Scope of license: Overview, definition, and example
What is scope of license?
The scope of license refers to the specific rights and limitations granted by a licensing agreement. It outlines what the licensee (the person or business receiving the license) is allowed to do with the licensed material or property, such as using, reproducing, distributing, or modifying it. The scope can vary depending on the terms of the agreement, including factors like geographical location, duration, and the types of use permitted.
For example, if your business licenses software from a developer, the scope of license will define whether you can use the software on one computer or across multiple devices, whether it can be modified, or whether it can be sold to third parties.
Why is scope of license important?
The scope of license is important because it defines the extent of use allowed and helps prevent unauthorized use, reproduction, or distribution of the licensed property. Without a clear scope, the parties involved might face misunderstandings, legal issues, or disputes over what is allowed under the license.
For SMBs, understanding and clearly defining the scope of a license is critical to ensuring that you don’t overstep the boundaries of the agreement, protect intellectual property, and avoid potential infringement claims. It also helps businesses negotiate better terms when acquiring or granting licenses.
Understanding scope of license through an example
Imagine your small business licenses a design for a logo from a graphic designer. The license agreement specifies that you have the right to use the logo only for your website and marketing materials within the United States for two years. The scope of this license excludes the use of the logo on products or merchandise and limits its geographical use to the U.S.
In another example, your business may license software to be used across multiple workstations in your office. The scope of license might specify the number of devices you can install the software on, the version you can use, and whether you can distribute the software to other parties.
An example of scope of license in action
Here’s how the scope of license might be referenced in an agreement:
“The license granted under this agreement allows the licensee to use the software on up to 10 computers located within the United States for a period of 12 months. The license does not permit sublicensing, modification, or distribution of the software to third parties.”
Conclusion
The scope of license defines the specific rights and restrictions granted by a licensing agreement. For SMBs, clearly understanding and outlining the scope of license ensures that licensed property or intellectual assets are used appropriately and within legal boundaries. It protects both the licensor and licensee by minimizing the risk of misuse, misunderstandings, or legal disputes.
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.