An EULA specifies the terms under which end users may access and use software products. This playbook guides counsel through critical clauses on license scope, restrictions, warranties, and limitations of liability.
Why This Matters: Unclear ownership can lead to disputes over improvements or derivative works, undermining the value of the licensed IP.
Negotiation strategy
If you're the Licensor:
Ensure that all rights to the core IP and any improvements are retained. Clearly define the scope of the licensee's rights to prevent unauthorized use.
If you're the Licensee:
Negotiate for a non-exclusive, royalty-free license to use any new developments. Ensure the rights are sufficient for operational needs without overstepping licensor's ownership.
Essential elements
1
Ownership of Intellectual Property
Licensor retains all IP rights.
2
Improvements and Derivative Works
Licensee assigns improvements to Licensor.
3
Licensee's Rights to New Developments
Non-exclusive use of new developments.
Action framework
ACCEPT
Propose edits if the clause does not clearly allocate rights to improvements.
EDIT
Reject if the clause undermines core IP rights.
ADD
Add language to clarify ownership and rights allocation.
PRO TIP
Always ensure that the licensor's core IP rights are protected while allowing the licensee reasonable use.
Example clauses
FAVORABLE
Clear IP Ownership Clause
"The Licensor shall retain all rights, title, and interest in and to the Licensed IP, including any and all patents, copyrights, trademarks, trade secrets, and other intellectual property rights therein."
NEUTRAL
Basic IP Rights Allocation
"The Licensee acknowledges that it shall not acquire any rights, title, or interest in or to the Licensed IP except as expressly set forth in this Agreement."
UNFAVORABLE
Ambiguous IP Rights
"The Licensee may use the Licensed IP as needed, with no clear restrictions on improvements or derivative works."
Fallbacks
High-Risk Projects
In high-risk projects, ensure that all improvements are clearly assigned to the licensor to mitigate potential disputes.
Joint Development Agreements
In joint development, negotiate shared ownership or clear assignment of improvements to avoid future conflicts.
International Licensing
Consider jurisdictional differences in IP laws when drafting clauses for international agreements.
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