Limited license: Overview, definition, and example
What is a limited license?
A limited license is a type of license that grants the licensee specific rights to use intellectual property or assets, but with restrictions on the scope, duration, or manner of use. Unlike an exclusive license, which may grant broader or even exclusive rights, a limited license is typically narrower in scope and may apply only under certain conditions. These limitations can include constraints on geography, time period, specific use cases, or the transferability of rights.
Limited licenses are commonly used in the context of intellectual property, such as patents, trademarks, copyrights, and software, where the owner of the intellectual property allows another party to use it under defined conditions, while retaining certain rights or control.
Why is a limited license important?
A limited license is important because it allows the licensor to maintain control over their intellectual property while providing the licensee with the right to use it for a specific purpose or within certain boundaries. This type of license can help protect the licensor’s interests, limit exposure to liability, and prevent misuse of their intellectual property, while still enabling the licensee to benefit from the use of the asset.
For businesses, a limited license provides a way to monetize intellectual property without fully transferring ownership. It also offers flexibility in negotiations, allowing licensors to tailor the terms based on their specific goals. For licensees, a limited license grants access to valuable resources or technology while keeping the costs and responsibilities manageable.
Understanding a limited license through an example
Imagine a software company that owns a program and wants to allow another company to use it for internal purposes, but not for resale or distribution. The software company grants a limited license to the other company, allowing them to use the software for one year, within a specific geographic region, and only for certain business operations. After the year, the license expires, and the company must seek a renewal if they want to continue using the software.
In another example, a publishing company may grant a limited license to an author to use a portion of a copyrighted book in a new work, but restrict the use to only a certain number of copies and for a limited time period. This ensures that the author does not exploit the original work beyond the specified terms.
Example of a limited license clause
Here’s how a limited license clause might appear in a contract or agreement:
"The Licensor grants the Licensee a non-exclusive, non-transferable, limited license to use the Licensed Material solely for [specific purpose], within the [specified region], for a period of [X] years, beginning on the date of this Agreement. The Licensee shall not modify, distribute, sublicense, or use the Licensed Material for any other purpose without the prior written consent of the Licensor. Upon expiration or termination of this license, the Licensee shall immediately cease all use of the Licensed Material and return or destroy any copies in their possession."
Conclusion
A limited license is a versatile tool that allows licensors to provide access to their intellectual property or assets under controlled conditions. By specifying the limitations of the license, licensors can protect their rights and manage the use of their assets, while still enabling others to benefit from them.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.