Electronics

End User Licence Agreements

Updated: 01 Mar 2010

Introduction

Before you install software programs, you generally need to agree to a EULA (End User Licence Agreement). But what are you really agreeing to?

The short answer is: whatever the software publisher wants. And that is even if the program compromises your security, deletes files from your PC, monitors your computing activity and reports on it, or later installs additional software that you may not know about.

We take a closer look at EULAs and your legal rights.

Why EULAs exist

The EULA is both a warning system for the user and a safeguard for the publisher.

It was originally developed to protect the intellectual property (IP) rights of software developers. In most cases, for software to be installed it must be copied to your PC and, because it can be copied, it needs to be restricted legally to protect the commercial interests of the makers.

You don't actually buy software; you buy a licence to use it under strict conditions. These conditions usually include limiting the number of copies you can make, along with limitations on the software developer's liability as a result of using the product.

There's no such thing as a 'standard' licence agreement. Nor are there any stipulations limiting length, content or complexity. They can, and do, include anything the software developer wants to include.

Furthermore, licence agreements tend to be copied, modified, adapted and reproduced around the world. The result is that consumers' versus developers' rights has become a very grey area.

It seems the only way that the issues may be clarified is if somebody mounts a serious legal challenge to a licence agreement in this country. So far this hasn't happened, leaving the big software companies with the 'whip hand' in being able to include almost any provisions they so desire.

Pictured below, a typical licence agreement window.

Legally binding contract

The bad news, from a consumer's viewpoint, is that when you click "I Agree" to the licence agreement during installation, you're most likely entering into a legally binding contract.

You don't have to physically sign anything. In fact, with some software packages, you may be agreeing to the contract when you remove the shrink-wrap on the package.

Even if you can't understand the almost indecipherable legalese that's common to licence agreements, the onus is on you, the consumer, to seek that clarity before you agree. Software makers have customers over a barrel. You either agree to the terms or you can't use the software, no matter how much you paid for it.

Just clicking "I agree" has become a fact of life for most personal computer users. And all too often we do it without thinking about, let alone reading, the licence agreement. But that puts you on shaky legal ground if you later want to challenge it.

The Fair Trading Act has provisions against deceptive or misleading conduct, but if there's a pop-up window that has to be interacted with, it may be difficult for a consumer to argue that conditions were not sufficiently drawn to their attention.

What if you don't agree?

If you buy software and decide you don't want to accept the licence agreement you can cancel the installation. But can you get your money back?

Few software packages print the licence agreement on the package as there usually isn't room. The problem with packaged software is that once you break the shrink-wrap or CD/DVD case seal it can be assumed that the software has been copied and most retailers won't take the package back.

This is especially a problem with cheaper software that is simply packaged in a CD/DVD case which, when opened, gives you access to the disc. If you have broken any seal that gives access to the program disc itself, your options for redress are limited. If you have any doubts, check the supplier's returns policy before purchase.

Some mainstream packages overcome this by packaging the disc in a separate case with a security seal, along with a printed version of the licence agreement, inside a main box. Microsoft's Windows Vista operating system software is a good example. You can open the box and read the licence agreement leaflet without breaking the security seal on the disc case.

Some companies put their licence agreements online so you can read them before you buy the software. If you're buying online though, there are two main problems.

Most software available online was developed outside New Zealand and may come with terms and conditions quite different to those accepted in New Zealand. Particular words may even have a different legal meaning locally.
And, if you purchase the software and later want a refund, it can be extremely difficult to achieve with an overseas-based company.

Protect yourself

Here's how to help protect yourself from the security and privacy problems associated with EULAs before you hit the "I Agree" button.

Consider the software publisher - is the company well known and reputable? Does it publish its EULA prominently? Does it have a privacy policy?
Try to read the licence agreement before installing the software. If necessary, copy the information and delay the installation until you've had time to study it carefully and contact the publisher for clarification. Look for the licence agreement on the publisher's website before buying the software.
Look for clauses that indicate monitoring of internet activity or collecting your personal information (you may also need to review the company's privacy policy first).
Look for any restrictions on your use, such as the number of computers you can install it on, or prohibitions on producing commercial work with academic version software.
Beware of prompts to allow software past your firewall. Review the licence agreement to find out why this is necessary.
Use caution with 'free' software. It is rarely free. There's often a trade-off in advertising, access to personal information or use of your computer's resources. For example, peer-to-peer (P2P) file sharing programs use your computer to send information across the web which may leave it vulnerable to viruses, software flaws and trojans (malicious programs hiding in benign applications).
Don't install unauthorised software on computers at work, as it could have wider privacy and security implications.

Our advice

Even if you accept the licence agreement, you have one final line of defence in your favour if you are purchasing from a local supplier: you aren't waiving the statutory rights that you're entitled to as a consumer under New Zealand law.
Proving that those rights overrule EULA provisions could be difficult, however. You may need specific legal advice on a case-by-case basis.
If you're in doubt about the possible ramifications of anything contained in a licence agreement, contact the Commerce Commission or your local Citizens Advice Bureau.
Wherever possible try a free trial version of the software first so you can find out if it will suit you before you buy. Note: you may still have to agree to a EULA.

Analyse that EULA

If you can't make head nor tail out of a EULA, or just want a quick and easy way to help detect possible major problems, try EULAlyzer. This program lets you capture the text of a licence agreement before installing the software, then analyses it and assigns a risk rating and singles out what it calls "words of interest" for further scrutiny.

The higher the risk rating and the more words of interest, the more you might rethink installing the software, at least until you've read the licence agreement thoroughly.

The personal version is free but requires that you manually get EULAlyzer to check the licence agreement in question. The 'pro' version isn't free but does this automatically each time a program is being installed. Download it from www.javacoolsoftware.com.

This report was first published by the Australian Consumers' Association, CHOICE.