This clause limits *how* you can use intellectual property—not where, but what you can do with it. For example, a company might license you a chemical formula to make cleaning products, but explicitly forbid you from using it to make cosmetics. This is high-risk because it can severely narrow your business opportunities and create disputes about what counts as "permitted use." Courts interpret these clauses strictly: if the contract says "cleaning products only," you cannot pivot to related products without breach. The restriction protects the IP owner's ability to license the same asset to different companies in different markets.
Define "field of use" as broadly as your negotiating position allows—use specific product categories rather than vague terms like "consumer goods." If the restriction might limit your future growth plans, push back hard or ask for a review clause that lets you request expanded rights after a certain period. Get written examples of what IS and ISN'T permitted to avoid disputes later. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause limits *how* you can use intellectual property—not where, but what you can do with it.
Why should I care about this clause?
For example, a company might license you a chemical formula to make cleaning products, but explicitly forbid you from using it to make cosmetics.
What are my options?
This is high-risk because it can severely narrow your business opportunities and create disputes about what counts as "permitted use." Courts interpret these clauses strictly: if the contract says "cleaning products only," you cannot pivot to related products without breach.
How does this affect small businesses?
The restriction protects the IP owner's ability to license the same asset to different companies in different markets.