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: Overbroad or unintended exclusivity can limit revenue opportunities or competitive positioning, increasing commercial risk.
Negotiation strategy
If you're the Licensor:
Ensure the geographic scope and field of use are clearly defined to protect your rights. Retain flexibility to grant additional licenses outside the defined scope.
If you're the Licensee:
Negotiate for exclusivity in key markets to secure competitive advantage. Ensure the terms align with your business objectives and allow for potential expansion.
Essential elements
1
Geographic Scope
Defines territory for use.
2
Field of Use
Specifies authorized application area.
3
Exclusivity
Grants exclusive rights within scope.
Action framework
ACCEPT
Propose edits if the scope is too broad or restrictive, ensuring alignment with strategic goals.
EDIT
Reject clauses that overly limit future licensing opportunities or are misaligned with business objectives.
ADD
Add clauses to define scope and exclusivity if missing, ensuring they support business strategy.
PRO TIP
Always ensure that exclusivity terms are balanced to protect both parties' interests while allowing for future growth.
Example clauses
FAVORABLE
Balanced Geographic Scope
"The Licensee is granted rights to use the licensed technology within the territory of [specified geographic area]. The Licensee shall not exploit the licensed technology outside the defined territory without prior written consent from the Licensor."
NEUTRAL
Standard Exclusivity Clause
"The Licensee shall have exclusive rights to the licensed technology within the specified territory and field of use. The Licensor retains the right to grant additional licenses outside the defined territory and field, provided such licenses do not infringe upon the Licensee's exclusive rights."
UNFAVORABLE
Overly Restrictive Exclusivity
"The Licensee shall have exclusive rights to the licensed technology in all territories and fields, with no exceptions."
Fallbacks
High-Growth Markets
In high-growth markets, ensure the geographic scope allows for rapid expansion and does not limit potential market entry.
Niche Applications
For niche applications, define the field of use narrowly to prevent unauthorized exploitation while allowing for specialized development.
Global Licensing
In global licensing deals, balance exclusivity with the need to grant additional rights in emerging markets to maximize revenue potential.
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