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Eula-gy

The EULA is just what it sounds like: an agreement—between you, the end user, and the company that "sold" you the software you are about to install. It contains a number of restrictions about how you can use the software. For example, the Microsoft EULA on your machine restricts you from using this copy of the operating system on more than one machine. If you have two computers, you can't legally buy one copy of Windows and install it on both machines. The license specifically says that you can't do that. It also contains a number of other provisions. For example:

  • The license may limit the number of backup copies you're allowed to make.

  • The license may restrict how many CPUs you can have in the machine on which you're running the software.

  • The license may allow you to move the software from one machine to another, provided that you completely delete it from the first machine after you install it on the second.

The EULA probably also contains a lot of items that limit the liability of the software company; for example, stating that there is no warranty for the software's performance, or that you're not allowed to export or resell the software.

And then there's usually a termination clause. For example, here's what the Microsoft EULA states: "TERMINATION. Without prejudice to any other rights, Microsoft may cancel this EULA if you do not abide by the terms and conditions of this EULA, in which case you must destroy all copies of the Product and all of its component parts."

Which means that Microsoft has the option of basically taking back their software. If you don't abide by the terms of the EULA, they have the right to make you stop using their software. And if you don't stop using it, Microsoft could take you to court and possibly be awarded damages for your illegal use.

That's why it's not really accurate to say that you "buy" or "own" software. If you buy a lawn sprinkler and only use it to let the neighborhood kids run through the water in the summertime, the lawn care products manufacturer can't come to you and say, "Hey, your license agreement states that only one individual may use the product at a time, so you're in violation of your Sprinkler License and are hereby ordered to either purchase additional licenses or stop using the product immediately."

A software company can do exactly that.

Keep in mind here that we're not trying to pick on Microsoft. Far from it. Microsoft didn't invent the EULA, and they're certainly not the only software company that licenses products this way. Virtually every piece of software you use is governed by one of these license agreements—even the shareware and "free" products you might download online.

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