Software License Agreement in Israel: Template, Key Clauses and Local Law (2026)

What a software license agreement does A software license agreement is the contract that lets someone use software they do not own. The owner keeps the copyright and grants the user a defined right to use the software, on set terms, for a price. It answers five questions: who may use it, on what, where, for how long, and what they may not do with it. This matters because software is almost never sold outright. It is licensed. The license is where ownership stays with the developer while the customer gets a controlled right to run the code. This is a general guide to Israeli law, not legal advice. See the note at the end. ## How Israeli law treats software In Israel, software is protected by copyright. The Copyright Act, 5768-2007 protects literary works, and computer programs are treated as literary works for copyright purposes. Protection arises automatically on creation; there is no registration system you must use to hold copyright in software. Two ownership rules from the Copyright Act shape every software deal: - Employees: where an employee creates a work in the course of employment, the employer is generally the first owner of the copyright, unless agreed otherwise.

• Commissioned works: where a work is commissioned, the default first owner is the author (the developer), not the commissioning customer, unless the parties agree otherwise. This is the opposite of what many buyers assume. So if a company pays an external developer to build software and wants to own it, the contract must assign the copyright in writing. Without that assignment, the customer may end up with only an implied license while the developer keeps the copyright. This single point causes more Israeli software disputes than almost any other. General contract rules, including the good-faith duty in the Contracts (General Part) Law, 5733-1973, apply to the license on top of copyright. ## License or assignment? Decide first - A license leaves copyright with the owner and grants a right to use. Most SaaS and off-the-shelf deals are licenses.
• An assignment transfers ownership. Bespoke development where the buyer wants to own the result needs a written assignment under the Copyright Act. Many contracts mix the two: the customer owns bespoke deliverables, while the developer keeps and licenses its pre-existing tools and libraries. Spell out which is which. ## Key clauses in an Israeli software license agreement ### 1. Grant and scope State exactly what is licensed, and whether the license is exclusive or non-exclusive, perpetual or term, worldwide or territorial, and whether it can be sublicensed or transferred. Define permitted users and uses. ### 2. Restrictions List what the licensee may not do: no reverse engineering (subject to any mandatory exceptions), no redistribution, no exceeding user or device counts. ### 3. Ownership and background IP Confirm the licensor keeps ownership of the software and any pre-existing IP. Where there is bespoke work, say clearly whether the customer gets an assignment (in writing, to satisfy the Copyright Act) or only a license. ### 4. Fees and payment Set the license fee model (one-off, subscription, per user, usage) and payment, late-payment, and tax terms. Israeli VAT applies to many software supplies; the standard VAT rate is 18 percent as of 2026, so handle tax expressly. ### 5. Maintenance, support, and updates Say whether support and updates are included, and on what service levels. ### 6. Warranties and disclaimers Warrant that the licensor has the right to license, and set performance warranties with clear disclaimers for the rest. ### 7. Indemnity for IP infringement The licensor commonly indemnifies the licensee against third-party claims that the software infringes copyright or other IP, with the usual control and cap terms. ### 8. Liability Cap and exclude liability as Israeli law permits. Some losses cannot be excluded, so keep the cap realistic. ### 9. Open-source components Disclose open-source elements and flow down their license terms, since some open-source licenses affect what the customer can do. ### 10. Term, termination, and effect Set the term, termination grounds, and what happens on termination (stop use, delete copies), plus any source-code escrow for critical systems. ### 11. Governing law and disputes Choose Israeli law and forum where appropriate. ## A simple structure you can reuse 1. Parties and definitions

2. License grant and scope
3. Restrictions
4. Ownership and background IP (and assignment, if any)
5. Fees, payment, and tax
6. Support, maintenance, and updates
7. Warranties and disclaimers
8. IP indemnity
9. Limitation of liability
10. Open-source disclosure
11. Confidentiality and data protection
12. Term and termination
13. Governing law and disputes
14. Schedules: the software, fees, service levels ## Common mistakes - Assuming the customer owns commissioned software by default. Under the Copyright Act 2007 the author is the default first owner of a commissioned work, so get a written assignment if ownership is the goal.

• Confusing a license with an assignment, so neither side is sure who owns what.
• Ignoring open-source components and their license conditions.
• Leaving VAT and the IP indemnity to chance. ## Keeping software licenses consistent as you sign more of them A software business signs the same license over and over, with different grant scopes, seat counts, support levels, and renewal dates, and the risk is the clause that drifted or the renewal nobody tracked. The work of drafting from a house template, checking that ownership and assignment language is right, spotting a non-standard liability cap, and keeping renewal dates in view can live in one AI contract workspace instead of scattered files. Adira is an AI legal operating system that drafts, reads, and tracks contracts in one place, tuned to how your company contracts and built on frontier AI; its deepest jurisdiction support today is India, with other jurisdictions including Israel on the roadmap, so confirm local-law depth before relying on it. ## Not legal advice This page is a general explanation of software license agreements under Israeli law in 2026. It is not legal advice. Ownership of commissioned code, the reach of the IP indemnity, and permitted liability caps depend on your facts, so take advice from a qualified Israeli lawyer before you sign.