What is the ISV Royalty Program?

The ISV Royalty Licensing Program offers a convenient way to license Microsoft products, integrate them into a software business application and then replicate the business solution and distribute a fully licensed solution to end users.

As an ISV, you can integrate Microsoft licensed products into your business solution by including one or more Microsoft licensed products along with the software for your unified solution and distributing the solution by either:

  • Copying it onto physical media, which is labelled and packaged as your unified solution.
  • Pre-installing it on a computer system for distribution as part of your unified solution.

License Type
The ISV Royalty Licensing Program offers perpetual licenses, which are everlasting and valid if the licensed product is being used in accordance with the license-agreement requirements. Microsoft licenses the products to the ISV, not the end user.

The ISV Royalty License and Distribution Agreement is 3year, non-renewable. At the end of your three-year agreement term, you must sign a new ISV Royalty License and Distribution Agreement to continue to participate in the program.

Licensing Offerings

The two types of use rights offered are:

  • ISV license. This default license type enables you to integrate Microsoft licensed products and for them to be licensed as part of your unified solution. This license also allows your end users to use the underlying Microsoft licensed products with other applications, as long as the Microsoft licensed products are still licensed for your application.

  • ISV run-time license. Some licensed products offered through the ISV Royalty Licensing Program are offered with additional restricted-use rights. In these cases, your end users:

      1. Can use these applications only with the unified solution with which they were acquired.
      2. Cannot use the Microsoft licensed products to run any other applications, to develop new applications, or in any other context independent of the unified solution with which the licenses were acquired.

Software Maintenance Options
End users can upgrade to future product versions by acquiring Embedded Maintenance for a fee. Only new product versions released during the Embedded Maintenance coverage period are included. Licenses must be enrolled in Embedded Maintenance during the same month the license is originally acquired. Coverage can be renewed annually during the agreement term.
Note: End users with licenses enrolled in Embedded Maintenance can obtain the upgrade software through the ISV. End users with licenses not enrolled in Embedded Maintenance who want to upgrade are required to acquire a new license.


Enrolling in the ISV Program
To enrol in the ISV Royalty Licensing Program, your organization must meet eligibility requirements <note: Not all conditions are listed below>:

  • Develop a unified solution. Develop a value-added unified solution that uses Microsoft licensed products and distribute the unified solution
  • Comply with the Microsoft license terms. Incorporate any applicable Microsoft license terms into the end user agreement for the unified solution.
  • Sign agreements. Complete the ISV Royalty License and Distribution Agreement, Microsoft Business and Services Agreement/Microsoft Business Agreement (MBSA/MBA), and credit application form (credit form required for direct agreements only).

After you have enrolled, the following are the key steps for participating in the ISV Royalty Licensing Program:

  • Integrate the Microsoft licensed products into your software application to create a unified solution.
  • Ensure that the required Microsoft license terms are provided to and agreed upon by your end users.
  • Sell and report on licenses for the unified solution distributed to your end users.
  • Abide by copyright, trademark, and antipiracy obligations.
  • Report monthly on software licenses.
  • Agree to participate in ISV Royalty Licensing Program audits.
  • Comply with export requirements.

Rules around How to Distribute
After Microsoft approves the ISV Royalty License and Distribution Agreement, you can begin distributing Microsoft licensed products as outlined in the agreement.

  • The ISV Royalty Licensing Program allows you to distribute Microsoft licensed products as part of a unified solution, not as stand-alone products.
  • You are not allowed to lease or rent or offer Microsoft licensed products as a service without a separate agreement with Microsoft…..that would be a SPLA
  • Integration of a Microsoft licensed product with your unified solution must include the entire product, not just a portion of the product. Based on the functionality of your unified solution, certain features might not be used (for example, development tools), but the entire Microsoft licensed product must be integrated.
  • Although you are allowed to create technically accurate documentation for the unified solution based on the information contained in the help files, the help files contained in the Microsoft licensed product may not be modified. This is to ensure that end users receive the complete Microsoft software package and a consistent end user experience, no matter where or from whom they acquire the software.
  • Microsoft does not allow any features to be disabled, so that end users receive fully functional licensed products. In addition, disabling certain features might affect other parts of a licensed product that would be detrimental to it. However, you may configure licensed products in accordance with their software documentation
  • If you would like to provide your unified solution as software services, you must sign a Microsoft Services Provider License Agreement – SPLA
  • The ISV Royalty Licensing Program allows for worldwide distribution of the unified solution, subject to the United States export laws and subject to certain agreement provisions. Because Microsoft does not control to whom you distribute the unified solution, you are required to have agreements with all third-party business entities to whom you directly provide the unified solution for direct or indirect distribution (and not for sublicense) to end users.


Note: The products that are currently offered with run-time use rights are Microsoft SQL Server, Microsoft BizTalk Server, and Microsoft Office Communications Server.

Note: Monthly reporting and payment of perpetual licenses are based on actual use from the previous month.

Note: Desktop operating systems, Server operating systems and Microsoft Online Services are not offered through the ISV Royalty Licensing Program.


1 Comment

  1. Hi Emma

    Thanks for your detailed explanation on Microsoft License this really Help. I am sure you will include some Additional details on ISV Inderect Model.

    Thanks again, I get a lot of assistance from your Aticles

    Kind Reagrds

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