Does South African law recognise the validity of ‘perpetual’ software licences? If not, or if it is not advisable for other reasons, are there other means of addressing concerns relating to ‘perpetual’ licences?
Parties to agreements in South Africa are free to contract for any term that they wish. There is therefore no bar to a perpetual licence, but to ensure the functioning of the licence in practice, parties should contract clearly that the licence is in perpetuity, and also directly address termination.
Practically speaking, software has a limited lifespan relative to the copyright protection it is entitled to, and accordingly parties are unlikely to come upon issues of enforceability owing to duration.
Are there any legal requirements to be complied with prior to granting software licences, including import or export restrictions?
As software can be protected by copyright, an exclusive licence to a piece of software should be in writing and signed by or on behalf of the copyright owner. This is typically the licensing entity, but copyright ownership should be checked in advance of entering into any licence. Beyond this there are no bespoke requirements pertaining to software licensing.
South Africa has exchange control restrictions on the outward licensing of IP, and these licence agreements require the exchange control approval from the South African Reserve Bank (SARB). The approval by the SARB or designated commercial banks is required for outward payment of licence fees or royalties.
Are there are legal restrictions with respect to the restrictions a licensor can put on users of its software in a licence agreement?
There is no restriction in South Africa against the inclusion of disabling code in software, and indeed a licensor would be wise to include such a power in order to maintain control against misuse or infringement of its IP rights. Accordingly, the exercise of such a power is primarily subject to the contractual terms between the parties; if the licensor reserves the right to terminate for material breach then it would have the right to use disabling code.
This being said, unilaterally disabling a licensee’s software would be an at-risk decision for the licensor, as if the licensor was wrong about the breach, or if the breach was ultimately not material, the licensor would itself be in breach of the licensee. It is therefore to be recommended that any use of disabling code is subject to typical material breach notifications and procedures.
For more information, contact:
Head: Commercial Department
Tel+27 11 324 3025