A number of the questions raise issues about the grant clause. That term is used to identify the “action” clause in the license – it is the clause that states what right are being granted to the licensee by the licensor. The grant clause identifies which of the rights of the intellectual property holder the licensee is being permitted to use without infringing the intellectual property rights of the owner. Think of it this way. I make a contract with a plumber to come in to my house and fix the sink in my bathroom. I arrange for my neighbor to open the door for the plumber. The plumber, without our contract, would be trespassing if he entered my house. Our contract permits him to enter my house and walk to the bathroom to fix the sink. If the plumber comes in to my house and goes into my living room, the plumber is trespassing. Why is it a trespass to go to my living room when it is not a trespass to go to my bathroom? Obviously because permission to come on to my property was limited to the area between the front door and the bathroom. If I license someone to make use of my software, and do not limit which of the rights of a copyright owner I am permitting my licensee to use, the licensee can make copies of the software, can incorporate my software in their own projects, can sell copies of my software, and can exercise any of the other powers of a copyright holder – not because they are the copyright holder, which they are not. They are a licensee and I have not identified which of my copyright rights I am licensing. Maybe I could persuade a court that the license was more limited, but that is a risk no sensible person (or good lawyer) would undertake. I probably am authorizing my licensee to copy my software to their computer’s hard drive and to employ the software in their work (or play). I probably am not authorizing them to make copies to distribute to their friends and I probably am not authorizing them to combine my code into their own code nor to alter my code. But if I want the license to be limited in that fashion, I must say so – in the grant clause.
Of course the problem that we saw in a number of cases is that the licensor and licensee may not foresee other possible uses of the intellectual property being licensed. What is preferable is to limit the license narrowly to the known uses to preclude a court, via “interpretation” from deciding that the unforeseen use was intended to be licensed, an understanding which would have to be derived from some general language in the grant clause. Of course that may not be negotiable and, as always in contract negotiations, in order to come to agreement, the parties may include nonspecific language. If you as an attorney draft such general language that both parties can agree upon, you need to advise your client about the possibility that the language may be used by a court to include in the license a use of the intellectual property which was not foreseen by either of the parties to the license. The problem of the unknowable future can arise in all contracting of course, But it is most difficult in long-term contracts, and licenses of intellectual property are most frequently long-term arrangements.
During class, I did make one other more particular statement about grant clauses – and that was based on the Microsoft/Apple license case. I said, and I believe this is good advice, do not depend upon other provisions in a license to be the basis for limiting the rights which are otherwise included in the grant clause. If the license is to be limited, those limits should be part of the description of what is granted – in the grant clause itself.
Professor Kalodner
