Last Updated on 13/08/2025 by Damin Murdock

Software developers and distributors often need to license their products to different users, in different countries, and for different purposes. Australian law allows for flexible software licensing structures, provided that the terms are clearly defined and legally compliant.

At Leo Lawyers, we help technology providers draft, review, and enforce licensing agreements that accommodate diverse commercial needs while meeting legal requirements. This article outlines how multi-layered software licensing works under Australian law.

Can Software Be Licensed Differently to Different Users?

Under Australian copyright and contract law, software can be licensed on varying terms for different users, jurisdictions, and use cases. This flexibility is permitted as long as the licensing arrangements are clear, consistent, and compliant with relevant legal frameworks.

Common licensing models include:

  • Geographic Licensing: Defining Jurisdictional Use

Software licenses can restrict use based on location. For example, a license may only permit use within Australia or the Asia-Pacific region. Relocating the software to another country may require consent from the licensor.

The enforceability of such territorial restrictions was confirmed by the Federal Court in Racing & Wagering Western Australia v Software AG (Australia) Pty Ltd [2008] FCA 1332, emphasizing that these must be clearly expressed in the licensing agreement. In this case, Racing & Wagering Western Australia stored its back-ups offsite, and it was claimed by Software AG that the licence only allowed for maintaining a disaster recovery copy, not a copy offsite for installation or testing purposes. On appeal, the Full Court held that it was illogical to allow for a disaster recovery copy but to not permit testing of its disaster recovery copy. In this circumstance, commercial practices were applied but this could have been avoided if there were clear contractual terms.

  • User-Specific Licensing: Custom Terms for Different Users

Software is commonly distributed through end-user license agreements, or EULAs, which define varying rights for different user types. These agreements may distinguish between personal and business use, internal users and resellers, or trial and paid license holders.

The enforceability of user-specific licensing terms, when properly structured and communicated, was upheld by the court in Universal Music Australia Pty Ltd v Sharman License Holdings Ltd [2005] FCA 1242. In short, a ‘click-wrap’ agreement is where someone ‘clicks’ to accept, whereas a ‘browse-wrap’ agreement is where the terms are situated on a platform or website. In terms of a ‘click-wrap’ agreement, they are generally enforceable, whereas a ‘browse-wrap’ agreement, there is a requirement for the user to be made aware of the existence of the agreement, otherwise there is no clear offer and acceptance to be a legally binding contract.

  • License Variation: Changing Terms Over Time

Licenses can be modified during their term if the agreement permits or the parties agree in writing. Common updates include pricing changes, revised usage limits, or expanded functionality. To be valid, modifications should be:

  • Documented in writing
  • Clearly communicated to the licensee
  • Consistent with the structure of the original agreement. 

The ability to vary licenses was affirmed by the court in Weston Aluminium Pty Ltd v EPA [No 2] [2005] NSWLEC 698, however, it is important to note that an ‘amendment clause’ or the variation to the EULA may still be found to be unlawful in circumstances where the amendment is found to be unfair under Australian Consumer Laws.

Legal Framework and Copyright Considerations

Under Australian law, the software creator retains core copyright ownership while granting defined usage rights to licensees. These rights can be split by territory, use case, and time period. The legal system supports modular licensing, provided that the rights granted are clear and consistent.

Best Practices for Flexible Licensing

To effectively implement flexible software licensing and protect your interests, developers and vendors should strategically address the following:

  • Licensing restrictions must be clearly written and consistently applied. All terms should be communicated in plain language, with meticulous documentation of every version and variation
  • Licensing terms must comply with local copyright laws and should avoid unreasonable discrimination that may trigger competition law concerns. If licensing internationally, ensure compatibility with local legal standards
  • Businesses should maintain robust systems to track user entitlements, restrict access according to license terms, and provide timely notifications of updates. Leverage license management tools to monitor compliance and address changes in real time.
  • Maintain formal, accessible records of all agreements and variations. Be prepared to justify commercial reasons for different licensing terms and ensure that variations are not applied retroactively or without proper notice.

Conclusion

Australian law allows software developers to license their products flexibly, as long as the terms are clear, consistent, and lawful. With the right documentation and legal strategy, businesses can tailor licensing arrangements to suit different markets and user types without compromising their rights.

At Leo Lawyers, we assist digital businesses, SaaS providers, and technology companies with licensing strategies that balance legal protection and commercial flexibility. Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our social media accounts.

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.

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Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."