When Do You Need a License?

In this 2011 post and this 2009 post I explored using license-granting language instead of language of discretion. Here’s what MSCD says about this:

Granting language is analogous to language of discretion. Consider [1-4], [1-4a], and [1-4b]. They all convey the same meaning, but granting language using the noun license, as in [1-4], offers two advantages.

First, license-granting language makes it clear that discretion is being accorded with respect to something that the licensor controls.

And second, using the concept of a license allows you also to use, as necessary, the concept of a sublicense. Articulating the notion of A to B to C using language of discretion would be trickier and wordier.

Instead of the granting language in [1-4] you could use the verb license, as in [1-4c], to grant discretion. But using granting language plus the noun license allows the drafter to add adjectives as necessary: nonexclusive, irrevocable, perpetual, and so on. That’s simpler than using adverbs to modify the verb license.

So I’m fine with that. But just because you can use granting language doesn’t mean you should: in what contexts does granting language make sense?

Consider for example the following from a contract in which Acme is agreeing to provide services to the Customer relating to Equipment that Acme sold the Customer:

The Customer hereby grants Acme a perpetual, nonexclusive, and irrevocable license to gather and use data on performance and output of the Covered Equipment …

Why not simply say Acme may use?

I’ll be deeply skeptical if you tell me it has something to do with remedies. We’re not in a magic-words world, where you have to use the word license to magically unlock benefits.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.