Dreadful drafting of grant clause

cainIP Draughts and his colleagues have some standard training materials that they use for teaching the principles of contract drafting.  These materials include a slide that consists of a badly-drafted licence clause, on which they invite comments from the audience.  For example, IP Draughts will be using a version of the following slide when he presents some sessions at the forthcoming PraxisUnico Advanced Licensing course, to be held at the University of Loughborough in a couple of weeks’ time.

grant clause

Points for discussion in the above slide include:

  • “grants and conveys” – why?
  • “sole and exclusive” – why?
  • licence under which IP? Does this need to be stated?
  • list of permitted acts – appropriate?
  • have made + have supplied = sublicensing by the back door?
  • use of names Licensor and Licensee
  • other points that may need to be included somewhere in agreement, eg whether sub-licensing is allowed

Imagine our surprise last week, when we were sent a draft contract to review that included the following clause (text shortened and slightly edited below to make it manageable, but typos from original left in).  It seems to be life imitating art!

Licensor hereby grants and coveys unto Licensee a sole and exclusive license in [Territory] and non-exclusive license throughout the world except to [Territory], unrestricted, irrevocable, world-wide, unlimited, royalty free, fully paid up, assignable, transferable, enterprise wide, perpetual, right and license, with the right to sub-license as provided below, to Use the Software and Documentation for its current and future business operations.

IP Draughts is tempted to scrap his made-up text, and use only bona fide contract language that has been in real agreements, in future.


Filed under Contract drafting, Licensing

7 responses to “Dreadful drafting of grant clause

  1. Reblogged this on IP Draughts and commented:

    After a couple of weeks of navel-gazing, let’s get back to basics with this golden oldie! IP Draughts continues to think that software licensing is a cuckoo in the nest of IP licensing, not really part of the family but treated as a family member.

  2. Thanks, Barbara, interesting. Over time, I am stumbling towards a theory that software licensing isn’t really IP licensing at all. Often, there is no reference to any specific IP being licensed. Instead one could view software licensing clauses as a way of setting out the limits of what the purchaser can do with an intangible product that he has purchased, and the limits of any non-infringement warranties and indemnities that are included in the sale agreement. Interestingly, the draft Technology Transfer Block Exemption Regulation that is due to come in next year, and associated commentary from the European Commission, indicate that most software licensing should be analysed under the Vertical Agreement BER and not the Technology Transfer BER., which is consistent with my nascent theory.

    • Interesting. When you have your theory in more crystallised form, please do write it up so that those of us who think about these things have the benefit of your thoughts.

    • Is it not understood that only the real IP in a software is being licensed? For example, software can registered as copyright in Indian Copyright Act. Should there not be a presumption that only copyright license is being granted, despite clause drafter taking too much liberty with words?

      • Interesting thought. If the licensor owns other IP that “protects” the software, eg patents, database rights, rights in confidential information, would the licence not extend to this IP as well? And if there are defects in the licensor’s title to any of this IP, or if third parties own relevant IP, would this cause the licensor to be in breach of contract? Not stating what IP is being licensed seems to me to create legal uncertainties.

  3. The common difficulty is that anyone drafting a new licence without the aid of lawyers (and sometimes even a lawyer) will resort to copying some language they have seen before. After all it must be the words that do the magic. No ?
    More seriously I have noted that there is a misunderstanding about the difference of the positive right to do something ( both examples) and a normal patent licence where all you are saying is you won’t sue them under your patent. Then you may still find a zillion other patents that prevent you using the Technology or you may need know-how to get it to work. At least with the Software you might get something. Most amateur inventors think that they have power to permit use of their invention when they licence their patent, but they cannot promise the required freedom to use in today’s vastly over-patented world

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