Managing licensing challenges for On-Product software

When software is licensed together with hardware, it can be a real challenge to determine which Terms & Conditions apply and how they should be interpreted.

TIP #70 - January 2021:What do you need to be aware of when using On-Product software? In this tip, we tell you more.

In order to shed some light, let’s summarise the different flavours:
  • Appliance: An Appliance is a pre-integrated hardware and software bundle, branded by a single vendor.
  • On-Product software: Hardware created by a supplier and filled with several software products from different Original Equipment Manufacturers (OEM*).

License-wise, the software on an Appliance is usually included and licensed with the Appliance. For On-Product software however, several types of software can be used by different OEM providers. Some software might be freeware, while other software might be commercial.

Most of the time the use of freeware is no problem, but freeware sometimes comes with very specific use rights and rules. “Can this freeware be used in commercially developed products” is one of the questions to ask.

On the other hand, another question can be asked: What needs your attention when using commercial software within an OEM system?

The answer is to discuss the possible options with the software publishers, to know how the software will be used and whether this is allowed. Or make an exception for your specific product and make sure an agreement is signed to validate.

The On-Product manufacturer in its turn, needs to be sure the Bill-of-Material of the system is managed correctly. All use rights need to be in place and agreed upon by the software publishers. A Bill-Of-Material needs to be complete, provided and contain at least:

  • The (freeware and commercial) software in use;
  • The total quantity of licenses being used (based on the agreement with the software manufacturers);
  • The software edition and version in use.

Having a clear view at all times will not only help companies that use On-Product software to prevent audits, but also helps an On-Product manufacturer in developing the product.

*An OEM is a company that produces parts and equipment to be used by another manufacturer.