Also known as: licensees with an interest · license coupled with an interest
Written by attorneys · grounded in primary & secondary sources — see below
The holder of a license incidental to the ownership of an interest in a chattel personal located on the land with respect to which the license exists. The license can be terminated only to the extent that termination does not prevent the license from protecting the coupled interest.
Lakewood Manufacturing purchased server racks from a supplier and received a license to install monitoring software only on those racks. When the supplier later attempted to revoke access to the software, Lakewood retained the right to continue using the software on the racks it still owned. The attempted revocation could not sever the license from Lakewood's ownership interest in the specific chattels.
Lotus Pharmaceuticals sold five handheld diagnostic devices to a clinic along with licenses to access proprietary codes usable only through those devices. The clinic later sold the devices to another buyer but tried to keep and reassign the code licenses separately. Because the licenses traveled with ownership of the devices, the attempted separate assignment failed and the new device owner received the code access rights.
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A license is coupled with an interest when it is incidental to ownership of a chattel personal located on the land and the licensed use can be exercised only in connection with that chattel. The license cannot be severed and transferred independently of the underlying chattel interest.
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No. The license can be assigned only together with conveyance of the chattel interest to which it is attached. An attempted assignment without transferring the chattel is ineffective.
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The license can be terminated only to the extent that termination does not prevent the license from protecting the interest with which it is coupled. Full revocation that would destroy the license's ability to safeguard the chattel interest is not permitted.
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