Licensing II
Volume Number: 9
Issue Number: 1
Column Tag: Legal eagles
Issues in Licensing or 
Assigning Computer Programs
Your program and the law, Part II.
By Patricia Mayer, Culver City, California
About the author
Patricia Mayer is an attorney practicing entertianment and intellectual property
law in Los Angeles. You can reach her care of Xplain Corporation.
I. INTRODUCTION
Welcome to the second, albeit belated, installment of "Your Program and the
Law". As promised, I will discuss some things to be aware of if you license your
program.
This article is not intended to be all-inclusive or the last word on intellectual
property licenses, neither is it intended to teach you to write your own license
agreement. However, I hope that when a company hands you their form license
agreement, this article will help you spot some of the issues (or at least help you to
talk to your lawyer in an intelligent fashion). Obviously, I recommend that you get a
lawyer who specializes in computer program licenses to look at any license agreement
you enter into. It will be money well spent.
In this article I deal with three types of license agreements: (1) an agreement
whereby I license the right to distribute your program, (2) an agreement whereby I
license the right to use your program in my business, and (3) an agreement whereby I
license the right to make a new program based on your existing program.
II. EXCLUSIVITY
You and I may enter into an agreement whereby you grant me the sole and
exclusive rights in your program. That would make sense if the type of contract we
are entering into allows me to distribute your program to wholesalers throughout the
U.S.
Remember, entering into an exclusive arrangement means that you cannot
re-license your program just because you feel that I didn't pay you enough money. In
an exclusive license you can't change or add partners after the dance begins. A
non-exclusive license would also be appropriate if I wanted to use your technology in
my business.
If I just want to use your program as part of a bigger program I am making (i.e.,
I want to make a derivative work based on your program), you probably do not need to
grant me exclusive rights. Indeed, you will want to license your program to various
companies who will adapt it to their own needs.
III. TYPE OF LICENSE (I.E., WHAT THE PERSON YOU ARE LICENSING TO
CAN DO)
There are all sorts of reasons I may want to license a program from you. My
reasons could be as simple as wanting to use it in my office on my computer (at which
point we probably do not need a written contract at all), or as complicated as wanting
to distribute your program to wholesalers around the world, or as specific as wanting
to translate your program for use in my operating system, or as unusual as wanting to
base a television show on your computer game. The structure of our contract will
depend on the rights I want from you.
You should think very carefully about what I will be doing with your software.
Ask me lots of questions: If I say I just want to use your program on the computers in
my office, ask how many computers I have. If I have a main-frame or a work-station
set up, ask me how many people will be using the program. Make sure you only grant
me the right to use the program on a certain number of computers or that you get paid
on a per-computer or per-user basis. If I say I want to adapt your program to fit the
needs of my company, ask me whether I will be selling the adaptation.
The key to this part of the negotiation is that you should try to limit what you are
granting me. Don't grant me any more than I am paying you for. The only way to make
sure that you don't grant me too much is to look very carefully at the language of our
license agreement. If all I want to do is to manufacture and distribute copies of your
program to wholesalers, don't grant me rights to "use" your program, certainly don't
let me change it, just let me "manufacture and distribute" your program. If all I want
to do is adapt your program for use by the employees in my business, only grant me
the right to make a single "derivative work based on the program" and do not grant me
the right to distribute that work. You may want to limit my use of your program to a
Referenced by (2):