Given that the word "perpetual" can be defined to mean "eternal; permanent; lasting for eternity" it is certainly arguable that a perpetual licence should last forever, but in the recent case of BMS Computer Solutions Limited v AB Agri Limited [2010] EWHC 464 (Ch) it was held that a perpetual software licence was merely a licence "of indefinite duration" and could be terminated in accordance with other provisions of the relevant licence agreement.
The BMS case highlights the need for clear and unambiguous drafting in licence agreements (and in any amendments to licence agreements). The parties had entered into a software licence agreement in 1994 under which the licensee was granted a non-exclusive licence to use certain software for its business purposes at its premises. The 1994 agreement required the licensee to enter into a software technical support agreement and to maintain such agreement throughout the duration of the software licence agreement. It was expressly stated that "In the event that the software technical support agreement is terminated for any reason whatsoever this agreement shall terminate forthwith..." (clause 5.2).
In 2000, the parties agreed to vary the 1994 agreement and entered into a separate variation agreement. The 2000 variation stated that the licence under the 1994 agreement "...will be extended to be a UK-wide perpetual licence..." and that "...the current Agreements [ie the 1994 agreement and the software technical support agreement] continue in full force and effect subject to these variations until such time as they are amended by any further variation Agreements."
In 2008, the licensee gave notice to terminate the software technical support agreement, and this duly terminated on 31 December 2009. The licensee then tried to assert that its licence to use the software continued to be effective as it was now a perpetual licence. "Er no," said the licensor "see clause 5.2 of the 1994 agreement" (this is paraphrased). The High Court judge agreed with the licensor's interpretation of the contract.
The judge felt that the termination provisions of the 1994 agreement were very important terms of the agreement and that if the parties had intended that those provisions (including clause 5.2) were to be deleted, it was natural to suppose that they would have expressly referred to them in the 2000 variation.
So, if you want your perpetual licence (or even your "irrevocable perpetual licence") to last forever, make sure that it is clearly stated in the licence agreement that the licence will survive any termination of the agreement.
Good logic and advice there.
Thanks for the free advice.
Posted by: Carey Suante | April 10, 2010 at 12:22 PM