Different licensing situations in software development - Part 1

In the previous post (perils of using unlicensed software), I had talked about some of the problems that occur when members of a team start using software that is not licensed. In this post, I will try to cover some of the different types of licensing that exist and the complications that arise due to each of them.
First of all, some basic explanation. What is a software license ? A software license is a legal document that bestows some rights on a person. All software has some sort of copyright protection, which means that if you do not use the software in the prescribed way, you are in violation of the agreement, and can be prosecuted for the same. For example, you could be buying a software in a concessional format that allows the usage of the software only for single person use, and you end up letting all the members of a group use the same software (and I have seen that happening, and there was no check in the software to prevent that from happening).
So, each software typically comes with a license. The license can either be in the form of proprietary licenses or free / open source licenses. These 2 different types of licenses have fundamental differences in terms of the rights that they give to the end user.
Most commercial software have proprietary licenses, which impose some sort of restriction on the end users. The restriction could be in several forms. If you consider the use of codecs such as those used in the media industry, there are stiff terms for the usage of such codecs. For example, when you use software used for the creation of DVD's / Blue Ray discs, then the payment for the usage of such codecs / software could be in the range of the hundreds of thousands of dollars, or many dollars per unit of the end software sold. Using such software would typically need management approval, and also clearance from the legal team as well (and typically, if you are using software from somebody else, then you should have some sort of legal help to ensure that you are not getting into any trouble).

Will write more about this in the next version of the article.