Licensing in Plain English; or How (and When) to Write Contracts People can Understand

October 22nd, 2009

Most of my work is with medium and large companies negotiating software licenses between one another.  The documents tend to be long and assume deep knowledge of license terms, indemnification, warranties, damages and other key concepts.  I recently had a very different assignment, though, that turned into a fascinating exercise in minimalist licensing terms.

A high profile company needed to obtain rights to use photographs of some extremely unsophisticated members of the general public (i.e. people who don’t read legal contracts very often, if ever).  We needed to obtain a license to use people’s likenesses in a way that made clear the people understood the rights they were providing, and of course we wanted the language to be legally defensible.  The assignment turned into a great opportunity to go back to the most basic licensing principles.  As a bonus I got to poke around at how other people handle the same problems.

Licensing Concepts
The first thing I did was to strip down a license into is most basic components.  At a minimum, a license needs to identify (i) the material being licensed, (ii) the fields in which the material may be used (or the areas from which material may be excluded), (iii) the geographic scope, if any, and (iv) the price being paid for the license.

A typical license agreement has loads of other terms that are important in various circumstances.  I certainly would not recommend that companies omit these provisions- they are important in those types of transactions.

At the same time, most people don’t do these types of transactions and don’t have the benefit of experience in looking at license terms.  Sometimes it can be appropriate to use a very basic set of provisions that focus more on clarity and covering the basics than on detail.  It is very possible to write plain English that covers items (i)-(iv) above simply and completely.

What Other People Do
Creative Commons
is my favorite example of complex license terms described simply.  CC helps laypeople people select license terms that are appropriate for specific situations and they have developed a friendly set of mix-and-match logos to indicate what rights are imparted by the various choices.  The logos are backed by human-readable descriptions of the terms as well as traditional legalese.

STADSchromosomen, Creative Commons license
Image by spinster via Flickr

This a nice approach since it offers multiple ways to understand the essential provisions.

When to Use What Language
The real question is- when is it appropriate to use full-blown legalese and when can we make do with less?  For me it comes down to three basic considerations:

1)  The people giving up rights need to understand what they are agreeing to.  This is Creative Commons’ basic principle, and also the one I follow with my clients.  In that case we came up with a very stripped-down, nonlegalistic license provision so that we could clearly communicate what we were asking of people and have a decent expectation that they understood it the same way we do.

2)  What is the downside of leaving things out?  In many cases companies expect to see license terms written in a certain way.  Sticking with the tried-and-true format can actually move the deal along faster.

3)  Leaving out big items like warranties, post-termination obligations and indemnification language can create risk for one side or the other, so I consider litigation risk as well before I start cutting things out of agreements.  Does the other side have the means to sue?  Would we cause undue exposure for ourselves by omitting certain terms?

In the end, I put all these items together and try to find the right spot on the plain English-legalese continuum for any given agreement.  I like this process because it means I don’t hew blindly to certain forms, but instead think about purpose and how to meet everyone’s needs as efficiently as possible.

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