When expanding into international markets, U.S.-based software licensors should always consider whether their software license agreements are enforceable in the countries in which the licensed software is being used. This is critical in order to protect a company’s valuable intellectual property rights. While this may seem like a straightforward issue to address, it can prove challenging when navigating the key differences among the legal frameworks of different countries.
In the first article of this two-part series, we analyzed the importance of a U.S. software supplier's choice of law to govern the license agreement when doing business in the European Union (EU) and, in particular, Germany. Choice of law is only one of myriad legal issues for a U.S. supplier to consider. Using Germany again as an example, this article will outline additional important issues to consider when crafting software license agreements enforceable in the EU. This article will focus on freedom of contract, use of the English language and certain individual country issues.
A logical question: Can an English-language license agreement be enforced in a non-English-speaking country as drafted, or would it need to be translated? Assuming both parties have negotiated and signed the agreement, it will generally be enforceable. But of course, there are always exceptions. "Standard terms and conditions" that are written in a different language from the language of the contract, and which are not understandable by a licensor or licensee, are generally not valid. Nevertheless, it is common to draft software license agreements in English, and it is generally considered valid to also use English-language "standard terms and conditions" between commercial licensors and licensees. Such agreements are frequently utsed in Germany without enforceability challenges.