Rights Grant

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Contents

Vocabulary

The Difference Between a Representation, Warranty, Covenant and Condition

Rights Grant

Examples:

Defective Grants

Licensor grants Licensee a license to its copyrighted computer program "Microsoft Word"

Licensor grants Licensee a license to use "Microsoft Word"

Licensor grants Licensee a license under patent #X,XXX,XXX

Licensor grants Licensee a license under Licensor's trademark "Microsoft"

Simple Software License

Licensor grants you and you accept the non-exclusive, non-transferable right to Use the Software in object code form only, on a single Computer. The term "Use" means storing, loading, installing, executing or displaying the Software. You may only make one copy of the object code of the Software solely for backup or archival purposes or when copying is an essential step in the authorized Use of the Software. ... Except to the extent permitted above, you may not: permit other individuals to use the Software; permit concurrent use of the Software; modify, translate, reverse engineer, decompile, disassemble, or create derivative works based on the Software; copy (including copying onto a bulletin board or similar system) the Software other than as specified above; rent, lease, grant a security interest in, or otherwise transfer rights to the Software except as set forth in "Transfer" below; or remove any proprietary notices or labels on the Software. If you are using the Software in any country in the European Community, the prohibition against modifying, translating, reverse engineering, decompiling, disassembling or creating derivative works based on the Software does not affect you rights under any legislation implementing the E.C. Council Directive on the Legal Protection of Computer Programs.

Longer Software License

2.1 Source Code. Company hereby grants to Licensee and its Subsidiaries a worldwide, nonexclusive, non-transferable license to execute, reproduce, display and prepare or have prepared Derivative Works based upon the Products in Source Code form; provided that: (a) such right and license is limited to Internal Distribution only and only for the Permitted Use; and (b) Section 6.8 and Section 13.4(d)(ii) govern the conditions and scope of Licensee's access to Source Code.

2.2 Object Code. Company hereby grants to Licensee and its Subsidiaries a worldwide, nonexclusive, non-transferable license to execute, reproduce, perform, display, prepare or have prepared Derivative Works based upon the Products, and to sublicense copies of the Products and Derivative Works based thereon, provided that: (a) such right and license is limited to Object Code distributed in connection with the Permitted Use; and (b) Licensee uses an end user license agreement which protects Company’s copyrights; prohibits decompilation and disassembly in connection with the distribution of Object Code under that license; and limits any liability of Company (through limitations on liability, disclaimers of warranty and all other appropriate means) in respect of claims by an end-user (whether directly or pursuant to the Indemnification Provisions of this Agreement) to the full extent permitted by applicable law.

2.3 Documentation. Company hereby grants Licensee and its Subsidiaries a worldwide, nonexclusive license to use, display, modify, reproduce and distribute the user Documentation and derivatives. Licensee will place an internationally recognized copyright notice on the work sufficient to protect the copyrighted material it contains.

2.4 Visual Displays. All grants of rights and licenses set forth in Sections 2.1, 2.2 and 2.3 with respect to Product include a grant of rights and licenses of the same scope in the Visual Display, to the extent that the Visual Display or Derivative Work thereof is embodied or implemented in, or created, performed or displayed by, the Object Code or Documentation of any Product, any portion of the foregoing, or any Derivative Work of the foregoing, alone or in combination with other Object Code or hardware.

2.5 Patents. All grants of rights and licenses set forth in this Sections 2.1, 2.2 and 2.3 with respect to Product include a grant of rights and licenses of the same scope in the Company's patents, if any, to the extent that the patents are performed by, the Object Code or Documentation of any Product, any portion of the foregoing, or any Derivative Work of the foregoing, alone or in combination with other Object Code or hardware.

Motivation/Strategy

Rights Required:

  1. Customer/End User
    1. Further Segregation by Class (e.g. ProCD)
  2. Reseller
  3. OEM/Use in other products
  4. Developer/Further develop for use in other product

Other issues which need to be addressed as part of the license

  1. Standing
  2. Obligation to exploit
  3. Interaction with other IP Doctrines such as patent exhaustion (see Patent Exhaustion)
  4. Warranty (covered in Representations, Warranties, Indemnification, Other Commercial Terms)

Product Approach vs. Specific Intellectual Property Rights Approach

Magic Words
IP Right Word from Statute Other Words Commonly Used
Patent makes, uses or sells, offers for sale, import, export (See Patent Act Section 271)
Copyright reproduce, to prepare derivative works based upon, to distribute, to perform, to display publicly (see Copyright Act Section 106) use
Trade Secret (not) misappropriate? use, disclose internally
Trademark use ? use, display

Example of "use" language: S.O.S. v. Payday

Example of confusion in copyright situation: Kennedy v. National Juvenile Detention Association, 187 F.3d 690 (7th Cir. 1999)

Intellectual Property Licensed

Cyrix v. Intel, 77 F.3d 1381 (Fed. Cir. 1996)

Nature of the Rights Granted

Creating derivative works

Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435 (9th Cir. 1994)

Changing Technology

Boosey & Hawkes Music Publishers Ltd. v. The Walt Disney Co., 145 F.3d 481 (2d Cir. 1998)

Random House v. Rosetta Books, 150 F. Supp. 2d (S.D.N.Y 2002), aff'd, 283 F.3d 490 (2d Cir. 2002)

See also New York Times Co. v. Tasini, 533 U.S. 483 (2001)

The Exclusivity, if any, of the Grant

In addition to the rights the Licensee gets, the Licensee is sometimes interests in what rights the Licensor retains. This is especially true in funded development (why should I pay to fund development if you are going to turn around and sell it to my competitor), but can also be true in other circumstances.

  1. Non-exclusive. The most common license grant is a non-exclusive license.
  2. Limited exclusivity. In some situations, especially in connection with grants under OEM or distribution agreements, grants need to be limited to correspond to fields of use or channels of distribution. The typical limitations would be time, geography and markets. Any limitation or exclusivity should be considered with a view to issues under antitrust laws, including antitrust laws in the EC, if distribution overseas is contemplated.

General Discussions of What is a License

Western Electric, Inc. v. Pacent Reproducer Corp., 42 F.2d 116 (2d Cir. 1930)

De Forest Radio Telephone & Telegraph Co. v. United States, 273 U.S. 236 (1927)

Discussion of Implied Licenses

Discussion of "Have Made" Rights

Geographic and Temporal Restrictions

  1. Field of Use
  2. Licensed Territory
  3. Term ("Perpetual", specific term)

Any Limitations

Conditions vs. Covenants

Sun Microsystems v. Microsoft, 188 F. 3d 1115 (9th Cir. 1999)

Other examples of License Grants

USE ONLY (NO MODIFICATION)

License Grant for Licensed Product. Conditional upon payment of the applicable License Fees under Section [ ] for the level of use, Supplier hereby grants to Customer and Customer Users a non-transferable, non-exclusive, limited license to use the Product, for Customer's Permitted Use only, on Customer Servers for the License Term, all as specified on the Product Schedule attached hereto as Exhibit A. The license granted herein is for Object Code only, and Customer may use the Product in Object Code form only. “Permitted Use” means use of the Product for the internal data processing needs of, and solely for the benefit of, the Customer and other companies which are its Subsidiaries (for as long as such companies remain Subsidiaries).

The Customer is authorized to make a reasonable number of copies of the Licensed Product for emergency backup or archival purposes, or when copying is an essential step in the normal use of the Product [within the numerical restrictions set forth in Section [ ]]. The Customer is authorized to make a reasonable number of electronic or paper copies of the Documentation for Customer's Permitted Use.

Except as expressly authorized herein, the Customer shall not: (i) copy the Product; (ii) distribute, disclose, market, rent, lease or transfer to any third party (i.e. other than a Customer User) any portion of the Product or Documentation, or use the Product or Documentation in any service bureau arrangement; (iii) use any third party licensed software products or modules provided by Supplier to the Customer under this Agreement independently from the Product; or (iv) modify, or create derivative works of, the Product. Customer shall ensure that the Product is not modified, translated, examined, tested, subjected to simulated input, decompiled, reverse engineered or disassembled (including software “disassembly” by attempted recreation of Source Code) in any manner, for any reason including but not limited to determining the mechanism, algorithms, processes or characteristics of the Product, provided that Customer may examine or test the Product only for authorized maintenance and error correction or otherwise solely as such access by Customer is required by applicable local law.

SOMEWHAT OPEN OEM GRANT

Subject to the terms and conditions of this Agreement, Supplier grants to Customer a non-exclusive, worldwide, perpetual license to the Supplier Product: (i) to use, reproduce and distribute the Supplier Product internally within Customer; (ii) if this license is identified in Exhibit A as including the right to Source Code, to create or have created Derivative Works by modifying the Source Code of the Supplier Product and to reproduce and distribute internally the Derivative Works in Source Code form or in Object Code form; (iii) to create or have created Derivative Works by modifying the Documentation of the Supplier Product and to reproduce and distribute internally such Derivative Works in any form; (iv) to distribute externally to End Users, either directly or through distributors, but only in bundled form with Customer’s products, copies in Object Code form only of the Supplier Product or Derivative Works and copies in any form of the Documentation or any Derivative Works of the Documentation, such distribution shall be in accordance with Customer's standard software distribution license agreement for a particular channel of distribution; (v) to exercise all rights to the Supplier Product with regard to pictorial, graphic or audio/visual works, including icons, screens, music and characters, that are created as a result of execution of any code or any Derivative Work thereof in accordance with the granted license; and (vi) to use development tools to produce Object Code that is identical to, or differs from, that produced by Supplier.

MORE RESTRICTIVE OEM GRANT

Subject to the terms and conditions of this Agreement, Supplier hereby grants and Customer hereby accepts, a nonexclusive and nontransferable license (i) to use and reproduce the Supplier Products (in executable, object code form only) on any tangible medium, provided that such reproduction occurs only at the location of Customer's principal office first set forth above unless an alternate location is otherwise specified in writing to Supplier; and (ii) to distribute Supplier Product copies, bundled and in conjunction with Customer's Product(s) only, to Distributors, Resellers and End Users, such distribution to be effected by sublicenses containing terms consistent with and no less restrictive than the terms hereof. The license granted to Customer hereunder specifically extends to Customer's use of the source code for the designated Supplier Products for purposes of software reproduction and incorporation into bundled application with Customer's products. Under no circumstances and notwithstanding any of the foregoing, may sublicenses granted by Customer include access to or use of Supplier's Product source codes. Customer is expressly prohibited from any marketing and/or distribution of Supplier Products unless each copy is bundled with Customer's Product(s). Customer and all Distributors and Resellers shall have the right to distribute the Supplier Products by license to End Users. Customer agrees not to modify, de-compile, reverse engineer, reverse compile, modify or perform any similar type of operation on any software or firmware acquired under this Agreement, in any fashion or for any purpose whatsoever, without the prior written consent of Supplier. Customer also agrees that any such works are Derivative Works and as such are the sole and exclusive property of Supplier or its licensor. Subject to the terms and conditions of this Agreement, Supplier hereby grants and Customer accepts a nonexclusive and nontransferable right and license to use and reproduce the Documentation, and to distribute the Documentation solely in conjunction with the Supplier Products. Such reproductions shall occur only at Customer's principal office first set forth above, unless an alternative location is otherwise specified in writing to Supplier. Such distribution may be to Distributors, Resellers and End Users. If all or any part of the Supplier Products or Updates delivered to Customer has been licensed to Supplier by a third party software supplier then, notwithstanding anything to the contrary contained in this Agreement, Customer is granted a sublicense to the third party software subject to the same terms and conditions as those contained in the Agreement between Supplier and such third party software supplier. In addition, Supplier reserves the right to substitute any third party software in the Supplier Products as long as the new third party software does not materially affect the functionality of the Supplier Products. Supplier represents that the current release of the Supplier Products contains no third party software which would require Customer to agree to any terms and conditions in addition to those set forth in this Agreement.

MULTIPLE CHOICE LICENSE

License Grant - Usage in General. You may use the Software, in the quantity and for the purposes set forth below, depending on the particular license you have acquired. Except as otherwise specifically set forth below, for each license acquired, we grant you and you accept the non-exclusive, non-transferable right to use the Software in object code form only, on a single Computer (provided that if you are the primary user of that Computer, you may also make a second copy of the Software for your exclusive use on either a home or portable Computer).

Evaluation License. If your Software is designated as an “Evaluation License”, we grant you and you accept the temporary, non-exclusive, non- transferable right to use one copy of the Software in object form only, solely for evaluation purposes, but not for general production use, during an evaluation period of sixty (60) days from the date the Software is first used by you.

Internal Use Source Code. If your Software is designated as a “Internal Use Source Code”, you may use the Software solely for the purpose of designing, developing, maintaining and testing your software application products for internal use only, meaning you may use the Software only within and for the benefit of your organization and you may modify the source code versions of the Sample Files, if any, included with the Software and redistribute such modified source code versions within your organization only. You may not redistribute outside your organization, in source code or object code form, the Software or any derivative work of the Software, and you may not use the Software to process information, or to generate output data, for the direct benefit of, or for purposes of rendering services to, any other business entities or organizations, such as is done by service bureaus, data processing organizations or similar organizations. (If you wish to do so, you must acquire a "Development License").

Development License. If your Software is designated as a “Development License”, you may use the Software solely for the purpose of designing, developing and testing your software application products which add significant functionality besides that provided by the Software. You may modify the source code versions of the Sample Files, if any, included with the Software and redistribute such modified source code versions in compiled, object code form only. You may also redistribute, as part of your application(s), files designated as “Redistributable Code.” The Sample Files and Redistributable Code files, if any, are identified in the LICENSE.TXT text file stored in the root directory on disk as well as in the License Information section of the online Help file. [You (a) may distribute the Sample Code and/or Redistributable Code only in conjunction with and as part of your application(s) and (b) may not use our name, logo or trademarks to market your application.] [or] [You (a) may distribute the Sample Code and/or Redistributable Code only in conjunction with and as part of your application(s), (b) may distribute your applications only to your end-users who are authorized licensees of the Software (both Server and Client licenses), (c) may not permit further redistribution of the Sample Code and/or Redistributable Code by your licensees, (d) must distribute your applications under a written agreement that prohibits reverse engineering, decompilation or disassembly of the applications(s) and requires your licensees of the applications(s) to abide by the conditions stated in this Agreement, (e) may not use our name, logo or trademarks to market your application, and (f) must include a valid copyright notice on your software application product.]

Server License; Simultaneous Use. If your Software is designated as a “Server License”, you must acquire one copy of the Software for each Server on which the Software is installed, but (unless the Software is designated as “Server License (Simultaneous Use)”), there is no limitation for the Server license on the Simultaneous Use by Clients. [(But each Computer which Uses the Software to accesses the Server must be separately licensed.)] If your Software for the Server is designated as “Server License (Simultaneous Use)”, in addition to the foregoing requirement, you are only authorized to permit the Simultaneous Use of such Server by the number of Clients for which you have purchased Simultaneous Use licenses.

License Grant - Additional Restrictions. You may only use the Software on any single Computer (provided that if you are the primary user of a (non-Server) Computer, you may also make a second copy of the (non-Server) Software for your exclusive use on either a home or portable Computer). You may only use the Software to access Servers on which the Software is installed if the use of the Software on such Server is properly licensed and complies with the conditions (including any Simultaneous Use restrictions) of such Server license. The restrictions in this paragraph do not apply to Software designated as an "Evaluation License”, “Server License” or "Development License”, but do apply to Software designated as "Internal Use Source Code" or otherwise undesignated.

Content. To the extent that the Software enables you to access (on-line or otherwise) materials not supplied by us ("Content"), you should be aware that such Content is the property of the applicable Content owner and may be protected by applicable copyright law. This License grants you no rights to Content.

Ownership. You acknowledge and agree that the Software is owned and copyrighted by us or our third party suppliers. Your license confers no title or ownership in the Software and is not a sale of any rights in the Software. All ownership rights remain in us or our third party suppliers, as the case may be.

Copies. You may only make one copy of the object code of the Software solely for backup or archival purposes or when copying is an essential step in the authorized use of the Software. You must reproduce all copyright and other proprietary or restricted rights notices in the original Software on all authorized copies. You may not copy any of the enclosed books or printed materials which are part of the Software.

Additional Restrictions. You acknowledge that the Software may contains software procedures or other mechanisms ("License Enforcement Mechanisms") that enforce use restrictions and that may disable functionality of the Software and prevent access to data using the Software at the end of any evaluation period or upon violation of the terms of this Agreement. Except to the extent permitted above, you may not: permit other individuals to use the Software; permit concurrent use of the Software; modify, translate, reverse engineer, decompile, disassemble, or create derivative works based on the Software; copy (including copying onto a bulletin board or similar system) the Software other than as specified above; rent, lease, grant a security interest in, or otherwise transfer rights to the Software; modify, disable, attempt to circumvent, or otherwise interfere with any License Enforcement Mechanisms (and you acknowledge that any attempt to do so may be a violation of applicable law) or remove any proprietary notices or labels on the Software. If you are using the Software in any country in the European Community, the prohibition against modifying, translating, reverse engineering, decompiling, disassembling or creating derivative works based on the Software does not affect your rights under any legislation implementing the E.C. Council Directive on the Legal Protection of Computer Programs.

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