A license is used to allow the author of a piece of software (intellectual property) to establish the rights of a user in terms of the copy of that software that contains the license. Unlike tangible goods, which are clearly limited in terms of what an owner can do with the product, digital goods are easy to make perfect copies. It is therefore important to establish limits. While the user may have purchased a digital copy, this does not imply freedom of use of that copy. The license will detail what the user is able to do (in terms of resell, number of machines the software can be applied, making modifications to the software etc.) The free software movement (also known as open source) has created a set of licenses that creates greater freedom of use of software, which is more appropriate for innovation among the hacker community.

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