License Scope

It is important from the licensor’s perspective that the scope of application of the license is defined with care. The following issues should be considered:

• Is alteration or further development of the intellectual property rights allowed?

• Is sub-licensing allowed?

• Who exactly is being granted the right of use?

• What does the right of use comprise?

From the licensor’s perspective, it may, for instance, be quite unwelcome if the licensee would develop a potentially competing product based on the licensed product. If sublicensing is permitted, the terms and scope of the sublicenses should be considered. If the license only entails the right to use software, then it may be specified to apply only to installation on one computer.

From the licensee’s perspective, it is important that the license covers all such areas where the right of use is required. If, for instance, further development or sublicensing of licensed software is prohibited, this prevents use of the licensed intellectual property rights as a basis for new software for the licensee’s customers.

The scope of application of the license may be limited in the agreement to only grant each licensee the right of use within one business sector, for example, one licensee operating within the medical industry, and another in the food industry. The scope of application may be restricted even further, for example to include only one specified product or service.