Until the late 1960s computers—large and expensive 

mainframe computers, machines in specially

air-conditioned computer rooms—were usually leased to customers rather than sold.[4][5] Service and
all software available were usually supplied by manufacturers without separate charge until 1969.
Computer vendors usually provided the source code for installed software to customers. [citation
needed]
 Customers who developed software often made it available to others without charge. [6] Closed
source means computer programs whose source code is not published except to licensees. It is
available to be edited only by the organization that developed it and those licensed to use the
software.
In 1969, IBM, which had antitrust lawsuits pending against it, led an industry change by starting to
charge separately for mainframe software[7][8] and services, by unbundling hardware and software. [9]
Bill Gates' "Open Letter to Hobbyists" in 1976 decried computer hobbyists' rampant copyright
infringement of software, particularly Microsoft's Altair BASIC interpreter, and asserted that their
unauthorized use hindered his ability to produce quality software. But the legal status of software
copyright, especially for object code, was not clear until the 1983 appeals court ruling in Apple
Computer, Inc. v. Franklin Computer Corp.[10][11][12]
According to Brewster Kahle the legal characteristic of software changed also due to the
U.S. Copyright Act of 1976.[13]
Starting in February 1983 IBM adopted an "object-code-only" model for a growing list of their
software and stopped shipping much of the source code, [14][15] even to licensees.
In 1983, binary software became copyrightable in the United States as well by the Apple vs.
Franklin law decision,[16] before which only source code was copyrightable. [17] Additionally, the
growing availability of millions of computers based on the same microprocessor architecture created
for the first time an unfragmented and big enough market for binary distributed software. [17]

Legal basis[edit]
Further information: Software law, Software copyright, Software patent, and End-user license
agreement
Most of the software is covered by copyright which, along with contract law, patents, and trade
secrets, provides legal basis for its owner to establish exclusive rights. [18]
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 on screen (clickwrap), or by opening the
box containing the software (shrink wrap licensing). License agreements are usually not negotiable.
[19]
 Software patents grant exclusive rights to algorithms, software features, or other patentable
subject matter, with coverage varying by jurisdiction. Vendors sometimes grant patent rights to the
user in the license agreement.[20] The source code for a piece of software is routinely handled as
a trade secret.[21] Occasionally, software is made available with fewer restrictions on licensing or
source-code access; such software is known as "free" or "open-source."[22]

Limitations[edit]
Since license agreements do not override applicable copyright law or contract law, provisions in
conflict with applicable law are not enforceable.[23] Some software is specifically licensed and not
sold, in order to avoid limitations of copyright such as the first-sale doctrine.[24]

Exclusive rights[edit]
The owner of proprietary software exercises certain exclusive rights over the software. The owner
can restrict use, inspection of source code, modification of source code, and redistribution.
Use of the software[edit]
Further information: Copy protection, Damaged good, and Price discrimination
Vendors typically limit the number of computers on which software can be used, and prohibit the
user from installing the software on extra computers. [citation needed] 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 to three devices in one household.
 Windows XP can be installed on one computer, and limits the number of network file sha