What is a License Agreement?


A license is a contractual right that gives someone permission to engage in a defined activity or to use certain property that is owned by someone else.

With regards to intellectual property, a license allows the holder of intellectual property rights (the "licensor") to make money from an invention or creative work by charging a user (the "licensee") a fee or royalty to use the licensed product.

A license agreement is written to protect the rights of the parties.  The license agreement does not have to be long or complicated in order to be enforceable.  

A license agreement can be either an exclusive license agreement or a non-exclusive license agreement:

  • An exclusive license agreement is a legal document licensing an intellectual property to another party for their exclusive use. This intellectual property cannot be licensed to any other party for any use.

  • A non-exclusive license agreement is a legal document licensing an intellectual property to another party for use in a defined field. This intellectual property may also be licensed to additional parties.