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"Licence" redirects here. License_sentence_0

For the historian, see Tom Licence. License_sentence_1

A license (American English) or licence (British English) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit). License_sentence_2

A license is granted by a party to another party as an element of an agreement between those parties. License_sentence_3

In the case of a license issued by a government, the license is obtained by applying for it. License_sentence_4

In the case of a private party, it is by a specific agreement, usually in writing (such as a lease or other contract). License_sentence_5

The simplest definition is "A license is a promise not to sue," because, with the exception of a marriage license (which merely grants official recognition of the relationship between the two people), a license either permits the licensed party to engage in an activity which is illegal, and subject to prosecution, without the license (e.g. fishing, driving an automobile, or operating a broadcast radio or television station), or it permits the licensed party to do something that would violate the rights of the licensing party (e.g. make copies of a copyrighted work), which, without the license, the licensed party could be sued, civilly, criminally, or both. License_sentence_6

In particular, a license may be issued by authorities, to allow an activity that would otherwise be forbidden. License_sentence_7

It may require paying a fee or proving a capability (or both). License_sentence_8

The requirement may also serve to keep the authorities informed on a type of activity, and to give them the opportunity to set conditions and limitations. License_sentence_9

A licensor may grant a license under intellectual property laws to authorize a use (such as copying software or using a patented invention) to a licensee, sparing the licensee from a claim of infringement brought by the licensor. License_sentence_10

A license under intellectual property commonly has several components beyond the grant itself, including a term, territory, renewal provisions, and other limitations deemed vital to the licensor. License_sentence_11

Term: many licenses are valid for a particular length of time. License_sentence_12

This protects the licensor should the value of the license increase, or market conditions change. License_sentence_13

It also preserves enforceability by ensuring that no license extends beyond the term of the agreement. License_sentence_14

Territory: a license may stipulate what territory the rights pertain to. License_sentence_15

For example, a license with a territory limited to "North America" (Mexico/United States/Canada) would not permit a licensee any protection from actions for use in Japan. License_sentence_16

Again, a shorthand definition of license is "a promise by the licensor not to sue the licensee". License_sentence_17

That means without a license any use or exploitation of intellectual property by a third party would amount to copying or infringement. License_sentence_18

Such copying would be improper and could, by using the legal system, be stopped if the intellectual property owner wanted to do so. License_sentence_19

Intellectual property licensing plays a major role in business, academia and broadcasting. License_sentence_20

Business practices such as franchising, technology transfer, publication and character merchandising entirely depend on the licensing of intellectual property. License_sentence_21

Land licensing (proprietary licensing) and IP licensing form sub-branches of law born out of the interplay of general laws of contract and specific principles and statutory laws relating to these respective assets. License_sentence_22

Real property licenses License_section_0

A license provides one party with the authority to act on another's land, when such action would typically amount to trespass absent that license. License_sentence_23

A key distinction between licenses and leases is that a license grants the licensee a revocable non-assignable privilege to act upon the land of the licensor, without granting any possessory interest in the land. License_sentence_24

Once a license is agreed upon, the licensee may occupy the land only so far as is necessary to complete the act. License_sentence_25

Another key distinction between a license and a lease is that leases are generally required to be in writing, where the statute of frauds requires it, while licenses can be made orally. License_sentence_26

Creation License_section_1

A license is generally created by an express or implied agreement. License_sentence_27

The licensor must agree to the license which can be shown in writing or the licensors acquiescence in its exercise. License_sentence_28

Furthermore, unlike many other contractual agreements, a license does not require consideration, a license can be created with or without it. License_sentence_29

Moreover, whether an agreement is held to be a “license” and not a lease will depend on three essential characteristics of a license: (1) a clause allowing the licensor to revoke “at will"; (2) the retention by the licensor of absolute control over the premises; and (3) the licensor’s supplying to the licensee all of the essential services required for the licensee’s permitted use of the premises. License_sentence_30

Termination License_section_2

Under a pure licensing agreement, the licensor, under its terms and by common-law, can cancel the agreement at will and without cause, unless it is coupled with an interest or made irrevocable by contract. License_sentence_31

A license that has been coupled with an interest is not revocable by the licensor without exposure to liability and potential damages. License_sentence_32

In the event a license is coupled with an interest, the licensor must provide reasonable time for the licensee to remove that interest from the property prior to termination. License_sentence_33

Additionally, because a license does not confer any possessory interest in the licensee, in the event of a sale of the property, the license is terminated and cannot be enforced against the new owners of that property. License_sentence_34

Moreover, the death of either the licensee or licensor will terminate the agreement. License_sentence_35

Remedies License_section_3

If a license is revocable at will by the licensor, courts will be unable to grant specific performance in favor of the licensee. License_sentence_36

A licensee would be unsuccessful in bringing forcible entry claims or a detainer proceeding because the licensee was never granted any possory interest. License_sentence_37

The Licensee would also not be able to recover damages for money spent unless they are able to show detrimental reliance on the license. License_sentence_38

In certain cases, however, licenses can be made irrevocable, and specific performance may be granted. License_sentence_39

Where a license is made with a set term period and valid consideration is transferred, revocation of the license prior to the terms expiration may raise breach of contract claims that could provide damages against the licensor. License_sentence_40

Furthermore, once the licensor terminates or revokes the license, notice is statutorily required prior to the commencement of any special proceeding to recover possession of the property (e.g., in NY that requirement is 10 days). License_sentence_41

Mass licensing of software License_section_4

Mass distributed software is used by individuals on personal computers under license from the developer of that software. License_sentence_42

Such license is typically included in a more extensive end-user license agreement (EULA) entered into upon the installation of that software on a computer. License_sentence_43

Typically, a license is associated with a unique code, that when approved grants the end user access to the software in question. License_sentence_44

Under a typical end-user license agreement, the user may install the software on a limited number of computers. License_sentence_45

The enforceability of end-user license agreements is sometimes questioned. License_sentence_46

As of 2020, there are various ways to license software with different kinds of licensing models, which allow software vendors to profit from their product offerings in flexible ways. License_sentence_47

Patent licensing License_section_5

A licensor may grant permission to a licensee to conduct activities which would otherwise be within the, offer for sale, or import a patented product, or to perform a patented process. License_sentence_48

The term of a patent license may be a "fixed" (i.e., specified) term, such as 5 years, or may be for the life of the patent (i.e., until the patent expires). License_sentence_49

A patent is by its nature limited in territorial scope; it only covers activity within the borders of the country issuing the patent. License_sentence_50

Accordingly, a patent license does not require a territory provision. License_sentence_51

The consideration provided by the licensee in return for the patent license grant is called a patent royalty payment. License_sentence_52

In a "paid-up" license, the "lump sum" royalty payment is a specified monetary amount, typically due shortly after the effective date of the patent (e.g., within 15 business days of the effective date), and no further payments are required. License_sentence_53

Otherwise, the royalty payment is a "running royalty," typically payable on an annual basis. License_sentence_54

The annual royalty may be a specified amount (e.g., one million dollars each year), or an amount proportional to the volume of licensed activity conducted by the licensee (e.g., one dollar per unit of licensed product sold by the licensee that year, or one percent of the net sales amount of the licensed products sold by the licensee that year). License_sentence_55

A licensing agreement is an arrangement whereby a licensor grants the right to intangible property to another entity for a specified period, and in return, the licensor receives a royalty fee from the licensee. License_sentence_56

Intangible property includes patents, inventions, formulas, processes, designs, copyrights, and trademarks. License_sentence_57

Advantages of a licensing agreement: License_sentence_58


  • A primary advantage of a licensing agreement, the firm does not have to bear the development and risks associated with opening a foreign market. It is very attractive for firms lacking the capital to develop operations overseas. Licensing can be attractive when a firm is unwilling to commit substantial financial resources to an unfamiliar or politically volatile foreign market. Licensing is primarily used when a firm wants to participate in a foreign market but is prohibited because of barriers to investment.License_item_0_0

Disadvantages of a licensing agreement License_sentence_59


  • First, it does not give a firm the tight control over manufacturing, marketing, and strategy that is required for realizing experience curve and location economies.License_item_1_1
  • Second, competing in a global market may require a firm to coordinate strategic moves across countries by using profits earned in one country to support competitive attacks in another. Licensing limits a firm's ability to do this.License_item_1_2
  • Lastly, a third problem with licensing is the relationship of the economic theory of FDI. This is associated with licensing technological know-how foreign companies. Technological know-how constitutes the basis of many multinational firms' competitive advantages. Most firms wish to control how their know-how is used, because they can lose control easily. Many firms make the mistake of thinking they could maintain control over their know-how within the licensing agreement.License_item_1_3

Trademark and brand licensing License_section_6

A licensor may grant permission to a licensee to distribute products under a trademark. License_sentence_60

With such a license, the licensee may use the trademark without fear of a claim of trademark infringement by the licensor. License_sentence_61

The assignment of a license often depends on specific contractual terms. License_sentence_62

The most common terms are, that a license is only applicable for a particular geographic region, just for a certain period of time or merely for a stage in the value chain. License_sentence_63

Moreover, there are different types of fees within the trademark and brand licensing. License_sentence_64

The first form demands a fee independent of sales and profits, the second type of license fee is dependent on the productivity of the licensee. License_sentence_65

When a licensor grants permission to a licensee to not only distribute, but manufacture a patented product, it is known as licensed production. License_sentence_66

Artwork and character licensing License_section_7

A licensor may grant a permission to a licensee to copy and distribute copyrighted works such as "art" (e.g., Thomas Kinkade's painting Dawn in Los Gato) and characters (e.g., Mickey Mouse). License_sentence_67

With such license, a licensee need not fear a claim of copyright infringement brought by the copyright owner. License_sentence_68

Artistic license is, however, not related to the aforementioned license. License_sentence_69

It is a euphemism that denotes freedom of expression, the ability to make the subject appear more engaging or attractive, by fictionalising part of the subject. License_sentence_70

Academia License_section_8


A licentiate is an academic degree that traditionally conferred the license to teach at a university or to practice a particular profession. License_sentence_71

The term survived despite the fact that nowadays a doctorate is typically needed in order to teach at a university. License_sentence_72

The term is also used for a person who holds a licentiate. License_sentence_73

In English, the degree has never been called a license. License_sentence_74

In France, the licence is the first degree awarded in Universities. License_sentence_75

In Sweden, Finland, and in some other European university systems, a 'licentiate' is a postgraduate degree between the master's degree and the doctorate. License_sentence_76

The licentiate is a popular choice in those countries where a full doctoral degree would take five or more years to achieve. License_sentence_77

Vehicle licensing License_section_9

See also: Driver's license License_sentence_78

A license to driving certain vehicles has been applied to many countries around the world. License_sentence_79

Being allowed to drive a certain vehicle requires a specific driving license, the type of license depending on the type of vehicle. License_sentence_80

Criminal law License_section_10

Main articles: Parole § United Kingdom, Temporary licence, and Release on licence License_sentence_81

In the United Kingdom prisoners serving a determinate sentence (a fixed time in prison) will be released prior to the completion of their full sentence "on licence". License_sentence_82

The licence is the prisoner's agreement to maintain certain conditions, such as periodic reporting in to a probation officer and only living at an approved address, in exchange for their early release. License_sentence_83

If they break the conditions of the licence, they can be "recalled" (returned to prison). License_sentence_84

Offenders serving determinate sentences are released automatically at a set point in their sentence, whereas prisoners serving indeterminate sentences (e.g. life imprisonment) can only be released by the parole board. License_sentence_85

Economic theory License_section_11

Patent licensing has been studied in formal economic models in the field of industrial organization. License_sentence_86

In particular, Katz and Shapiro (1986) have explored the optimal licensing strategy of a research lab selling to firms who are competitors on the product market. License_sentence_87

It turns out that (compared to the welfare-maximizing solution) the licensor’s incentives to develop innovations may be excessive, while the licensor’s incentives to disseminate the innovation are typically too low. License_sentence_88

Subsequently, the seminal work of Katz and Shapiro (1986) has been extended in several directions. License_sentence_89

For example, Bhattacharya, Glazer, and Sappington (1992) have taken into account that the firms acquiring licenses must make further investments in order to develop marketable products. License_sentence_90

Schmitz (2002, 2007) has shown that asymmetric information due to adverse selection or moral hazard may lead the research lab to sell more licenses than it would do under complete information. License_sentence_91

Antelo and Sampayo (2017) have studied the optimal number of licenses in a signalling model. License_sentence_92

Criticism License_section_12

The provision of licenses and the agencies that mandate them are often criticised by libertarians, like Milton Friedman, for creating an anticompetitive environment for occupations, which creates a barrier to entry for more qualified and skilled individuals who may not have the resources to obtain the necessary licences. License_sentence_93

According to Friedman, licenses and permits have become so burdensome due to legislation that favors the current establishment of wealthy occupants that they decrease the supply of such occupations, which raises prices for the average consumer. License_sentence_94

Libertarians and the anti-authoritarian left (anarcho-communists) view competing guilds and other voluntary communes as being more beneficial for disseminating the skills and education required to perform a specified career. License_sentence_95

See also License_section_13

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