Fees

The licensee’s core obligation under the agreement is to use digital information subject to the terms contained in the agreement. There may be additional specific obligations on libraries, including informing authorized users of the terms of the license agreement and, more specifically, the uses of the information are permitted and prohibited. These clauses should be considered carefully. Libraries should be wary of clauses which impose onerous responsibilities to monitor usage of the materials. While librarians should do what they can to inform users of restrictions on use of the authorized materials and stop unauthorized use when it is discovered, they should not obligate themselves to police their users or promise to take remedial action against unauthorized use that is beyond their authority.

Other licensee obligations will depend on the means by which the library or its users gain access to the licensed materials. Where access is through passwords and/or usernames, the licensor will often request that the library inform its users of their obligation not to divulge the passwords to unauthorized users and that the library itself maintain the confidentiality of the passwords it uses to access the materials. Again, these provisions should be analyzed carefully to ensure that the library does not undertake unreasonable monitoring or policing responsibilities.

Example Clauses

Licensee Performance Obligations: Example Clauses

1. The [Licensee] may elect to use each Database on either an annual subscription or a “per search” basis.Subscription Use. The [Licensee]’s election to subscribe to a certain Database provides its Permitted Users, for a fixed annual fee, unlimited searching of the Database for the term of the agreement, beginning with the first full month following the date on which the [Licensee] executes this Agreement or makes such election, whichever is later. Per Search Use. The [Licensee]’s election to access a certain Database on a per search basis permits the [Licensee] to pay monthly for only those searches its Permitted Users make during the preceding month.		Commentary: Payment arrangements can take many forms. For example, fees can include one or more of the following: a charge for each log-on to the database; a charge for each search of the database; monthly, quarterly or annual subscription fees; initial access fees to cover the installation of software and any special hardware. Example 1 offers annual subscription and per search alternatives.

2. [Licensor] shall be responsible for the costs of converting the Materials into digital form and making them available at one or more remote sites to which the Libraries and Authorized Users will have access. Licensee shall be responsible for all costs of establishing and maintaining systems to provide access to such sites for its Libraries and Authorized Users including any telecommunications or other charges imposed by all carriers, proprietary network operators and Internet access providers used by Licensee, the Libraries or Authorized Users to access the [Licensor]’s site(s) and transmit accessed Materials to the Libraries and Authorized Users. Licensee will be responsible for obtaining licenses for the use of the Adobe Acrobat Reader software tool and Web browser software by the Libraries and Authorized users and paying the license fees, if any.		Commentary: This example spells out in considerable detail which party will bear responsiblity for costs incurred in developing and using a digital database. The particular division of responsibility will vary, but the parties should clearly and s pecifically set forth in the contract any allocation of costs they agreed to during the negotiations.

3. [Licensor] reserves the right to deny the [Licensee] further access to the Databases if a payment is not received by its due date. If [Licensor] chooses to permit the [Licensee] continued access to the Databases, it shall: (i) in the event a subscription fee is not paid in full, charge the [Licensee] on a per search basis at the highest published unit price, and (ii) in the event monthly fees are not paid in full, assess a late payment charge equivalent to ten percent (10%) per year of the unpaid balance, or the maximum amount permitted by law, whichever is less.		Commentary: It is not unusual to include specific penalties for non-payment of license fees. In Example 2, however, termination of the licensee’s access to the database may be too draconian a remedy. A more satisfactory clause would provide for te rmination of access only after notice of intent to terminate and expiration of a reasonable period of time to make the payment. See Termination for Breach for examples of clauses describing “cure” periods.

4. Full payment for the Licensed Product shall be made upon execution of this Agreement. [Licensor] reserves the right to change pricing for the Licensed Product upon renewal of this Agreement.5. The fees set forth herein are subject to change at any time. Any increase in fees, including subscription fees, may become effective only upon at least forty-five (45) days prior notice from [Licensor] to the [Licensee], which notice shall set forth the new fees and effective date(s) thereof. Increases in the [Licensee]’s subscription fees shall be effective only upon renewal of this Agreement for the applicable database. 6. The Subscription Price for calendar years subsequent to the initial subscription year may be adjusted by the [Licensor] to reflect increases in costs of providing the online and print versions of the Materials; provided, however, that the increase in the Subscription Price shall not exceed ten percent (10%) plus the percentage increase in the Consumer Price Index-Urban during the twelve-month period preceding Licensor’s notification of such price increase under this section. Licensor will notify Licensee of the new Subscription Price not later than the last day of September of the year preceding the year for which such adjusted price applies.		Commentary: Most license agreements have fixed fees for the life of the agreement. Licensors should not be able to unilaterally change the fee structure during the term of the agreement. Fee increases should be negotiated between the parties as th e term of the agreement nears expiration.Often, license agreements have automatic renewal clauses. Licensees must be careful that the licensor can not automatically renew the contract with a changed fee structure without first giving adequate notice to the licensee of the proposed new rate structure. (See Term and Renewal.) Example 4 would be unacceptab le because it does not require the licensor to provide advance notice of a change in rates prior to expiration of the initial contract term. Example 5, on the other hand, gives 45 days notice prior to any increase in licensing fees, and states th at increases in fees will be effective only upon renewal of the agreement. Example 6 is particularly interesting in that it specifically makes clear what factors will justify a price increase, and establishes an annual cap on a price increase for any single year.

Last updated: April 25, 2012