What do I need to know before I sell a software license? [closed]

Question

I've developed a web-based application that a company is interested in licensing. I suspect they intend to appropriate the features they want, and add to their existing codebase, so a license is likely to be a one-time affair. Since it's interpreted at run-time, I'd have to turn over the source, and it's not immediately apparent that I can protect it in any way.

To add a layer of complexity, I've had a number of users express interest in using it as a service, so I've been working towards a subscription-based version. It's a niche market, so growth potential is limited, but I don't want to sell it short.

I typically sell my services hourly, so I don't know the first thing about licensing code.

The questions I'm struggling with are:

1. What should I charge?
2. What does a commercial software license look like?
3. How do I protect my work?

I'm sure there are a few dozen more I should ask. What should I be thinking about?

Thanks in advance.

--Thanks for the replies, all--

Answer 1

1. What should I charge? Ultimately you have to arrive at a figure you both can live with. Start by asking what value the buyer will derive from using your product as a guide. It's probably more than you think.

2. What does a commercial software license look like? It says whatever you want it to say, plus a bunch of standard legal boiler plate. As others have said, find a lawyer that specialises in software IP. Ask questions, If they keep saying they have to research it, it's probably a sign to look for another lawyer.

   Before you go to a lawyer have a clear idea about your goals. Here's a few things to think about:

   • what do you want to give the other party. What/how can they use your product.
   • limitation of liability
   • warranty. What warranty do you want to give
   • support. What support will you provide. Costs.
   • termination. How will the licence terminate and what will happen when it does
   • intellectual property. Who owns what
   • how will disputes be resolved
   • assignment. Can they other part assign the agreement to someone else. If so under what conditions

3. How do I protect my work? If you can't trust the other party you probably shouldn't do it. As Aaron said "If you can trust someone, you don't need a contract. If you can't trust them, a contract won't save you." You can write all the contracts and licences that you want, but if it goes wrong, litigating it is a painful business. Best not get in that position in the first place, or at least make sure the potential gains offset the risks.