Proprietary software

Proprietary software

Proprietary software is computer software licensed under exclusive legal right of the copyright holder. The licensee is given the right to use the software under certain conditions, but restricted from other uses, such as modification, further distribution, or reverse engineering.[1]

Complementary terms include public domain software, which is not subject to copyright and can be used for any purpose, and free software, licensed by the owner under more permissive terms. Proponents of free and open source software use proprietary or non-free to describe software that is not free or open source.[2]


Software becoming proprietary

Until the late 1960s computers—huge and expensive mainframe machines in specially air-conditioned computer rooms—were usually supplied on a leasing rather than purchase basis.[3][4] Service and all software available were usually supplied by manufacturers without separate charge until 1969. Software source code was usually provided. Users who developed software often made it available, without charge. Customers who purchased expensive mainframe hardware did not pay separately for software.

In 1969 IBM led an industry change by starting to charge separately for (mainframe) software and services, and ceasing to supply source code.[5]

Legal basis

Most software is covered by copyright which, along with contract law, patents, and trade secrets, provides legal basis for its owner to establish exclusive rights.[citation needed]

A software vendor delineates the specific terms of use in an end-user license agreement (EULA). The user may agree to this contract in writing, interactively, called clickwrap licensing, or by opening the box containing the software, called shrink wrap licensing. License agreements are usually not negotiable.

Software patents grant exclusive rights to algorithms, software features, or other patentable subject matter. Laws on software patents vary by jurisdiction and are a matter of ongoing debate. Vendors sometimes grant patent rights to the user in the license agreement.[6] For example, the algorithm for creating, or encoding, MP3s is patented; LAME is an MP3 encoder which is open source but illegal to use without obtaining a license for the algorithm it contains.

Proprietary software vendors usually regard source code as a trade secret.[7]


License agreements do not override applicable copyright law or contract law. Provisions that conflict may not be enforceable.[citation needed]

Some vendors say that software licensing is not a sale, and that limitations of copyright like the first-sale doctrine do not apply. The EULA for Microsoft Windows states that the software is licensed, not sold.[8]

Exclusive rights

The owner of proprietary software exercises certain exclusive rights over the software. Commonly, the owner restricts use, inspection of source code, modification of source code, and redistribution.[citation needed]

Use of the software

Vendors typically limit the number of computers on which software can be used, and prohibit the user from installing the software on extra computers. Restricted use is sometimes enforced through a technical measure, such as product activation, a product key or serial number, a hardware key, or copy protection.

Vendors may also distribute versions that remove particular features, or versions which allow only certain fields of endeavor, such as non-commercial, educational, or non-profit use.

Use restrictions vary by license:

  • Windows Vista Starter is restricted to running a maximum of three concurrent applications.
  • The retail edition of Microsoft Office Home and Student 2007 is limited to non-commercial use on up three devices in one household.
  • Windows XP can be installed on one computer, and limits the number of network file sharing connections to 10.[9] The Home Edition disables features present in Windows XP Professional.
  • Many Adobe licenses are limited to one user, but allow the user to install a second copy on a home computer or laptop.[10]
  • iWork '09, Apple's productivity suite, is available in a five-user family pack, for use on up to five computers in a household.

Inspection and modification of source code

Vendors typically distribute proprietary software in compiled form, usually the machine language understood by the computer's central processing unit. They typically retain the source code, or human-readable version of the software, written in a higher level programming language.[11] This scheme is often referred to as closed source.[12]

By withholding source code, the software producer prevents the user from understanding how the software works and from changing how it works.[13] This practice is denounced by some critics, who argue that users should be able to study and change the software they use, for example, to remove secret or malicious features, or look for security vulnerabilities. Richard Stallman says that proprietary software commonly contains "malicious features, such as spying on the users, restricting the users, back doors, and imposed upgrades."[14] Some proprietary software vendors say that retaining the source code makes their software more secure, because the widely available code for open-source software makes it easier to identify security vulnerabilities.[15] Open source proponents say that wide availability results in increased scrutiny of the source code, making open source software more secure.[16]

While most proprietary software is closed-source, some vendors distribute the source code or otherwise make it available to customers. The source code is covered by a non-disclosure agreement or a license that allows, for example, study and modification, but not redistribution. The text-based email client Pine and certain implementations of Secure Shell are distributed with proprietary licenses that make the source code available.

Some governments fear that proprietary software may include defects or malicious features which would compromise sensitive information. In 2003 Microsoft established a Government Security Program (GSP) to allow governments to view source code and Microsoft security documentation, of which the Chinese government was an early participant.[17][18] The program is part of Microsoft's broader Shared Source Initiative which provides source code access for some products. The Reference Source License (Ms-RSL) and Limited Public License (Ms-LPL) are proprietary software licenses where the source code is made available.

Software vendors sometimes use obfuscated code to impede users who would reverse engineer the software. This is particularly common with certain programming languages. For example, the bytecode for programs written in Java can be easily decompiled to somewhat usable code,[citation needed] and the source code for programs written in scripting languages such as PHP or JavaScript is available at run time.[19]


Proprietary software vendors usually prohibit users from sharing the software with others.[citation needed] Another unique license is required for another party to use the software.

In the case of proprietary software with source code available, the vendor may also prohibit customers from distributing their modifications to the source code.

Shareware is closed-source software whose owner encourages redistribution at no cost, but which the user sometimes must pay to use after a trial period. The fee usually allows use by a single user or computer. In some cases, software features are restricted during or after the trial period, a practice sometimes called crippleware.

Interoperability with software and hardware

Proprietary file formats and protocols

Often, proprietary software stores its data using proprietary file formats and communicates using proprietary protocols controlled by the vendor. Most proprietary formats and protocols are secret and incompatible with other software. Their use may be restricted by trade secret or patent rights.

Proprietary APIs

A proprietary application programming interface (API) is a software library interface "specific to one device or, more likely to a number of devices within a particular manufacturer's product range."[20] The motivation for using a proprietary API can be vendor lock-in or because standard APIs do not support the device's functionality.[20]

The European Commission, in its March 24, 2004 decision on Microsoft's business practices,[21] quotes, in paragraph 463, Microsoft general manager for C++ development Aaron Contorer as stating in a February 21, 1997 internal Microsoft memo drafted for Bill Gates:

The Windows API is so broad, so deep, and so functional that most ISVs would be crazy not to use it. And it is so deeply embedded in the source code of many Windows apps that there is a huge switching cost to using a different operating system instead.

Early versions of the iPhone SDK were covered by a non-disclosure agreement. The agreement forbade independent developers from discussing the content of the interfaces. Apple discontinued the NDA in October 2008.[22]

Vendor lock-in

A dependency on the future versions and upgrades for a proprietary software package can create vendor lock-in, entrenching a monopoly position.[23]

Software limited to certain hardware configurations

Proprietary software may also have licensing terms that limit the usage of that software to a specific set of hardware. Apple has such a licensing model for Mac OS X, an operating system which is limited to Apple hardware, both by licensing and various design decisions. This licensing model has been affirmed by the United States Court of Appeals.[24]

Legal meanings and licensing

The founder of free software movement, Richard Stallman, sometimes uses the term "user-subjugating software"[25] to describe proprietary software, while Eben Moglen sometimes talks of "unfree software". The term "non-free" is often used by Debian developers to describe any software whose license does not comply with Debian Free Software Guidelines, and they use "proprietary software" specifically for non-free software that provides no source code. The Open Source Initiative uses the terms "proprietary software" and "closed source software" interchangeably.[26][27]

Semi-free software, as defined by the Free Software Foundation, is software that is not free software, but comes with permission for individuals to use, copy, distribute, and modify either for non-profit purposes only or with the prohibition to redistribute modified copies or derived works.[28] Such software is also rejected by the Open Source Initiative and Debian. PGP and the video game Angband are examples of semi-free programs. The Free Software Foundation classifies semi-free software as non-free software, but draws a distinction between semi-free software and proprietary software.

Free software licences use the same laws used by proprietary software, but to preserve the rights to use, copy and modify the software. This technique is used with copyleft, but with other software as well.[29] Free software companies and projects are also joining into patent pools like the Patent Commons and the Open Invention Network. See software patents and free software.

"Proprietary software" is not synonymous with "commercial software",[30][31] though the industry commonly confuses the term,[32] [33] as does the free software community.[34][35]

Proprietary software can be distributed at no cost or for a fee, and free software can be distributed at no cost or for a fee.[36] The difference is that whether or not proprietary software can be distributed, and what the fee would be, is at the proprietor's discretion. With free software, anyone who has a copy can decide whether, and how much, to charge for a copy or related services.[37]

Proponents of commercial proprietary software argue that requiring users to pay for software as a product increases funding or time available for the research and development of software. For example, Microsoft says that per-copy fees maximise the profitability of software development.[38]

Proprietary software is said to create greater commercial activity over free software, especially in regard to market revenues.[39]

If the proprietor of a software package should cease to exist, or decide to cease or limit production or support for a proprietary software package, recipients and users of the package may have no recourse if problems are found with the software. Proprietors can fail to improve and support software because of business problems.[40] When no other vendor can provide support for the software, the ending of support for older or existing versions of a software package may be done to force users to upgrade and pay for newer versions; or migrate to either competing systems with longer support life cycles or to FOSS-based systems.[41]


Well known examples of proprietary software include Microsoft Windows, Adobe Flash Player, PS3 OS, iTunes, Adobe Photoshop, Google Earth, Mac OS X, Skype, WinRAR, and some versions of Unix.

Software distributions considered as proprietary may in fact incorporate a "mixed source" model including both free and non-free software in the same distribution.[42] Most if not all so-called proprietary UNIX distributions are mixed source software, bundling open source components like BIND, Sendmail, X Window System, DHCP, and others along with a purely proprietary kernel and system utilities.[43][44]

Some free software packages are also simultaneously available under proprietary terms. Examples include MySQL, Sendmail and ssh. The original copyright holders for a work of free software, even copyleft free software, can use dual-licensing to allow themselves or others to redistribute proprietary versions. Non-copyleft free software (i.e. software distributed under a permissive free software license or released to the public domain) allows anyone to make proprietary redistributions.[45][46] Free software that depends on proprietary software is considered "trapped" by the Free Software Foundation. This includes software written only for Microsoft Windows,[47] or software that could only run on Java, before it became free software.[48]

Proprietary software that comes for no cost is called freeware. Proprietary software which is no longer marketed by its owner and is used without permission by users is called abandonware and may include source code. Some abandonware has the source code released to the public domain either by its author or copyright holder and is therefore free software, and no longer proprietary software.

According to Jonathan Zittrain, the emergence of "closed devices" and online applications, like the iPhone, Facebook and Google apps, have made the Internet become far more proprietary than early versions of Microsoft Windows.[49]

See also


  1. ^ "Apple - Legal - Licensed Application End User License Agreement". Retrieved 2011-10-25. "You may not copy (except as expressly permitted by this license and the Usage Rules), decompile, reverse engineer, disassemble, attempt to derive the source code of, modify, or create derivative works of the Licensed Application." 
  2. ^ "Categories of Free and Nonfree Software - GNU Project - Free Software Foundation (FSF)". Retrieved 2011-10-25. "Proprietary software is another name for nonfree software." 
  3. ^ Paul E.Ceruzzi (2003). A history of modern computing. MIT Press. p. 128. ISBN 0-262-53203-4. "Although IBM agreed to sell its machines as part of a Consent Decree effective January 1956, leasing continued to be its preferred way of doing business" 
  4. ^ "History of Leasing". Retrieved 2010-11-12. "In the 1960s, IBM and Xerox recognized that substantial sums could be made from the financing of their equipment. The leasing of computers and office equipment that occurred then was a significant contribution to leasings growth, since many companies were exposed to equipment leasing for the first time when they leased such equipment" 
  5. ^ "". IBM. Retrieved 2010-11-12. "Rather than offer hardware, services and software exclusively in packages, marketers "unbundled" the components and offered them for sale individually. Unbundling gave birth to the multibillion-dollar software and services industries, of which IBM is today a world leader" 
  6. ^ Daniel A. Tysver (2008-11-23). "Why Protect Software Through Patents". Retrieved 2009-06-03. "In connection with software, an issued patent may prevent others from utilizing a certain algorithm (such as the GIF image compression algorithm) without permission, or may prevent others from creating software programs that perform a function in a certain way. In connection with computer software, copyright law can be used to prevent the total duplication of a software program, as well as the copying of a portion of software code." 
  7. ^ Donovan, S. (1994). "Patent, copyright and trade secret protection for software". Potentials, IEEE 13 (3): 20. doi:10.1109/45.310923. "Essentially there are only three ways to protect computer software under the law: patent it, register a copyright for it, or keep it as a trade secret." 
  8. ^ Microsoft Corporation (2005-04-01). "End-User License Agreement for Microsoft Software: Microsoft Windows XP Professional Edition Service Pack 2" (PDF). p. Page 3. Retrieved 2009-04-29. 
  9. ^ Microsoft Corporation (2005-04-01). "End-User License Agreement for Microsoft Software: Microsoft Windows XP Professional Edition Service Pack 2" (PDF). p. Page 1. Retrieved 2009-04-29. "You may install, use, access, display and run one copy of the Software on a single computer, such as a workstation, terminal or other device (“Workstation Computer”). The Software may not be used by more than two (2) processors at any one time on any single Workstation Computer. ... You may permit a maximum of ten (10) computers or other electronic devices (each a 'Device') to connect to the Workstation Computer to utilize one or more of the following services of the Software: File Services, Print Services, Internet Information Services, Internet Connection Sharing and telephony services." 
  10. ^ Adobe Systems, Adobe Software License Agreement,, retrieved 2010-06-09 
  11. ^ Heffan, Ira V. (1997). "Copyleft: Licensing Collaborative Works in the Digital Age". Stanford Law Review 49: 1490. "Under the proprietary software model, most software developers withhold their source code from users." 
  12. ^ David A. Wheeler (2009-02-03). "Free-Libre / Open Source Software (FLOSS) is Commercial Software". Retrieved 2009-06-03. 
  13. ^ Margolis, Philip E. (1999). Webster's Computer & Internet Dictionary. Random House. pp. 452. ISBN 0375703519. "[P]roprietary is the opposite of open. A proprietary design or technique is one that is owned by a company. It also implies that the company has not divulged specifications that would allow other companies to duplicate the product." 
  14. ^ Stallman, Richard (June 2009). "Viewpoint: Why "open source" misses the point of free software". Communications of the ACM (ACM) 52 (6): 31–33. doi:10.1145/1516046.1516058. Retrieved 2010-03-08. 
  15. ^ Kingstone, Steve (2005-06-02). "Brazil adopts open-source software". BBC News. 
  16. ^
  17. ^
  18. ^
  19. ^ Tony Patton (2008-11-21). "Protect your JavaScript with obfuscation". Retrieved 2009-06-12. "While the Web promotes the sharing of such code, there are times when you or a client may not want to share their JavaScript code. This may be due to the sensitive nature of data within the code, proprietary calculations, or any other scenario." 
  20. ^ a b
  21. ^ "Commission Decision of 24.03.2004 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C-3/37.792 Microsoft)" (PDF). European Commission. March 24, 2004. Retrieved June 17, 2009. 
  22. ^ Wilson, Ben (2008-10-01). "Apple Drops NDA for Released iPhone Software". CNET Reviews. Retrieved 2010-12-17. 
  23. ^ The Linux Information Project (2006-04-29). "Vendor Lock-in Definition". Retrieved 2009-06-11. "Vendor lock-in, or just lock-in, is the situation in which customers are dependent on a single manufacturer or supplier for some product [...] This dependency is typically a result of standards that are controlled by the vendor [...] It can grant the vendor some extent of monopoly power [...] The best way for an organization to avoid becoming a victim of vendor lock-in is to use products that conform to free, industry-wide standards. Free standards are those that can be used by anyone and are not controlled by a single company. In the case of computers, this can usually be accomplished by using free software rather than proprietary software (i.e., commercial software)." 
  24. ^ Apple wins key battle against Psystar over Mac clones (2011-09-29). "Apple court victory over Pystar". Retrieved 2011-09-30. 
  25. ^ Stallman, Richard (February 17, 2009). "Re: GCC and the Visual Basic programmer....". mailing list. Retrieved September 24, 2009. 
  26. ^ Russell Nelson (2008-03-14). "Who speaks for the Open Source Community?". Retrieved 2008-06-11. "When we, the open source community, want to make an agreement with the proprietary software vendors, who do we talk to?" 
  27. ^ Russell Nelson (2008-03-24). "Patent owners and Open Source". Retrieved 2009-06-11. "The purpose of closed-source software is to give you ownership over the code." 
  28. ^ Semi-free software, definition by the Free Software Foundation
  29. ^ Eben Moglen (2005-02-12). "Why the FSF gets copyright assignments from contributors". Retrieved 2009-06-26. "Under US copyright law, which is the law under which most free software programs have historically been first published, [...] only the copyright holder or someone having assignment of the copyright can enforce the license." 
  30. ^ Rosen, Lawrence (2004). Open Source Licensing. Upper Saddle River: Prentice Hall. pp. 52, 255, 259. ISBN 978-0131487871. 
  31. ^ Havoc Pennington (2008-03-02). "Debian Tutorial". Retrieved 2009-06-04. "It is important to distinguish commercial software from proprietary software. Proprietary software is non-free software, while commercial software is software sold for money." 
  32. ^ Cynthia Keeshan (2009-04-30). "The Software Ecosystem". Microsoft Corporation, Canada. Retrieved 2009-04-30. "Commercial software companies develop and distribute proprietary software to generate revenue. (original emphasis)" 
  33. ^ Vinod Valloppillil, Microsoft Corporation (2006-10-12). "Halloween Document 1". Microsoft Halloween documents leak. Eric S. Raymond. Retrieved 2009-04-30. "Commercial software is classic Microsoft bread-and-butter. It must be purchased, may NOT be redistributed, and is typically only available as binaries to end users. (original emphasis)" 
  34. ^ Russell McOrmond (2000-01-04). "What is "Commercial Software"?". Retrieved 2009-05-02. 
  35. ^ Michael K. Johnson (1996-09-01). "Licenses and Copyright". Retrieved 2009-06-16. "If you program for Linux, you do need to understand licensing, no matter if you are writing free software or commercial software." 
  36. ^ Eric S. Raymond (2003-12-29). "Proprietary, Jargon File". Retrieved 2009-06-12. "Proprietary software should be distinguished from commercial software. It is possible for software to be commercial [...] without being proprietary. The reverse is also possible, for example in binary-only freeware." 
  37. ^ Free Software Foundation (2008-12-31). "Selling Free Software". Retrieved 2009-06-03. 
  38. ^ "The Commercial Software Model". Microsoft. May 2001. Retrieved 2007-03-05. 
  39. ^ "Open Source Versus Commercial Software: Why Proprietary Software is Here to Stay". Sams Publishing. October 2005. Retrieved 2007-03-05. 
  40. ^ "What happens when a proprietary software company dies?". NewsForge. October 2003. Retrieved 2007-03-05. 
  41. ^ "Microsoft Turns Up The Heat On Windows 2000 Users". InformationWeek. December 2006.;jsessionid=GL4O5EZFOXYJGQSNDLPSKH0CJUNN2JVN?articleID=196700071. Retrieved 2008-09-16. 
  42. ^ Engelfriet, Arnoud (August/September 2006). "The best of both worlds". Intellectual Asset Management (IAM) (New Hibernia House, Winchester Walk, London Bridge, London SE1 9AG, United Kingdom: Gavin Stewart) (19). Retrieved 2008-05-19. 
  43. ^ Loftus, Jack (2007-02-19). "LinuxWorld: Managing mixed source software stacks".,289142,sid39_gci1244277,00.html. 
  44. ^ Tan, Aaron (2006-12-28). "Novell: We're a 'mixed-source' company". CNET Networks, Inc.,39044164,61977995,00.htm. 
  45. ^ Rosenberg, Donald (2000). Open Source: The Unauthorized White Papers. Foster City: IDG. pp. 109. ISBN 0-7645-4660-0. 
  46. ^ "Categories of Free and Non-Free Software - Free Software Foundation". 
  47. ^ Free Software Foundation (2009-05-05). "Frequently Asked Questions about the GNU Licenses". Retrieved 2009-06-25. 
  48. ^ Richard Stallman (2004-04-12). "Free But Shackled - The Java Trap". Retrieved 2009-06-25. 
  49. ^ Brian Braiker (2008-05-02). "A Killer Product: Will closed devices like Apple's iPhone murder the Web?". Retrieved 2009-06-16. "Through historical accident, we've ended up with a global network that pretty much allows anybody to communicate with anyone else at any time. Devices could be reprogrammed by them at any time, including code written by other people, so you don't have to be a nerd to get the benefits of reprogramming it. [But] this is an historical accident. Now, I see a movement away from that framework--even though it doesn't feel like a movement away. [For example,] an iPhone can only be changed by Steve Jobs or soon, with the software development kit, by programmers that he personally approves that go through his iPhone apps store. Or whimsical applications that run on the Facebook platform or the new Google apps. These are controllable by their vendors in ways that Bill Gates never dreamed of controlling Windows applications. [...] That's the ironic thing. Bill Gates is Mr. Proprietary. But for my purposes, even under the standard Windows operating system from 1990, 1991, you write the code, you can hand it to somebody else and they can run it. Bill Gates has nothing to say about it. So it's funny to think that by moving in Steve Jobs's direction it actually ends up far more proprietary." 

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