End User License Agreement (EULA)

What is an end user license agreement (EULA)?

An end user license agreement (EULA) is a contract that lets you use a copy of software without owning it. A license is permission to use something while the owner keeps ownership.

The difference has legal weight. In Vernor v. Autodesk (2010), a federal appeals court held that a software user is a licensee, not an owner of a copy, where the copyright owner says the user gets a license, significantly restricts transfers and imposes notable use restrictions. The court noted that the first sale doctrine, the rule that lets the owner of a copy resell it, does not apply to a licensee.

A EULA is a contract like any other. In ProCD v. Zeidenberg (1996), a federal appeals court said shrinkwrap licenses "are enforceable unless their terms are objectionable on grounds applicable to contracts in general." Each of these rulings binds only the federal courts of its own circuit; neither is a nationwide rule. A EULA you accept by clicking is a clickwrap agreement. Terms you never had to accept work differently; see browsewrap agreement.

EULAs in a SaaS stack

SaaS runs on the vendor's servers, so the main contract is usually a terms of service or a SaaS agreement, not a EULA. License terms come back when you install something: a desktop app, a self-managed edition or an agent on your servers.

Sometimes the license sits inside the main terms. Zoom's terms grant "a limited, revocable, non-exclusive, non-transferable, non-assignable, non-sublicensable, and royalty-free license to use the Software in object code format" for internal use, and say that access is "revocable in Zoom's sole discretion."

Some vendors have merged the two. In April 2024 Atlassian announced a single Customer Agreement "replacing the Atlassian Cloud Terms of Service and Atlassian Software License Agreement." The agreement now says its terms "apply to both Cloud Products and Software Products." Others keep a separate license. The Grafana Labs License Agreement covers Grafana Enterprise, Grafana Enterprise Metrics and Grafana Enterprise Logs software.

What it looks like in a vendor's terms

A typical license grant reads like this:

Subject to this Agreement, Licensor grants Customer a limited, non-exclusive, non-transferable, revocable license to install and use the Software in object code form for Customer's internal business purposes. Customer will not reverse engineer, decompile or disassemble the Software. Licensor may audit Customer's use of the Software on reasonable notice.

• "non-exclusive": the vendor can license the same software to anyone.
• "non-transferable": you cannot pass the license to another company without consent, which can matter in an acquisition. See assignment clause.
• "revocable": the vendor can end the license.
• "object code ... internal business purposes": you run the compiled program for your own business, not to serve others.
• "reverse engineer": you may not take the program apart to see how it works.
• "audit": the vendor can check how many copies and users you have. It is the reverse of the audit rights you ask for in a DPA.

Why it matters to you

An audit can find more installs or users than you paid for. Atlassian may audit your use of its installed products no more than once every 12 months. Grafana Labs may audit on reasonable notice, and you must address any non-compliance it finds within 30 days.

Your license can depend on staying in good standing. Grafana's no-charge license grant lasts "for so long as you are not in breach of any provision of this Agreement," which is stricter than a material breach test with a cure period.

Merged agreements change together. When one agreement covers cloud and installed products, an update to it reaches both.

What to check

• Which document applies: whether installed apps, agents and self-managed editions fall under the main terms or a separate license.
• Scope: the users, devices or servers covered, and whether contractors and affiliates may use it.
• Audit: how often, how much notice, who pays and how long you get to fix a shortfall.
• Ending the license: whether any breach ends it or only an uncured material breach.
• Updates: whether you must install updates. Zoom's terms say you "may be required to obtain updates or upgrades from time to time."
• Data: what the installed software sends back to the vendor, and which privacy policy covers it.

How Venpo helps

Vendors such as Atlassian and Grafana Labs post their license terms on public legal pages. Venpo watches those pages, along with your vendors' terms of service and other public legal documents, and emails you a plain-English alert when one changes, with what changed and why it matters. Each vendor's change history keeps a redline of every version, so you can show which license applied when you installed or renewed.