The following list provides definitions of words and phrases commonly found in Licensing Agreements. Last updated May 2008.
Acceptance: The formal, voluntary act of agreeing to an offer, which leads to creating a legally binding agreement. See also “Agreement,” below.
Affirmative Defense: In a lawsuit, a denial, answer, or plea that opposes the plaintiff’s case and request for damages, and which offers new evidence that, if true, would defeat the plaintiff’s request for damages. See “Fair Use,” below.
Agreement: A legally binding understanding and concurrence between two parties that often is memorialized in a written contract. In the licensing context, this term may be capitalized (i.e. “Agreement”), in which case it refers to the contract (along with any appendices, amendments, or exhibits) that codifies the parties’ understanding about access to and use of the digital information resources. Compare “Contract,” below.
Arbitration Clause: A clause in a licensing contract that calls for the parties to resolve contract disputes by hiring a neutral third party to create a binding resolution, often in lieu of litigation. An arbitration clause typically is considered a material contract clause. Some institutional parties cannot sign contracts that include arbitration clauses because they may violate the institution’s business or legal policy. See also “Material.”
Article 2: See “Uniform Commercial Code,” below.
Authorized Use: See “Use,” below.
Authorized User: See “User,” below.
Battle of the Forms: A conflict between the terms of standard form contracts that a buyer and seller exchange during a contract negotiation. A “battle of the forms” issue violates contract law’s “mirror image rule,” which holds that an acceptance is valid only where it matches exactly with the offer’s terms. Battle of the forms issues may arise in database license contracts if the contract is governed by Article 2 of the Uniform Commercial Code. See “Uniform Commercial Code,” below.
Breach: The breaking of a promise or a failure to perform an obligation under an agreement.
- Material breach: A breach that destroys the contract’s value, excuses an aggrieved party’s further performance under the contract, and gives the aggrieved party a cause of action for breach of contract.
- Minor breach: A breach that technically violates a contract term or condition, but does not destroy the contract’s value. A minor breach can be rectified by if the breaching party cures the breach within a reasonable period of time.
Choice of Law: See “Conflict of Law,” below.
“Click-wrap” Agreement or License: A contractual agreement that a user views online and agrees to (by clicking an online prompt that indicates the user’s consent to the agreement’s terms) as a condition of using or accessing the database or licensed resources. Several court decisions have concluded that click-wrap licenses are legal and fully enforceable where a user has an opportunity to review the license prior to using the database service, or installing any applicable software.
A click-wrap agreement may include terms or conditions that conflict with the terms and conditions of a negotiated license, thereby creating separate, individual contracts between the database provider and individual users. Compare “Shrinkwrap Agreement.”
Concurrent Users: See “User,” below.
Conflict of Law: Judicial decisions that determine where a case should be adjudicated, often based upon which jurisdiction has the most significant relationship to the transaction. Conflict of law principles may call for a contract dispute to be decided in a place other than a place within the jurisdiction the parties have fixed in the contract. Compare, “Jurisdiction,” below.
Confidentiality: The state of treating information as private and not for distribution beyond a mutually agreeable scope, or the agreement not to use such information other than for specifically identified purposes. Confidentiality typically is codified and enforced through a confidentiality agreement, or non-disclosure agreement. See also “Non-Disclosure Agreement,” below.
Contract: The writing (including any appendices, amendments, or exhibits) that details the terms and conditions of a formal, legally binding agreement between two or more parties. Compare “Agreement,” above.
Copyright: A federal legal regime that grants for a limited time exclusive rights to authors of original, creative works fixed in a tangible medium of expression, and provides exceptions to those exclusive rights under certain circumstances. In the United States, the current federal law is the Copyright Act of 1976, which is codified at Title 17 of the United States Code. (17 U.S.C. § 101, et seq.).
- Copyright infringement: See “Infringement,” below.
Coursepacks (also “Course packs”): Bound copies of materials that instructors assemble for student use, usually in lieu of or in addition to a text book. Coursepacks materials often are protected by copyright.
Damages: Monetary compensation for a legal wrong, such as a breach of contract or breach of a confidentiality agreement.
- Liquidated damages: An amount of damages to which the contract parties agree before a breach occurs. In order to be legal, liquidated damages must be a reasonable estimate of the anticipated damages. A liquidated damages clause typically is considered to be a material contract clause. Some institutional parties cannot sign contracts that include liquidate damages clauses because they may violate the institution’s business or legal policy. See also “Material.”
Disclaimer: A statement denying responsibility for a particular action. See also “Warranty,” below.
Distributor: An individual or organization that re-sells, sublicenses or otherwise makes digital information available from the owner to end-users. See also “End-user,” below.
Domain: “Domain” can have several meanings within the context of licensed database resources:
- A network of servers and clients that a single database controls.
- A communications network that a single computer system controls.
- On the Internet, a registration category that fosters a domain name. See also “Domain Name,” below.
Domain Name: The address of an Internet site (i.e., liblicense.com). The term also refers to an entity’s or computer’s unique name on the Internet, which is a alphanumeric substitute for Internet site address coordinates. Compare “IP Address,” below.
Download: To receive digital information from a network. The term also refers to the process of saving retrieved information from digital information onto a hard drive, diskette, or other electronic storage media.
End-user: Authorized individuals or organizations that access digital information for their own use. The term typically appears in license contracts involving computer software, whereas the term “User” more commonly appears in license contracts involving digital database resources. Compare “User,” below.
Fair Use: An affirmative defense to copyright infringement set forth in Section 107 of the Copyright Act of 1976 (17 U.S.C. § 107) that allows certain persons or entities to use, access, copy, distribute, remix, publicly perform, or publicly display limited portions of protected material for certain purposes. Under the fair use doctrine, such parties may be able to use the protected work without having to receive the copyright owner’s permission to use or access that material, or without having to pay the owner for that use or access. See also “Affirmative Defense,” “Infringement.”
First Sale Doctrine: An exception to copyright that generally allows any person or entity who purchases an authorized legal copy of a protected item to resell, lend, or give away that item. The first sale doctrine, which the Copyright Act of 1976 codifies at Section 109(a) (17 U.S.C. § 109(a)), is a recognized exception to the copyright owner’s exclusive right to distribute protected works under Section 106(3) (17 U.S.C. § 106(3)).
Governing Law: See “Jurisdiction,” below.
Grant of License: See “Use,” below.
Infringement: A violation of a law, contract, or right.
- Copyright infringement: Unauthorized use of copyrighted material, or a violation of one or more of the copyright owner’s exclusive rights, without excuse, exception, or defense. Copyright infringement is punishable by actual damages, statutory damages, or criminal prosecution under Title V of the Copyright Act of 1976.
Integration clause: See “Merger clause,” below.
IP Address: The unique identifier of a computer or other networked device that is attached to a network. Compare “Domain Name,” above.
Jurisdiction: A court’s power to hear arguments, apply law, or decide a legal case or dispute.
- Jurisdiction clause: A contract clause that predetermines the state or court that will decide a breach or dispute between the parties. Jurisdiction clauses may be subject to conflict of law principles, and may be referred to as “venue clauses.” Compare “Conflict of Law,” above; “Venue,” below.
License: A right that gives a person or entity permission to do something which would be illegal if the person or entity did not have such permission. Usually the scope of the permission excludes ownership rights or privileges. For example, a license to use digital information gives a Licensee permission to access and use the information under the terms and conditions described in the agreement between the Licensor and the Licensee.
Licensee: The person or entity that receives permission under a License to access or use digital information. The Licensee, often a library, educational, or research organization, generally pays the Licensor a fee for permission to use digital information.
Licensor: The person or entity that gives or grants a License. The Licensor owns or has permission to distribute digital materials to a Licensee. If it is representing the interests of copyright owners in a License Agreement, the Licensor must have the financial means and legal authority to provide the services to which the parties agreed under the License Agreement.
Liquidated Damages: See “Damages,” above.
Material: Important, necessary.
- Material alteration: A change or amendment that alters the contract’s legal effect, meaning, or interpretations.
- Material breach: See “Breach,” above.
- Material term: A term that, if eliminated, added, or changed, alters the contract’s legal effect.
Merger Clause: A contract provision that essentially says neither party can alter the contract’s written terms by prior or oral understandings, conversations, or agreements that the parties made, but did not write into the final, written contract. Also called an “integration clause.”
Minor breach: See “Breach,” above.
Modification: See “Amendment” above.
Negotiations: The process of submissions, considerations, and reviews of offers between two or more parties that occurs until the Licensee and Licensor agree on terms and conditions (thereby codifying the agreement in a contract), or until the parties mutually agree to end this process without an agreement.
Network: A group of computers linked together to share information. Networks can consist of a number of linked computers in a specific physical location, a Local Area Network (“LAN”), or they may consist of computers located at different physical sites linked together by means of phone lines and modems or other forms of long distance communications.
Non-assignable: A status in which the entire licensing agreement, or some of its rights, obligations, and terms; may not be transferred to a party that has not signed the original contract. See also “Non-transferable.”
Non-disclosure Agreement: A contract or contract provision that contains a party’s promise(s) to refrain from disclosing or making public certain information outside a mutually agreeable scope. See also “Confidentiality.”
Non-exclusive: A status in which the rights the agreement grants to the Licensee are available to others, reserving to the Licensor the right to give the same or similar rights to use the licensed materials to other parties.
Non-transferable: See “Non-assignable,” above.
Party: A person or entity that enters into a contract.
- Third-party: A person or entity that is not directly involved in the transaction that is the subject of a contract. A third-party may have legal, property, or transactional interests at stake in the contract between parties.
Permitted Use: See “Use,” below.
Permitted User: See “User,” below.
Remedies: The resolutions or corrections available to a party who has been harmed by a breach. Remedies can include rights or the cure of a wrong, both at law (in the form of damages) or in equity (in the form of an injunction).
Severability Clause (Separability Clause): A contract clause that maintains the agreement’s legality and continued effectiveness in the event a court or other trier of fact declares one or more of the contract terms is illegal or otherwise cannot be enforced.
“Shrink-wrap” Agreement or License: A contractual agreement that a user views and agrees to (by removing software cellophane wrapping or other packaging, which indicates the user’s consent to the agreement’s terms) as a condition of using the software.
Shrink-wrap license agreements typically apply to software, whereas click-wrap agreements apply to licensed databases or “software as a service” (SaaS). Courts generally hold shrink-wrap licenses to be fully enforceable when a user has had an opportunity to review the license prior to using the database service, or installing any applicable software. Compare “Click-wrap” Agreement, above.
Signing Authority (“Signature Authority”): The authority to bind a party to, approve, or execute a contract on that party’s behalf. If an individual signs a contract beyond his or her authority, that individual may be held personally liable for enforcing the contract or paying damages on the contract. See also “Statute of Frauds,” below.
Statute of Frauds: A contract doctrine that requires certain contracts will be legal only if the contract is in writing and signed by the party against whom the contract will be enforced. The statute of frauds is a protection against fraud. See also “Signing Authority,” above.
Term: “Term” may have several meanings within the context of a license contract:
- A word or phrase; an expression, particularly one that has been defined in an agreement.
- A clause or provision of an agreement.
- A fixed and definite period of time. The term of a Licensing Agreement is the period of time during which the agreement is in effect.
Termination: The cancellation or ending of an agreement.
- Termination clause: A term or condition in a license contract that outlines the date or time period when the contract ends. A termination clause also may include a recitation of each party’s rights and responsibilities that come due when the contract ends or is nearing its end.
Terminal: A computer workstation linked to a server or other computer over a network on which a user may display information. When it is merely a video display, it may be referred to as a “Dumb Terminal.”
Third Party: See “Party,” above.
UCITA: See “Uniform Computer Information Transactions Act,” below.
Uniform Commercial Code (“UCC”): A model law jointly developed by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American Law Institute (ALI) that oversees commercial transactions in the United States, including the sale of goods. Most U.S. states and territories have adopted substantial portions of the UCC, including Article 2, which governs transactions in goods.
In some instances, UCC Article 2 may govern software or database licenses. The lack of settled legal doctrine regarding Article 2’s applicability to software or database license transactions led to the development of the Uniform Commercial Information Transactions Act. See “Uniform Computer Information Transactions Act (UCITA),” below.
Uniform Computer Information Transactions Act (“UCITA”): A model law developed in 1999 (and revised in 2002) by the National Conference of Commissioners on Uniform State Laws (NCCUSL) that regulates software license and database access transactions. As January 2008, Virginia (Va. Code Ann. §§ 59.1-501.1 et seq.) and Maryland (Md. Code Ann. Comm. Law §§ 22-101 et seq.) are the only two states that have adopted UCITA legislation.
Use: A Licensee’s right to operate the Licensor’s program, software, Web site, or other electronic environment in order to access the digital information the Licensee is leasing under the agreement. The definition of “use” can take many forms and often is called many things (i.e., “Grant of License”), but it is one of the most important definitions or clauses in any license agreement.
- Authorized Use: Use of information that is expressly allowed under a Licensing Agreement. May also be referred to as “Permitted Use.” A use that is not expressly identified as an authorized use may or may not result in a breach.
User: Any person or entity who interacts with the database or its licensed digital resources, or puts its resources into service. In a licensing contract, the term “User,” whether in singular or plural, typically is synonymous with “Authorized User.” Compare “End-user,” above.
- Authorized User: Any person or entity designated in a licensing agreement who has permission to access or otherwise use the digital resources that is the subject matter of a licensing agreement. May also be referred to as “Permitted User.”
- Concurrent Users: The number of users that can access simultaneously a digital information resource. The number of concurrent users a license allows usually correlates with the license fee: the greater amount of concurrent users a license allows, the higher the license fee a licensee will have to pay.
- Unauthorized User: Any person or entity designated in the licensing agreement who does not have permission to access or otherwise use the digital information that is the subject matter of the agreement. Also, an Unauthorized User is any user that the license agreement does not explicitly define as an Authorized User.
Venue: The particular jurisdiction where a party brings a legal dispute, which may be where the cause of action arose, where the parties reside, or where the parties conduct business. Venue is different from jurisdiction. Compare “Jurisdiction,” above.
Waiver: The intentional or voluntary surrender of a known right or privilege granted under an agreement, or the failure to take advantage of some failure of performance or other wrong. For example, if a Licensee fails to complain about a series of interruptions in connecting to a Licensor’s database, the Licensor may later claim that the Licensee has Waived a claim that the service interruptions constitutes a breach of the License Agreement.
Warranty: A party’s assurance or guaranty that a fact upon which the other party relies really is true, such that the relying party does not have to discover that fact for himself. A party that grants a warranty effectively indemnifies the other party from harm or loss if the warranty is not honored. For example, a License Agreement relating to a database of musical composition samples may contain a Warranty that the Licensor has obtained permission from the composers and performers of the individual musical works to provide access to the database to the Licensee.
Warranties are common under Article 2 of the Uniform Commercial Code, which governs the sale of goods. License agreements that provide software or access to information, however, may not qualify as “goods” as the Uniform Commercial Code defines the term. The inclusion or removal of a warranty is considered to be a material contract change. Some institutional parties cannot sign contracts that alter warranties because the alterations may violate the institution’s business or legal policy. See also “Material,” “Uniform Commercial Code.”
Workstation: A single terminal or personal computer that may or may not be connected to a larger Network.