Derivatives and License Back

Table of Contents:

• License to Make Derivatives

• License Back to Use Derivatives

Derivatives and License Back

License to Make Derivatives

Software license agreements may expressly allow a licensee to create so-called “derivatives” of the licensed software, which can include modifications or improvements of the original code such as new functions and features.

In the following exemplar, the software licensor owns any such derivatives:

Exemplar C25-1

Contractor and its suppliers shall retain all rights, title, and interest in the Licensed Software. Contractor shall retain all right, title, and interest in all modifications and derivative works thereof made by or for Customer during the term of this Agreement.  Customer shall not take any action inconsistent with such title and ownership. Customer shall not have any ownership interest in any element, segment, or component of the Licensed Software incorporated into the Licensed Customer Products.

In the following exemplar, the licensee is prohibited from modifying the licensed software in a manner that would subject the licensor’s original software to problematic terms and conditions of “copyleft” licenses such as the General Public License:

Exemplar C25-2

Licensee shall own all right, title and interest in any derivative works to the Software made by Licensee in accordance with this Agreement, subject to Licensor’s ownership of the underlying Software and the restrictions contained herein. Licensee will not create any derivative works or take any other action that could expose Licensee to obligations that would conflict with Licensee's obligations hereunder, such as for example, combining the Software with code licensed under the General Public License ("GPL") or a similar license.

For a full discussion on contract terms applicable to copyleft licenses, please see the section entitled “Open Source Code”.

License to Make Derivatives

Alternatively, the software owner may permit the licensee to own any derivates created by the licensee, subject to the licensee granting back to the owner a broad and royalty-free license to use the derivatives:

Exemplar C25-3

Licensee agrees to grant to Contractor an unrestricted, royalty-free license to use, copy, modify and distribute such changes and/or modifications and to own any changes or modifications that Contractor either makes or has made to the changes and/or modifications without accounting or payment to Licensee or any other party.

In the following exemplars, the grant-back license is justified as a means to enhance the owner’s ability to support and maintain such derivatives:

Exemplar C25-4

Customer shall own the Derivatives created by Customer pursuant to this Agreement, subject to Licensor’s underlying ownership rights in and to the Software. Customer acknowledges that it is in the best interests of Customer and Licensor for the Software to be as bug-free as possible, and for improved Updates of the Software to be available to Customer. Accordingly, without prejudice to any rights of Licensor in and to the Software, Customer hereby grants to Licensor a non-exclusive, royalty-free, perpetual, irrevocable, worldwide license to use, reproduce, have reproduced, display, perform, transmit, license, import, export, rent, lease, distribute through multiple tiers of distribution, modify and create or have created derivative works based on, such Derivatives of the Software, in whatever form, and to grant sublicenses of the foregoing to third parties. Upon Licensor’s written request, Customer shall provide Licensor with the source code of the Derivatives.

Exemplar C25-5

Licensee acknowledges that it is in the best interests of Licensee and Supplier for the License Code to be as bug-free as possible, for Supplier to be able to confirm that Licensee’s object code releases of the Licensed Code conform to the restrictions of this license, and for improved updates of the Supplier to be available to Licensee and other developers of Supplier. Licensee therefore grants to Supplier the following sublicenseable rights to its enhancements to the Supplier. In the event that Licensee develops an update or modification to the Licensed Code or other Supplier (the “Enhancement”), including, but not limited to, in or as a Licensed Work, Licensee will promptly disclose and deliver the Enhancement to Supplier, including but not limited to Source Code, and Licensee hereby grants to Supplier a non-exclusive, worldwide, royalty-free, perpetual, irrevocable, and sublicenseable (with the authority to authorize the granting of sublicenses) license to implement such Enhancement in or with any Supplier product or technology.