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© 2009-2017 Dana H. Shultz, Attorney at Law

Negotiating Software Licenses – What Really Counts

Photo of shaking hands, which symbolizes negotiating software license agreementsThis post addresses the most important issues that are raised in negotiating software licenses.

I will assume that parties have agreed on pricing. (Otherwise, there is no point negotiating license terms!) In addition, I will ignore the lengthy legal “boilerplate” that appears in most software license agreements.

Four Critical Issues in Negotiating Software Licenses

In my experience, there are four issues that must be examined closely, and often result in much discussion, when negotiating software licenses. (more…)

Which Open Source License Should We Choose?

Logo for the Open Source Initiative, which can help developers choose which open source license to useSoftware developers may have decided to provide open source software, but they may not know which open source license to use. This post describes three resources developers can consult to help make that decision.

First, Open Source Initiative maintains a comprehensive list of open source software licenses. Licenses are grouped into categories, starting with the most popular licenses. However, the OSI site does not provide any tools to help decide which open source license to use.

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How Can I Make Sure I Receive My Full Royalty?

Curled paper tape from a calculator

Intellectual property license agreements often include a provision by which the licensor is paid a royalty that is calculated as a percentage of the revenue received by the licensee from licensed products. Given that licensees have a financial incentive to reduce the amount of revenue that is reported*, the prudent licensor includes an audit provision in the license agreement.

The audit provision typically:

  • Specifies the frequency and nature of audits that may be conducted;
  • Provides that the licensee will pay any underpayment amount that is discovered plus interest; and
  • Obligates the licensor to pay for the audit unless the underpayment exceeds X% of the royalty that was due, in which case the licensee must reimburse the licensor for the cost of the audit.

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I’m One of Several Inventors – Who Owns the Patent?

A recently-acquired client is one of three inventors of a device that received a U.S. patent. She asked me whether she can freely license to an LLC owned by two of the inventors the right to manufacture products covered by the license. I replied “yes” – here’s why.

35 U.S.C. Section 262 says:

In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners.

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Don’t Use Social Media if You Have Something to Hide

Groupon logo

A client sells high-quality collectibles manufactured from authentic sports-related materials (game-used balls, uniforms, arena flooring, stadium seats, etc.). The company ensures that all materials are licensed by the applicable university or professional sports organizations so it can use the organizations’ names and trademarks in promotional activities. Some competitors do not pay for the required licenses, however – and one of these recently was caught as the result of a Groupon promotion.

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Does My New Employer Now Own My Software?

Quora logo

This post is adapted (with editing) from a Quora question that I answered. Q. I developed a software application on my own, then adapted it for my new employer, where it is used enterprise-wide.? What are my ownership rights in this situation?

A. It would help to know whether you signed any type of proprietary information and inventions agreement with your employer. If you did, its terms (obviously) will be of great importance. You did not mention any such agreement, so I will assume, for the purposes of the discussion below, that there is no such agreement.

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What is a Sublicense Agreement?

LinkedIn logo

This post is based on a LinkedIn question that I answered recently. Q. What is a sublicense agreement?

A. A license is an agreement by which the owner (the licensor) of something (in the case of the LinkedIn question, a trademark) grants, to someone else (the licensee), rights that are less that all of the rights to that thing. “Licensing 101“, and the download to which it refers, provide basic information about licensing.

A sublicense agreement is an agreement by which the licensee (as sublicensor) grants to someone else (as sublicensee) some of the licensee’s rights. If permitted by the original license agreement, there may be multiple tiers of sublicensees.

Dana H. Shultz, Attorney at Law  +1 510 547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

Autodesk Wins: Software License Restrictions Trump “First Sale” Doctrine

AutoCAD logo on software packaging

Update: On September 10, 2010, the Court of Appeals for the Ninth Circuit (in Vernor v. Autodesk) reversed the District Count decision discussed below. Supporting software licensors’ reasonable business expectations, the Court held “that a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.” [Emphasis added.] Accordingly, Vernor, as a licensee, was not protected by the first sale doctrine when he sold copies of Autodesk’s software.

* * *

In Vernor v. Autodesk, the U.S. District Court for the Western District of Washington told Autodesk that despite the restrictions in its license agreement, Autodesk could not preclude its customer from selling AutoCAD software to a third party.

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Eminent Domain: The U.S. Giveth, the U.S. Taketh

Photo of a hand grabbing money, symbolizing the US government's eminent domain powersA fundamental tenet of patent law is that the owner of a patent can preclude others from using or manufacturing inventions that the patent covers. Because of eminent domain, however, that there is a major loophole regarding the U.S. government.

Section 1498(a) of Title 28 of the U.S. Code says, in part:

“Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be action against the United States in the United States Court of Federal Claims for recovery of his reasonable and entire compensation for such use and manufacture.”

(Section 1498(b) provides similarly with respect to copyright infringement by the United States.) (more…)

Negotiation: When What You Hold Can Make the Other Guy Fold

A couple of years ago I had one of my greatest thrills as an attorney.

My client owns several patents covering ways to improve the efficiency of certain types of lasers. We had succeeded in licensing a large company for one field of use. We were trying to sign up another company for a second field of use.

All business and legal issues had been resolved when, at the last minute, the licensee’s General Counsel demanded that my client convey, in addition to the patent license, certain broadly-defined rights to my client’s know-how. We refused, explaining that know-how never was part of the discussion, and if my client ever was interested in conveying know-how, it would come at a price. The parties then reached final agreement without the know-how provision.

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