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Proprietary software, also known as non-free software, or closed-source software, is computer software for which the software's publisher or another person retains intellectual property rights—usually copyright of the source code,[1] but sometimes software patent rights.[2]


Until the late 1960s computers—large and expensive mainframe computers, machines in specially air-conditioned computer rooms—were usually leased to customers rather than sold.[3][4] Service and all software available were usually supplied by manufacturers without separate charge at the time. Computer vendors usually provided the source code for installed software to customers. Customers who developed software often made it available to others without charge.[5] Closed source means computer programs whose source code is not published except to licensees. It is available to be edited only by the organization that developed it and those licensed to use the software.

In 1969, IBM, which had antitrust lawsuits pending against it, led an industry change by starting to charge separately for mainframe software and services,[6][7] by unbundling hardware and software.[8]

Bill Gates' "Open Letter to Hobbyists" in 1976 decried computer hobbyists' rampant copyright infringement of software, particularly Microsoft's Altair BASIC interpreter, and reminded his audience that their theft from programmers hindered his ability to produce quality software.[9] According to Brewster Kahle the legal characteristic of software changed also due to the U.S. Copyright Act of 1976.[10]

Starting in February 1983, IBM adopted an "object-code-only" model for a growing list of their software and stopped shipping much of the source code, even to licensees.[11][12] In August 1983, binary software became copyrightable in the United States as well by the Apple vs. Franklin law decision,[13] before which only source code was copyrightable.[14] Additionally, the growing availability of millions of computers based on the same microprocessor architecture created for the first time an unfragmented and big enough market for binary distributed software.[14]


  1. Saraswati Experts. "COMPUTER SCIENCE WITH C++", Saraswati House Pvt Ltd, pp. 1.27. Retrieved on 29 June 2017. 
  2. AUUG, Inc.. "AUUGN", AUUG, Inc., March 2003, p. 51. Retrieved on 29 June 2017. 
  3. Ceruzzi, Paul E.. "A History of Modern Computing", MIT Press, p. 128. “Although IBM agreed to sell its machines as part of a Consent Decree effective January 1956, leasing continued to be its preferred way of doing business.then everyone started fighting” 
  4. The History of Equipment Leasing. Lease Genie. Archived from the original on April 11, 2008. Retrieved on November 12, 2010. “In the 1960s, IBM and Xerox recognized that substantial sums could be made from the financing of their equipment. The leasing of computer and office equipment that occurred then was a significant contribution to leasings [sic] growth, since many companies were exposed to equipment leasing for the first time when they leased such equipment.”
  5. Overview of the GNU System. Free Software Foundation (2016-06-16). Retrieved on 2017-05-01.
  6. Pugh, Emerson W.. "Origins of Software Bundling", IEEE Annals of the History of Computing, 2002, pp. 57–58. 
  7. Hamilton, Thomas W.. "IBM's Unbundling Decision: Consequences for Users and the Industry", Programming Sciences Corporation, 1969. 
  8. IBM (n.d.). Chronological History of IBM: 1960s. “Rather than offer hardware, services and software exclusively in packages, marketers 'unbundled' the components and offered them for sale individually. Unbundling gave birth to the multibillion-dollar software and services industries, of which IBM is today a world leader.”
  9. Gates, Bill (February 3, 1976). An Open Letter to Hobbyists.
  10. Robert X. Cringely's interview with Brewster Kahle, 46th minute
  11. Bryan Cantrill (2014-09-17). Corporate Open Source Anti-patterns (video). Retrieved on 2015-12-26. “[at 3:15]
  12. Gallant, John (1985-03-18). IBM policy draws fire - Users say source code rules hamper change. Computerworld. Retrieved on 2015-12-27. “While IBM's policy of withholding source code for selected software products has already marked its second anniversary, users are only now beginning to cope with the impact of that decision. But whether or not the advent of object-code-only products has affected their day-to-day DP operations, some users remain angry about IBM's decision. Announced in February 1983, IBM's object-code-only policy has been applied to a growing list of Big Blue system software products
  13. Impact of Apple vs. Franklin Decision
  14. 14.0 14.1 Landley, Rob (2009-05-23). 23-05-2009. Retrieved on 2015-12-02. “So if open source used to be the norm back in the 1960s and 70s, how did this _change_? Where did proprietary software come from, and when, and how? How did Richard Stallman's little utopia at the MIT AI lab crumble and force him out into the wilderness to try to rebuild it? Two things changed in the early 80s: the exponentially growing installed base of microcomputer hardware reached critical mass around 1980, and a legal decision altered copyright law to cover binaries in 1983. Increasing volume: The microprocessor creates millions of identical computers

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