Proprietary software or closed source software is computer software licensed under exclusive legal right of the copyright holder with the intent that the licensee is given the right to use the software only under certain conditions, and restricted from other uses, such as modification, sharing, studying, redistribution, or reverse engineering.
Complementary terms include free software, licensed by the owner under more permissive terms, and public domain software, which is not subject to copyright and can be used for any purpose. Proponents of free and open source software use proprietary or non-free to describe software that is not free or open source.
According to Eric S. Raymond, in the Jargon File, "In the language of hackers and users" it is used pejoratively, with the meaning of "inferior" and "a product not conforming to open-systems standards".
Until the late 1960s computers—huge and expensive mainframe machines in specially air-conditioned computer rooms—were usually supplied on a lease rather than purchase basis. 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, under threat of Antitrust litigation, led an industry change by starting to charge separately for (mainframe) software and services, and ceasing to supply source code.
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. 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.
Free software licenses and open-source licenses use the same legal basis as proprietary software. Free software companies and projects are also joining into patent pools like the Patent Commons and the Open Invention Network.
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.
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.
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:
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. This scheme is often referred to as closed source.
By withholding source code, the software producer prevents the user from understanding how the software works and from changing how it works. 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, founder of the Free Software Foundation, says that proprietary software commonly contains "malicious features, such as spying on the users, restricting the users, back doors, and imposed upgrades." 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. Open source proponents pejoratively call this security through obscurity, and say that wide availability results in increased scrutiny of the source code, making open source software more secure.
While most proprietary software is closed-source, some vendors distribute the source code or otherwise make it available to customers. For example, users who have purchased a license for the Internet forum software vBulletin can modify the source for his or her own site but cannot redistribute it. This is true for many web applications, which must be in source code form when being run by a web server. 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. 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.
Proprietary software vendors can prohibit users from sharing the software with others. 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.
Proprietary software often stores some of its data in file formats which are incompatible with other software, and may also communicate using protocols which are incompatible. Such formats and protocols may be restricted as trade secrets or subject to patents.
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." The motivation for using a proprietary API can be vendor lock-in or because standard APIs do not support the device's functionality.
The European Commission, in its March 24, 2004 decision on Microsoft's business practices, 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:
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.
A dependency on the future versions and upgrades for a proprietary software package can create vendor lock-in, entrenching a monopoly position.
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.
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 have 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.
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. 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.
Proprietary software is not synonymous with commercial software, though the industry commonly confuses the term, as does the free software community. 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. 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.
Proprietary software that comes for no cost is called freeware.
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.
Proprietary software generally creates greater commercial activity over free software, especially in regard to market revenues.
Software distributions considered as proprietary may in fact incorporate a "mixed source" model including both free and non-free software in the same distribution. 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.
Some free software packages are also simultaneously available under proprietary terms. Examples include MySQL, Sendmail and ssh. Some trial version can be also described like this (for instance, Handy Backup - a tool for MySQL and Microsoft Exchange backup with 30-days trial). 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. Free software that depends on proprietary software is considered "trapped" by the Free Software Foundation. This includes software written only for Microsoft Windows, or software that could only run on Java, before it became free software.
In India, one and a half million laptops were pre-loaded with screen savers of political minister Mulayam Singh Yadav. The author of software developed for these laptops included a malicious feature that would "crash" the device if the laptop's owner attempted to change, remove, or modify this feature.
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