Proprietary software

Proprietary software is software distributed under licensing terms that reserve some rights—commonly the rights to modify, copy, or redistribute the program—to its owner or another rights holder. IBM describes proprietary or closed-source software as software for which the copyright holder controls whether users may edit, enhance, or redistribute the product beyond the permissions stated in its license.

The term describes a licensing and control model rather than a price category. The GNU Project's Free Software Definition explicitly states that free software can be commercial, so commercial software and proprietary software are not interchangeable terms.

Definition and licensing

A proprietary software license specifies the permissions granted to a recipient while leaving other rights with the publisher or copyright holder. IBM's policy description of closed-source software states that the publisher reserves licensing rights concerning use, modification, or sharing. The exact permissions therefore depend on the product's license or contract rather than on the label alone.

Proprietary software is commonly contrasted with open-source software. The Open Source Initiative states that open source requires more than access to source code: distribution terms must permit free redistribution, provide source code, allow derived works, and satisfy additional criteria in the Open Source Definition. A license that withholds those permissions does not meet that definition even when users can view some source code.

The practical effect of a proprietary license is that activities outside the granted permissions require authorization from the rights holder. Product-specific terms vary, so the applicable license remains the controlling document for a particular program.

Relation to free and open-source software

The GNU Project defines free software by four user freedoms: running the program, studying and changing it in source-code form, redistributing copies, and distributing modified versions. In GNU's terminology, software that does not provide those freedoms is nonfree or proprietary software. This is an explicitly stated position of the GNU Project and Free Software Foundation rather than a neutral judgment about every individual product.

Open-source terminology uses a license-based definition maintained by the Open Source Initiative. Its criteria include redistribution rights, access to source code, permission to create derived works, and nondiscrimination among people, groups, or fields of endeavor. IBM similarly describes open-source software as software that users may use, examine, alter, and redistribute, in contrast with proprietary software whose owner sets narrower permissions.

The categories do not determine whether software is developed by a business or supported for a fee. GNU notes that free software may be developed and distributed commercially, and IBM notes that open-source products can still involve costs for integration, support, and related services. The distinction is therefore based primarily on the permissions in the license, not simply on whether money changes hands.

Advantages and limitations

A proprietary model gives the rights holder centralized control over authorized modification and redistribution. The existence and scope of maintenance, warranties, updates, or technical support depend on the particular contract; IBM directs customers to the relevant product license or agreement for specific support terms.

The same concentration of rights limits what recipients may do independently. When a license does not grant modification or redistribution rights, users cannot exercise those rights merely because they possess a copy of the program. By comparison, the Open Source Definition requires licenses to permit redistribution and derived works, while GNU's free-software definition requires the ability to study, change, and share the program.

Neither proprietary nor open-source status by itself establishes a program's quality, security, cost, or suitability for a particular use. Licensing terminology identifies the permissions and restrictions attached to the software; evaluation of an individual product also depends on its design, maintenance, documentation, and service arrangements.

Intellectual property and distribution

Proprietary licensing operates within broader intellectual-property law. WIPO reports that the software industry has used trade-secret, copyright, and patent protection, with the scope and importance of those mechanisms varying over time and across jurisdictions.

In the United States, the Copyright Office states that copyright protection for a computer program covers copyrightable expression embodied in the program, but not functional aspects such as algorithms, functions, logic, systems, or methods. Copyright protection and software licensing are related but distinct: copyright law supplies exclusive rights, while a license grants specified permissions under terms set by the rights holder.

Distribution rules consequently depend on both applicable law and the license attached to the program. Open-source licenses must satisfy the Open Source Definition's redistribution and source-code requirements, whereas proprietary licenses may reserve redistribution or modification rights. Reading the license is necessary to determine the permissions attached to a particular copy.