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Bernie Amarillo and the do’s and don’ts of software licensing

Bernie, Swiss entrepreneur, flies to Japan for the Rugby World Cup to watch Scotland vs Ireland. At the game he sits next to Sakura, CEO of Japan’s largest sports events company. Bernie pitches his award winning event simulation software “The Hit Maker”!

Sakura loves it! She wants the software. She takes out her standard software licence contract. Bernie signs it on the spot thinking Money and Making it Big in Japan.

Next day he wakes up with a thumping hangover, but in a good mood. He emails his lawyer the contract and tells him about his great deal. Bernie’s world crumbles as his lawyer advises that he has given Sakura a worldwide exclusive license to “The Hit Maker”, in perpetuity, for 1 million yen…

Bernie, what did you do?!?

By signing Sakura’s standard agreement, you granted:

  • an exclusive license (no one else can license it from you),
  • a worldwide licence (not limited to Japan)
  • in perpetuity – that means FOREVER
  • with the right to relabel and redevelop your software (Sakura can rebrand it and modify the source code)
  • right to freely sublicense
  • for only 1 million yen = 8.000 Euros!

Bernie you gave it all away for 8.000 Euros!!

Next time don’t sign Sakura’s standard contract and consider:

  • placing restrictions on how the licensee can use the software
  • making it non-exclusive OR defining carefully what the scope of exclusivity means
  • defining a territory for use e.g. Japan
  • only licensing the object code
  • defining more narrowly sub-licensing rights

But don’t worry, L&P will help and maybe you can still make it Big in Japan.

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