agreements, and term agreements may not be as straight forward. Before attempting to cancel the license agreement, it is important to first review the terms of the agreement. If there is a termination or cancellation clause, it will give you valuable information on when, if, and how the licensing agreement may be cancelled. It could be that there are only certain conditions that would trigger the possibility of cancellation. Both parties to the licensing agreement have obligations and rights that must be fulfilled. Failure to fulfill those obligations or support those rights could be a breach, but it’s still imperative to read the agreement to locate the termination clause.

You may find it beneficial to schedule a consultation with an attorney who is skilled in creating and interpreting licensing agreements. Licensing agreements are legally binding contracts. They’re not always easy for laypersons to understand when it comes to their rights, their obligations, and whether they are entitled to cancel the agreement. An experienced attorney can help you understand whether you’re within your rights to cancel the licensing agreement or whether there is something you must do before the agreement may be cancelled. Understanding this information can help protect you from an allegation of a breach of contract or an allegation that you failed to perform according to the terms of the license.

Developing a Cancellation Clause as a Business or Developer Offering a Licensing Agreement

If you’re a developer or a business that offers licensing agreements, determining the type of licensing agreement to offer as well as how the license may be cancelled is key. As you’ve learned, not all licensing agreements work in the same manner and no two are ever identical. An experienced attorney can help you understand which type of licensing agreement is most beneficial for the software or the technology you offer.

Additionally, determining if, when, and how a licensing agreement may be cancelled must also be carefully considered. However, these are all considerations that depend upon the needs of the business as well as what you offer.

To learn more about licensing agreements as well as protecting yourself through the cancellation or termination clause, call Larsen Law Offices, LLC now at 303-520-6030 to schedule your free initial consultation.