If you are working on a license agreement, don’t forget to carefully define what is and is not included within the scope of the license. “Scope creep” has the potential to contaminate the parties’ understanding of what the license includes and to damage the parties’ relationship. License agreements almost always include provisions to protect the parties, to provide for indemnity, to define appropriate limitations of liability, to set the extent of any warranties, and to set rules and effects of termination, but the license provision itself often receives inadequate attention.
The parties should ask themselves and each other: What may the licensee do with the licensed product? What may the licensee not do? May only certain individuals associated with the licensee use the licensed product? Don’t be afraid to delve into details. If the license includes a product with an accompanying service, clearly define the product and the service (some products and services appear inseparable at first glance, but it is usually possible to differentiate them in some meaningful way). If the license is for software, may the licensee make copies of the software for its internal use? May the licensee run older versions of the software for legacy systems? May the licensee run the software in multiple virtual environments simultaneously? If the license is for a complete technology solution, will the licensee have access to the technology platform, or will the licensor deliver the solution to the client from a secure environment under its exclusive control?
License agreements that incompletely define the scope of the license may result in disagreement and even litigation between the parties at a later date. It is almost always a good idea to seek the advice of knowledgeable IP counsel when drafting or reviewing such documents.