Shrink wrap software meaning

Term of the Day. Best of Techopedia weekly. News and Special Offers occasional. Shrink Wrap. Techopedia Explains Shrink Wrap. What Does Shrink Wrap Mean? Techopedia Explains Shrink Wrap Even though shrink wrap licensing is widely accepted, some question whether it is a valid agreement since the consumer is not signing it. Share this Term. Section 14 of the Copyrights Act, was referred to understand the definition of copyright.

A copyright is an exclusive right to do or authorize the doing of certain acts "in respect of a work. The Section includes the act of copying the program onto the computer's hard drive or random access memory or making an archival copy when it is an essential step in utilizing the program. It was contended that, in fact, a license is not required to give someone a right to copy as that is an inherent right, provided by the law, with someone who purchases the software to run it on the computer.

Thus, rights in relation to these acts of copying, where they do no more than enabling the effective operation of the program by the user, should be disregarded in analyzing the character of the transaction for tax purposes. As a distributor, the taxpayer only resells the shrink-wrapped software. On a textual interpretation, the right to sell does not include the right to resell. Thus, by reselling, the distributor doesn't use the author's copyright.

Reference was made to Circular No. Revenue's Contention The software alleged to be "off the shelf software" or "standard software" are in substance enterprise-specific software and are customized, whereby certain rights are passed on to the buyers.

The case in discussion deals with software solutions for specific industries which are packaged and sold through a distributor.

The explanation 2 v to Section 9 1 vi of the Income Tax Act applies to the payments made to a non-resident by way of royalty for the use of or the right to use any copyright. For this, reliance was placed on the language of explanation 2 v and stressed that the words "in respect of" have to be given a wide meaning.

It was argued that the provisions for TDS are distinct and exist apart from the provisions for assessment under the Act. The tax treaty covers the taxpayer, not the deductor under Section Thus, it is clear that the tax treaty would not apply to the persons mentioned in Section of the Act who are not a deductor and not a taxpayer.

Thus, when a payment is to be made, we look at Section , the deductor cannot be in the position to decide what's more beneficial to the assessee. It was argued that according to a commonly accepted definition, a 'sale' is an agreement by which a person, in return for payment, transfers to another person his rights of ownership in an item of tangible or intangible property belonging to him.

Referring to various End User License Agreements EULAs and other agreements on record, the learned Additional Solicitor General was of the opinion that the software is not sold but licensed, and the title remains with the author.

The Indian Government had expressed its reservations on the OECD commentary, especially on the part dealing with the parting of copyright and royalty. Therefore, the reliance placed on OECD will not help, and the domestic law will prevail. In case it is held that the tax treaty provisions are to be applied in one or more cases, in that case also the royalty definition will include the position which we are dealing with in all these cases all 4 categories of assessee's involved because the software has been licensed and not sold and if it has been used by Indian entity for a particular object, these cannot be treated as off-the-shelf.

With respect to the Copyright Act, the learned Additional Solicitor General relied upon Sections 2 a v , 19 3 , 30A, 52 1 ad , 58 and 65A of the Copyright Act to buttress the submission that in some of the cases before us, since the adaptation of software could be made, albeit for installation and use on a particular computer, copyright is parted with by the original owner.

He added that section 51 b of the Copyright Act makes it clear that when any person makes for sale or hire, or sells or lets for hire, or distributes, either for the purpose of trade or to such an extent as to affect prejudicially, the owner of the copyright, or imports into India, any infringing copies of the work, such importation into India without a license would amount to infringement of copyright.

Ltd 2. Ruling After considering the arguments of both the parties, the Supreme court ruling in favor of the taxpayer made the following observation: The machinery provision contained in Section of the Income Tax Act withholding tax provisions on payment to a non-resident is inextricably linked with the charging provision contained in Section 9, read with Section 4 of the Act. Such withholding tax provisions can only be made if the non-resident is liable to pay tax under the charging provision of Section 9, read with Section 4 of the Income Tax Act.

Reference was made to the judgment in GE Technology 3. Sample 3. Shrink-Wrap Software means licenses of generally commercially available off-the- shelf Software licensed pursuant to un - negotiated end - user license or subscription agreements , shrink - wrap , click -wrap licenses or other similar licenses.

Shrink-Wrap Software means the current shipping versions of software applications and utilities generally available " off the shelf " on a commercially reasonable basis. In , one of the earliest cases to validate click-wrap licenses was Groff v. The court stated,. Our Court … stated the general rule that a party who signs an instrument manifests his assent to it and cannot later complain that he did not read the instrument or that he did not understand its contents. Under these circumstances, he should not be heard to complain that he did not see, read, etc.

Then in , the Second Circuit Court of Appeals, which includes New York, clarified the definition of a click-wrap license in Specht v. Netscape Communications Corp:. A click-wrap license presents the user with a message on his or her computer screen, requiring that the user manifest his or her assent to the terms of the license agreement by clicking on an icon.