Software licensing

Software licensing is the grant of permission to use software that remains owned by the licensor. The licence sets who may use it, on how many devices or seats, for what purpose and term, and limits warranties and liability. In Canada the code is protected by the federal Copyright Act, and the licence is enforced in BC as a contract.

How BC law treats it

Software is protected as a literary work under the Copyright Act, RSC 1985, c C-42. A licence does not transfer ownership; it permits use on stated terms. Licences may be perpetual or for a term, exclusive or non-exclusive, and on premises or delivered as software as a service (SaaS), where the customer accesses hosted software and the agreement often looks more like a service contract with uptime and data terms. The Copyright Act allows some uses without permission. The owner of a lawful copy may make a backup copy and may adapt the program for compatibility with a computer (s. 30.6), and reverse engineering for interoperability is permitted in defined circumstances (s. 30.61). Many licences prohibit these activities contractually, so the practical exposure for a user is usually breach of contract rather than infringement. Online licences, including click-through and browse-wrap terms, are enforceable contracts if the user had reasonable notice and agreed, as the Electronic Transactions Act, SBC 2001, c 10 permits. Courts will refuse to enforce unfair standard form terms in some cases: the Supreme Court of Canada set aside an arbitration clause as unconscionable in Uber Technologies Inc v Heller, 2020 SCC 16, and refused a foreign forum clause in a consumer contract in Douez v Facebook, Inc, 2017 SCC 33. Licences to consumers are also subject to the Business Practices and Consumer Protection Act, SBC 2004, c 2.

What it means for your business

For software companies, the licence is the product's revenue model and main legal protection: it controls pricing, permitted use, liability and data rights. For businesses buying software, the licence decides whether they can scale, switch vendors, keep their data and recover losses if the software fails. Reviewing renewal terms, usage limits and audit clauses before signing avoids surprise fees and vendor lock in. Example: A Kelowna logistics company licenses a routing platform on a three year SaaS subscription for 50 users. It negotiates a data export right on termination and a service level credit for downtime before signing.

Risks and common mistakes

Assuming a licence grants ownership or the right to modify and resell the software. Exceeding the licensed number of users or devices and triggering audit fees. Relying on online terms that users never clearly accepted. Failing to secure data export and transition rights when the subscription ends. Copying a US licence template that refers to US law and remedies without adapting it for Canada.

Key authorities

Copyright Act, RSC 1985, c C-42, ss. 30.6, 30.61
Electronic Transactions Act, SBC 2001, c 10
Uber Technologies Inc v Heller, 2020 SCC 16
Douez v Facebook, Inc, 2017 SCC 33

Frequently asked questions

Is reverse engineering software illegal in Canada?

Not always. The Copyright Act permits reverse engineering for interoperability in defined circumstances and adaptation for compatibility. Most licences prohibit it, though, so doing it can be a breach of contract even when it is not copyright infringement.

Are click-through software licences enforceable in BC?

Generally yes, if the user had reasonable notice of the terms and clearly agreed to them. Courts can refuse to enforce unconscionable terms, and consumer licences are also subject to BC consumer protection law.

Licensing your software to customers or reviewing a vendor's terms? Talk to a Fulcrum technology lawyer.