Q&As

Where a software licence grants a perpetual licence but does not expressly state that the perpetual licence continues beyond termination of the licence agreement, how should this be interpreted? Where a software licence notes the term of the agreement is five years but the fixed software licence is to be provided on ten years, what occurs?

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Published on LexisPSL on 01/11/2016

The following TMT Q&A provides comprehensive and up to date legal information covering:

  • Where a software licence grants a perpetual licence but does not expressly state that the perpetual licence continues beyond termination of the licence agreement, how should this be interpreted? Where a software licence notes the term of the agreement is five years but the fixed software licence is to be provided on ten years, what occurs?
  • Perpetual licence
  • Licence for ten years, fixed term agreement of five years

Perpetual licence

Many people assume that the term ‘perpetual’ would be given its natural meaning of never ending when used in a contract. However in the relatively recent case of BMS Computer Solutions v AB Agri, it was held that the word 'perpetual' in a software licence can have different meanings depending on the circumstances. It could mean:

  1. never ending, ie incapable of being bought to an end, or

  2. operating without a specific limit of time (ie of indefinite duration) until either party exercised their rights set out in the contract to terminate the agreement

In BMS, when considering the meaning of the word ‘perpetual’ in a given context, the court held that in that particular circumstance:

‘… it can mean “operating without limit of time” (so as, in the context of Cl 4(a) of the Variation Agreement, to grant a licence of indefinite duration, but subject to any contractual provisions governing termination of the licence)…’

In this particular case, it was held

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