Legal Definitions - field-of-use restriction

A field-of-use restriction is a specific condition written into an intellectual property license agreement. This condition limits the ways in which the party receiving the license (the licensee) is permitted to use the intellectual property. These restrictions typically define the particular products, services, industries, or even geographical areas where the licensed technology, brand, or creative work can be applied, preventing its use in other, unapproved contexts.

Here are some examples to illustrate how field-of-use restrictions work:

• Example 1: Software Technology

  A startup company develops a groundbreaking artificial intelligence (AI) algorithm designed to optimize energy consumption in large data centers. They license this algorithm to a major technology corporation. The license agreement includes a field-of-use restriction stating that the corporation can only use the AI algorithm for energy management in its own data centers and for offering energy optimization services to other data center operators. It explicitly prohibits the corporation from adapting or using the algorithm for financial trading, medical diagnostics, or autonomous vehicle systems.

  This example demonstrates a field-of-use restriction by limiting the licensed AI algorithm to a specific service market (energy optimization for data centers), preventing its application in unrelated industries.

• Example 2: Branded Merchandise

  A popular animated children's television show licenses its main character's image and name to a toy manufacturer. The license agreement contains a field-of-use restriction that allows the manufacturer to produce action figures, plush toys, and board games featuring the character. However, it specifically forbids the manufacturer from using the character's image on food packaging, clothing, or in any digital video games.

  Here, the field-of-use restriction defines the permissible product categories (toys and games) for the licensed character, preventing its use on other types of merchandise.

• Example 3: Patented Manufacturing Process

  A chemical engineering firm invents and patents a novel, environmentally friendly process for manufacturing biodegradable plastics. They license this patented process to a large plastics company. The license agreement includes a field-of-use restriction that permits the plastics company to use the process exclusively for producing packaging materials for consumer goods within North America. It explicitly states that the process cannot be used for manufacturing medical devices, automotive parts, or for any purpose outside of North America.

  This example illustrates a field-of-use restriction by limiting both the specific product market (packaging materials) and the geographical area (North America) where the patented manufacturing process can be applied.