I ran into this issue again recently, and I think it’s worth sharing. So, I’m sharing.
Often licenses incorporate a provision like this:
Licensee acknowledges that licensor owns all right, title and interest in the software and data, and in all intellectual property rights therein.
This is another version you might see:
As between the licensee and the licensor, licensor owns all right, title and interest in the software and data, and in all intellectual property rights therein.
These might seem reasonable. After all, you (the licensee) don’t think you own that stuff. What’s the risk? The risk is that the licensor has a very expansive view of what the licensor owns.
Here’s a story that illustrates that potential problem. Any similarity between this cautionary tale and actual events is unintended; just like on Law and Order. However, just like in Law and Order, I’m not clever enough to make up a good story on my own so it’s pretty close to true.
Licensor is a vendor of templates for PowerPoint slides. Licensee used one of those templates. That template creates slides with purple backgrounds and black lettering. The relationship between licensee and licensor came to an end. Two weeks later, licensor learned that licensee was continuing to make PowerPoint slides with purple backgrounds and black lettering. The trouble begins.
Licensor calls licensee and reminds her of the provision in their contract that says:
Licensee acknowledges that licensor owns all right, title and interest in the Licensed Product and all intellectual property rights therein.
Referencing that provision, he tells her to stop making slides with purple backgrounds and black lettering. In an angry voice he says that (i) the purple background and black lettering template is in his product, (ii) she agreed that he owns that product and everything in it, so (iii) he is sole owner of the right to create PowerPoint slides with purple backgrounds and black lettering. Moreover, he says that his method of creating templates is unique and proprietary. He accuses her of using that method and thereby stealing his trade secrets.
She responds “You can’t possibly think you own the right to create PowerPoint slides with purple backgrounds and black lettering. Anybody can do that, and there’s no special method in your product.” To him, this sound like “You’re crazy if you believe that and you’re not as smart as you think you are.” Sadly, both are true.
The gas having been thrown on the fire, the crazy, not so smart licensor digs in for a fight. She will never pierce his delusions with logic or reason. She must now wage an expensive and time consuming battle.
Reasonable people can disagree. Reasonable people and crazy people can really, really disagree. The crazy people are out there. Some of them think they invented the laws of physics. I have met some because of this very issue. They are exhausting and sometimes not a little bit scary.
I know this seems implausible to many people, but please don’t think that no one would litigate over something so stupid.
So look out for this kind of thing, but take this type of statement from a licensor as a really big red flag:
I just don’t want you to come back and say that you own any part of my stuff.
Please share any similar experiences. The more frightening stories I can tell clients, the easier it will be to convince them this really is an issue.