There are many obvious problematic provisions in a software license agreement. These provisions discuss audit rights, scope of the license grant, potential third-party use, limitations of liability, indemnity, and limitations on the transfer of licenses. When negotiating a licensing transaction, licensees frequently negotiate these provisions. One of the provisions in the license agreement that is often overlooked during the negotiations but that frequently plays a significant role in license disputes is the termination provision.
The termination provision can appear in many different places in a license agreement. Sometimes, there are multiple termination provisions in the agreement. Consider these five questions for successfully navigating potential pitfalls: 1. Where should counsel look for termination provisions? Publishers often include a separate provision for termination of the licenses, however, that is not the only place licensees should look to identify troubling language. Even if there is a separate termination provision, publishers also include termination provisions inside the audit provision to give it additional leverage during audit negotiations.