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This question is inspired in part by Open Source License restrictions and recent sanctions against Russia and in particular by this answer

Can a software license impose restrictions on the place where the software is to be used, so that a court would enforce those restrictions. Fopr example, could the license include text such as:

This software is licensed for use only in the state of Texas?

Similarly, can a license impose limitations on the purpose of use, such as:

  • This software is licensed for non-commercial use only;
  • This software is licensed for non-law-enforcement use only;
  • This license does not authorize use by any government or governmental agency;
  • This software is licensed for use only by individuals or corms with gross revenues of $5,000,000 or less.

Assume that the would-be user has acquired a copy of the software lawfully, and only subsequently decides to use it in a way that the license purports to forbid. Assume further that the dev who created the software still holds the copyright, and sues the would-be user to enforce such a condition. Would courts enforce such a license restriction?

I understand thsat such a restriction would make the software not "open source" as the OSI uses that term, nor 'free" as the FSF uses that term. Indeed the software might be clearly proprietary. I am only interested (for this question) in whether such terms can be enforced in any software license.

I would strongly prefer answers that cite case law, statute law, or other authoritative sources (in that order). I am most interested in answers for US, UK, or EU law (in that order), but I am interested in answers for any jurisdiction for which reliable sources are available.

David Siegel
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    If this is generally permitted, I wonder about cases where the restrictive clause relates to a characteristic protected by discrimination laws. For example, "This software is licensed to white people only", "This software is not authorized for use by Catholics, Muslims, or members of the Church of Scientology", or "Users with a mental health diagnosis are forbidden from using this software". – Robert Columbia Mar 13 '22 at 13:17
  • @RobertColumbia: In Germany, software licenses typcially would be considered mass contracts and terms are thus directly bound by anti discrimination law (AGG). This hinges on the same contract (license) being offered to many people, so software written for a specific customer and licensed only to them would not be bound by AGG. I take from David Siegel comment on another Q that the situation may be quite different in the US. – cbeleites unhappy with SX Mar 13 '22 at 16:33
  • I think the linked answer's point is more related to the distinction between (certain) licenses and contract. And if it constitutes a contract not all violation of licensing agreements (contracts) is a copyright infringement. A breach of contract has different enforcement options than copyright infringement and may be a lot limited if the software is otherwise "free/libre". – xngtng Mar 13 '22 at 20:50
  • Why might it not? – Robbie Goodwin Mar 13 '22 at 21:47
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    @Robbie Goodwin Because some, including the author of the answer in another thread linked in the Q, assert that a license cannot be used to impose such a restriction. – David Siegel Mar 13 '22 at 21:57
  • @xngtng I am well aware of the difference between copyright law and contract law. This questing is primarily abut ontrct law, and whether a license can impose, as a condition of use., various restrictions. – David Siegel Mar 13 '22 at 22:00
  • @DavidSiegel Please be more realistic. If I want to use your software, I must accept your terms.

    How is that difficult?

     – Robbie Goodwin Mar 13 '22 at 22:09
  • From the additional comments in the linked answer it seems like the distinction between contracts and simple licences is important. – xngtng Mar 13 '22 at 23:33
  • Old Java licenses famously forbade using Java for nuclear installations, probably because nuclear facilities are notoriously uninsurable and an accident would threaten Sun's or later Oracle's existence if Java was found to be the liable culprit. The current license apparently only forbids making nuclear etc. bombs (whose use in my opinion would make license issues seem secondary, but anyway). – Peter - Reinstate Monica Mar 14 '22 at 18:43

6 Answers6

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Yes

A software license is just a contract and parties to a contract are free to agree whatever terms they wish under the doctrine of freedom to contract.

Government can restrict what terms can be used in a contract either in general (e.g. for being against public policy) or specifically (e.g. by requiring wages be paid in money). None of the terms you mention fall foul of any restrictions I know of.

Dale M
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    The term which says "This license does not authorize use by any government or governmental agency" might be hard to enforce due to sovereign immunity, depending on which country we're talking about. – Kevin Mar 14 '22 at 02:12
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    @Kevin I doubt it. Most governments are not allowed to appropriate private property without due process and compensation – Dale M Mar 14 '22 at 02:16
  • "A software license is just a contract and parties to a contract are free to agree whatever terms they wish" I mean, I'm not a lawyer, but… no. Laws are a higher priority over contracts, so there are many things that even if you put them into a contract they aren't binding, or make the whole contract invalid in the first place. – o0'. Mar 14 '22 at 10:45
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    @o0'. I would recommend reading the second sentence ;-) – David Mulder Mar 14 '22 at 11:19
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    The person who wishes to use it is also free to not enter into any contract as long as they obtained their copy of the work legally to begin with. The copyright holder has no leverage to force them to do so. – R.. GitHub STOP HELPING ICE Mar 14 '22 at 16:15
  • @Kevin Sovereign Immunity would just mean that the government couldn't be held liable for breaking the contract, not that the government is authorized to use any software ever. It's a nuance but it's an important one. – David Jacobsen Mar 14 '22 at 19:12
  • @R..GitHubSTOPHELPINGICE IANAL, but I think MAI v Peak established that loading the program to memory (so you can run it) is considered a copy for copyright purposes, and therefore you need a valid license. – André Paramés Mar 14 '22 at 20:08
  • @AndréParamés: That was one argument used, but it was technically incorrect and it is completely possible to run a program without even copying it in that sense. Modern systems don't even copy a program to execute it; it runs directly out of the copy in the page cache, and if desired an operating system could be tweaked to delete the copy on disk at the same time it's paged in, and write it back out to disk when paging it out, never having more than one copy in existence. However the more relevant objection is that a "working copy" that's not being used independently is fair use... – R.. GitHub STOP HELPING ICE Mar 15 '22 at 04:22
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Yes, this appears to be legal and is a common practice in the industry however I can't speak for all the possibilities you listed. A couple of years ago VMWare announced new licensing polices relating to how many physical cores are valid with a license. This is something that Oracle has been know for doing with its database platform for decades.

https://news.vmware.com/company/cpu-pricing-model-update-feb-2020

While we will still be using a per-CPU approach, now, for any software offering that we license on a per-CPU basis, we will require one license for up to 32 physical cores. If a CPU has more than 32 cores, additional CPU licenses will be required. A FAQ related to this change is below.

Another example is non-commercial versus commercial use as there are plenty of examples of software that is free for personal use but expected to get a paid license for commercial use. And some cases where the price just increases based on the use. This also applies to development versus production licenses.

In the past I have also seen licenses that change based on amount of business that is involved, being a non-profit or academic among other factors.

As for your first example only for use in the state of Texas such restrictions could be valid based on various export restrictions that may apply to the software.

Joe W
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    I do not see how export restrictiosn could make use in Texas valid but use in California invalid. US states are not allowed under the US constitution to have restrictions on exports to other US states. I agree that some such restrictions are common, I am really hoping for case law where they have been challenged, or a statute specifically permitting or forbidding such restrictions – David Siegel Mar 12 '22 at 22:29
  • @DavidSiegel Correct that was more of a general example of a license restricting where software can be used. Do you have an example of software licensing something in Texas but not California? I would be interested in hearing an example of this. At best I could speculate state level laws that makes something legal in Texas but not California. – Joe W Mar 12 '22 at 22:31
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    I have not seen any attempt to impose such a restriction. That ws an attempt to create a hypothetical with the same legal issues as a "no-Russian use" license without the baggage of the current invasion or the possible vagaries of Russian courts or international law. That is I am interested in whether such a restriction is valid as a matter of contract law or licensing law, withoiut any specific state law being involved, – David Siegel Mar 12 '22 at 22:35
  • @DavidSiegel I don't think that specific case would ever be ruled legal because of the commerce clause in the US. Might be better to change the example to be dealing with a country instead of just part of a country. – Joe W Mar 12 '22 at 22:44
  • Let me be clear. I am not talking about restrictions imposed by law (where the commerce clause might apply) but about restrictions imposed by private individuals (where the commerce clause could not apply). – David Siegel Mar 12 '22 at 23:18
  • @DavidSiegel Right but I would guess there is and will always be a major difference in software restrictions in areas in a country and software restrictions for different countries. Courts will look at Texas/California differently then USA/Canada as an example. – Joe W Mar 13 '22 at 02:01
  • Will they? I don't see any basis for thjis in the law, and I haven't found cases where they hv done so. – David Siegel Mar 13 '22 at 02:11
  • @DavidSiegel I have no real idea how this would go I just have a feeling the commerce clause would force the license to be allowed anywhere in the country. – Joe W Mar 13 '22 at 16:37
  • I think you are mistaken. The commerce clause is not applied like that in other matters of private contract. Automakers, for example, can and do have different terms for dealers in different parts of the country. – David Siegel Mar 13 '22 at 16:40
  • @DavidSiegel How can I be mistaken when I am saying I think something but I am not sure. I never once (that I can recall) said that the commerce clause would prevent it from happening just what I think might. And all of that was a response to you bringing up the commerce clause. – Joe W Mar 13 '22 at 16:52
  • Let me put it this way: I think your belief that the commerce clause would be taken to have the effect of prohibiting such license terms is incorrect. As far as I know this particular case has never been brought to a court, but in other situations the commerce clause has not been used like that. It has been used to give power to the Federal Govt, and to restrain the states. It has not been used to restrict private parties in the absence of a specific federal law, as far as i am aware. – David Siegel Mar 13 '22 at 17:13
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    @DavidSiegel It may or it may not as far as I am aware a private party restricting which states customers are licensed to use their software in has never happened and has never been tested in a court of law. – Joe W Mar 13 '22 at 18:14
  • What about an App that helps you find an abortion clinic? It would probably be legal in California, but certainly illegal in Texas these days? – Aganju Mar 13 '22 at 19:11
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    @Aganju There is a difference between software being deemed illegal by a locale and the software maker having a license that prevents it from being used in a locale. As for your example the software would still be legal in Texas it just would return results based on Texas law. – Joe W Mar 13 '22 at 19:56
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Yes.

This software is licensed for use only by individuals or corms with gross revenues of $5,000,000 or less.

Game engines like unity/unreal have something like that. Unreal's current includes modified form (From https://www.unrealengine.com/en-US/faq ) - ' This license is free to use and incurs 5% royalties when you monetize your game or other interactive off-the-shelf product and your lifetime gross revenues from that product exceed $1,000,000 USD. ' as

Similarly, can a license impose limitations on the purpose of use, such as:

Yes. https://www.apple.com/legal/internet-services/itunes/us/terms.html says

You also agree that you will not use these products for any purposes prohibited by United States law, including, without limitation, the development, design, manufacture, or production of nuclear, missile, or chemical or biological weapons. also, https://aws.amazon.com/ru/service-terms/ section 42.10

42.10. Acceptable Use; Safety-Critical Systems. Your use of the Lumberyard Materials must comply with the AWS Acceptable Use Policy. The Lumberyard Materials are not intended for use with life-critical or safety-critical systems, such as use in operation of medical equipment, automated transportation systems, autonomous vehicles, aircraft or air traffic control, nuclear facilities, manned spacecraft, or military use in connection with live combat. However, this restriction will not apply in the event of the occurrence (certified by the United States Centers for Disease Control or successor body) of a widespread viral infection transmitted via bites or contact with bodily fluids that causes human corpses to reanimate and seek to consume living human flesh, blood, brain or nerve tissue and is likely to result in the fall of organized civilization.

Yes, maybe amazon's lawyeres thought it's funny.

FAR manager (windows console 2-panel manager, something like Norton Commander) have special non-commercial licenese for people from xUSSR countries. You can see it at https://github.com/eggoez/far/blob/master/License.xUSSR.txt (in Russian) Basically you need to be citizen of one of xUSSR countries (not CIS!), you also need to knew about this license and knew name of current day of week in Russian

Tauri
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Yes. I once worked for a company distributing Nexpert Object, and they had a clause prohibiting use in nuclear reactors and medical applications. I got the impression that this was a get out of jail free card. If someone were to use their product in a reactor, and there was a core meltdown, they could argue that the customer had violated the license conditions. The ban on medical applications may have been intended to protect them from the FDA,

Simon Crase
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    That's quite a common clause. Most likely the company doesn't mind if you use their software in a nuclear reactor, but because damages could wipe out the company, you have a license where they are not responsible for this damage. – gnasher729 Mar 14 '22 at 11:38
  • I have worked for a company whose software is licensed for medical applications. It requires a ton of paperwork. And I'm fairly certain that within that paperwork, there are a whole set of restrictions on allowed use. A particular restriction relevant to this question is that the paperwork certifies the medical software for a given jurisdiction. Can't send European paperwork to the FDA, obviously. – MSalters Mar 14 '22 at 13:23
  • @MSalters A ton? You got off lightly. I heard a joke from someone in the aircraft construction industry. How do you know you have enough doco for the FAA? When it weighs as much as the plane. – Simon Crase Mar 14 '22 at 19:58
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Yes

It may be perfectly possible to use it in other countries, and there may be no working countermeasures to stop it. However you'll still be breaking the licensing conditions.

I have a personal example of this. About 20 years ago, my company was doing a project for Ford, who used ClearCase for revision control. Because Ford's development teams are scattered all over the world but they still use a common code base wherever possible (good practise to avoid reinventing the wheel), the whole world had access to the ClearCase servers.

We (in the UK) had some issues getting ourselves set up, so our chief engineer called Rational (the owners of ClearCase) for tech support. He got an answer, which was good, but then the tech support guy asked him, "By the way, who gave you access to this? because Ford have only paid us for a license for US users." Which meant that every local Ford office around the world, and every Ford subsidiary (Jaguar Land Rover, Aston Martin, Volvo, Visteon, etc.), with literally thousands of users, had been breaking the licensing conditions since basically day 1 of Ford using ClearCase. Looking on the Rational website, they did indeed mention that they could do separate licensing for large organisations for continent-wide or global licenses.

Not many days later, there was a global email (and in this case "global" does genuinely mean the entire globe!) to all Ford engineers saying that there was an issue with ClearCase and no-one should worry, but you shouldn't call Rational for tech support and if you had any problems then contact someone in Ford.

A few weeks after that, we got another email saying the situation was resolved. There was no blow-back for our team, I guess because there was no way we could have known about this. We never did find out exactly how much it cost Ford to upgrade their license.

Graham
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No.

It's common practice for commercial software providers to claim they're entitled to do this, but to my knowledge there is no provision under copyright law that entitles them to do so (*). A license is not a contract, but a grant of permissions to do something that would be forbidden by the law without the permissions of the rights holder. Copyright law governs things like copying, preparation of derivative works, public performance, etc. It does not govern possession, transfer (see also: first sale), private enjoyment, etc. of a legally obtained copy of a covered work. In particular, no activity prohibited by copyright law is necessary in order to make use of a piece of software one has legally obtained. Someone who has legally obtained a copy of a copyright-covered work is under no obligation to "agree to a license" (or enter into a contract) with the copyright holder if they have no desire to do anything they need such permissions for.

(*) One arguable objection to this is the DMCA's prohibition on "circumvention of technological measures" and whether it's possible to make any practical use of the software without doing so. This is a topic with lots of complex technological and legal facets and likely-unresolved interpretation of the law, so for the purpose of my answer, I'm sticking to software in a more classical sense where there is no technological measure attempting to prevent use without entering into a contract with the copyright holder.

R.. GitHub STOP HELPING ICE
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  • If those types of contracts are not valid why are they still being used after decades of being in place? I would think that there would have been lawsuits and changes forced by now if they are not legal. – Joe W Mar 14 '22 at 16:23
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    Many proprietary software packages are not sold but remain the property of the software developer. In these cases the end user does not legally have all the rights as if they owned the copy. – doneal24 Mar 14 '22 at 16:54
  • @JoeW: The same reason illegal and unenforcable terms remain in employment contracts: to scare one party due to an imbalance of power. – R.. GitHub STOP HELPING ICE Mar 14 '22 at 17:59
  • @doneal24: That's a cute theory but not backed by anything if they're actually selling a physical copy in a package on a retail shelf. There's probably room to argue it in some contexts, especially with more specialized products where they're not sold on a public marketplace but only through direct engagement with the vendor, but it's still pretty sus. – R.. GitHub STOP HELPING ICE Mar 14 '22 at 18:02
  • Ninth Circuit Court of Appeals seems to like this cute theory. – doneal24 Mar 14 '22 at 18:07
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    Following up on your reply @JoeW comment, I would think that multi-billion dollar corporations would not be cowed into submission due to imbalances of power. Yet these contracts are accepted by the corporations. – doneal24 Mar 14 '22 at 18:14
  • Why would a multi billion dollar company be scared of taking legal action against a developer for an illegal contract? We have these companies publicly announcing these types of contracts in press releases. If this was really illegal as you say surely there is a law firm out there willing to start lawsuits over it in order to make some easy money. – Joe W Mar 14 '22 at 18:18
  • @doneal24: It's not affecting anything they care to do. It's affecting archivists, folks with ebay shops, hobbyists, hackers, etc. Why would a multi-billion dollar company go to court trying to stand up for these people when they stand to gain more by preserving the ability to impose "licenses" themselves? – R.. GitHub STOP HELPING ICE Mar 14 '22 at 18:18
  • If you know all of this is illegal why don't you point to some evidence to back up the claims? These types of contracts have been going on for decades and costing large corporations millions of dollars (hundreds of millions when you add them all up) each year you think they would have stood up by now if they could have. They would be saving themselves massive amounts of money which is what every company wants to do. – Joe W Mar 14 '22 at 18:20
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    Very few of these multi-billion dollar institutions are releasing their own software. They have real reasons to overturn the licenses (lots of money involved) and no impact on their products. – doneal24 Mar 14 '22 at 18:29
  • @doneal24: I don't see what your argument is that they have an economic incentive to overturn this. Ability to buy and actually own software is not something most enterprise customers want; the reason the subscription pricing model where you don't actually own anything has taken over is that it's the lowest friction for the big customers. It's small individuals who are screwed over by it. – R.. GitHub STOP HELPING ICE Mar 14 '22 at 19:22
  • As an IT manager in both pharmaceuticals and federal government, I would strongly disagree with your assessment. Enterprise customers will definitely purchase software and not rely solely on subscription pricing. Subscrition pricing is also a fairly recent development so why weren't licenses challenged 30 year ago? – doneal24 Mar 14 '22 at 19:26
  • @doneal24: What do you claim "licenses" were preventing the customer from doing 30 years ago? – R.. GitHub STOP HELPING ICE Mar 14 '22 at 20:06
  • I did not claim licenses are/were preventing customer's from doing anything. I pointed out that non-subscription licenses were the norm in the past and they were not challenged then. – doneal24 Mar 14 '22 at 20:19