A license is a legal term referring to formal permission granted by one party, the licensor, to another party, the licensee, to use intellectual property rights such as patents, trademarks, copyrights, know-how or trade secrets under a defined set of conditions. This practice is commonly used in various industries including technology, music, publishing and film.
The primary purpose of a license is to allow the licensee to exploit a creation (software, invention, brand, literary or musical work) without violating the intellectual property rights of the licensor who owns the rights. In return, the licensee usually agrees to pay royalties to the licensor, which can be fixed, based on sales volume or a combination of both.
The license can be exclusive, non-exclusive, or sublicensed. An exclusive license allows the licensee to be the only one to exploit the right in question, excluding even the licensor from using it during the license period. A non-exclusive license allows multiple entities to hold use rights simultaneously. A sublicense gives the licensee the right to allow another party to exploit the right under certain conditions.
Licenses are highly useful for sharing technologies and knowledge and enable companies to collaborate without compromising the protection of their intellectual property assets. They are also essential for creators who wish to control how their works are distributed and used by various economic players in their field and by the public.
In summary, a license is a contractual agreement between economic actors that plays a central role in the exploitation of intellectual property rights and facilitates the flow of ideas and innovations while protecting the interests of creators and rights holders.