White Label software license: who needs it and how it works

White Label software license: who needs it and how it works

The White Label model is suitable for IT companies that have developed software, but do not want to build sales and marketing processes. Then a reseller connects to the business chain and takes over these functions. In the article we will tell you how to monetize a product by White Label software licenses.

What do you need to work on the White Label model?

There are 3 parties involved in the chain: an IT solution developer, a reseller and end users. Let's take an example. A Polish IT company has developed a SaaS product. It is a software solution for municipality application management. Using the service, users organize workflow, store information and create reports. The product was developed in Ukraine, but is promoted among municipalities in the EU market through local partners (distributors). To license the program, Stalirov&Co IT lawyers have developed a White Label license. With its help, an IT company receives regular payments from clients, and a local partner sends out offers and conducts marketing campaigns, accompanies transactions and implements software, and services payments.

Key Points of the White Label License

Now we will tell you what to provide in the text of the document.

  1. License Terms

Decide right away type of license for: exclusive or non-exclusive. In the first case, the company transfers the software to a reseller and will not be able to conclude licenses with other distributors. And in the case of a non-exclusive license, there is no such restriction. This means that the company will be able to sign agreements with other distributors and users directly.

2. Sublicensing

Here, the IT company decides whether it is possible to issue sublicenses to resellers - to attract additional distributors. There are 3 options: 

  • give the right to sublicense; 
  • prohibit the issuance of sublicenses;
  • require first to obtain permission and coordinate the sublicensee with the IT company.
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3. Method of monetization

Fix the monetization model. For example, a percentage of sales, a subscription, or a monthly payment. The license should specify the terms for payment.

4. Terms of use of the software

In the license points, answer the following questions:

  • How is user registration done?
  • in what cases will the account be blocked?
  • What actions with the software are prohibited? 

5. Copyright

In the license, add a clause stating that the developer company does not transfer intellectual property rights to software, content, functionality, trademarks, inventions and designs to the reseller and end users. In addition, it advises to ban:

  • reverse engineer, decompile, reverse assemble, or attempt to discover the object code, source code, or algorithm intent;
  • modify, transform, adapt or create derivative works;
  • sell or transfer the program and copies to third parties;
  • remove copyright notices or attempt to circumvent copy protection measures.

And do not forget to record the consequences in case of violations. For example, the company will be able to restrict access to the program without giving reasons if it detects a violation.

6. Disclaimers

The software developer should set limits on responsibility. For example, an IT company does not control the performance and is not responsible for the functionality of the program after installing custom components. Also, the company is not obliged to update, expand the functionality, modify, publish new versions or additions to the program. And the company is not responsible for the quality of access to the program via the Internet. Disclaimers are prescribed for each product separately, taking into account technical and functional features.

7. Technical support

A separate section should be devoted to the conditions of technical support. Fix in the license:

  • paid or free nature of technical support;
  • on what questions you can contact the company-developer.

8. Privacy and non-competition

Reseller and end users gain access to trade secrets. The former is tempted to create his own business solution, but use the methods and database of an IT company. The second will quickly get tired of paying the primary developer and also want to develop the same type of product. This risk is faced by most companies that license software. Therefore, write in the document a ban on the disclosure of confidential information and the creation of competing products.

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Valery Stalirov
CEO of the company of IT lawyers Stalirov&Co
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