A license (US) or licence[1] (Commonwealth) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit).[1]
A license is granted by a party (licensor) to another party (licensee) as an element of an agreement between those parties. In the case of a license issued by a government, the license is obtained by applying for it. In the case of a private party, it is by a specific agreement, usually in writing (such as a lease or other contract). The simplest definition is "A license is a promise not to sue", because a license usually either permits the licensed party to engage in an illegal activity, 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.
In particular, a license may be issued by authorities, to allow an activity that would otherwise be forbidden. It may require paying a fee or proving a capability (or both). The requirement may also serve to keep the authorities informed on a type of activity, and to allow them to set conditions and limitations.
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.[2] 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.
Term: many licenses are valid for a particular length of time. This protects the licensor should the value of the license increase, or market conditions change. It also preserves enforceability by ensuring that no license extends beyond the term of the agreement.
Territory: a license may stipulate what territory the rights pertain to. 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.
Again, a shorthand definition of a license is "a promise by the licensor not to sue the licensee". That means without a license any use or exploitation of intellectual property by a third party would amount to copying or infringement. Such copying would be improper and could, by using the legal system, be stopped if the intellectual property owner wanted to do so.[3]
Intellectual property licensing plays a major role in business, academia and broadcasting. Business practices such as franchising, technology transfer, publication and character merchandising entirely depend on the licensing of intellectual property. Land licensing (proprietary licensing) and IP licensing.
Real property licenses
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. 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.[4] Once a license is agreed upon, the licensee may occupy the land only so far as is necessary to complete the act. 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.
Creation
A license is generally created by an express or implied agreement. The licensor must agree to the license which can be shown in writing or the licensors acquiescence in its exercise. Furthermore, unlike many other contractual agreements, a license does not require consideration, a license can be created with or without it. 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.[5]
Termination
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. A license that has been coupled with an interest is not revocable by the licensor without exposure to liability and potential damages. 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. 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. Moreover, the death of either the licensee or licensor will terminate the agreement.
Remedies
If a license is revocable at will by the licensor, courts will be unable to grant specific performance in favor of the licensee.[4] A licensee would be unsuccessful in bringing forcible entry claims or a detainer proceeding because the licensee was never granted any possessory interest. The Licensee would also not be able to recover damages for money spent unless they are able to show detrimental reliance on the license. In certain cases, however, licenses can be made irrevocable, and specific performance may be granted. 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. 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).
Mass licensing of software
Mass distributed software is used by individuals on personal computers under license from the developer of that software. Such license is typically included in a more extensive end-user license agreement (EULA)[6] entered into upon the installation of that software on a computer. Typically, a license is associated with a unique code, that when approved grants the end user access to the software in question.
Under a typical end-user license agreement, the user may install the software on a limited number of computers.[7]
The enforceability of end-user license agreements is sometimes questioned.
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.
Patent licensing
Like other intellectual property, patent owners may grant permission to others to engage in conduct that would otherwise be within the scope of a patent.[8] For example, a patent owner may authorize a licensee to make, use, sell, offer for sale, or import a patented product. Such agreements are typically referred to as a patent license agreement or a covenant not to sue. These agreements can last for a specific period of time (such as five years) or for the entire life of the patent (i.e., until the patent expires).[8] Patent license agreements may also be exclusive (i.e., the licensee is the only person or entity that is allowed to sell, make, use, offer to sell, or import the patented invention) or non-exclusive (i.e., the licensee is simply one of several entities who has rights under the patent).[8] Finally, any rights given under the agreement may be limited to a particular "field of use" (e.g., a licensee may be able to practice an invention in the field of consumer electronics, but not in the field of industrial electronics).[8]
Often, patent owners will require a licensee to pay money in exchange for granting a patent license. Such payments are referred to as royalty payments and come primarily in two forms: lump sum or running royalty.[8] A lump sum royalty involves an upfront, one-time payment, while a running royalty typically involves periodic payments (e.g., quarterly or annual) based on the number of patented products sold or imported.
A licensor may grant permission to a licensee to distribute products under a trademark. With such a license, the licensee may use the trademark without fear of a claim of trademark infringement by the licensor. The assignment of a license often depends on specific contractual terms. 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. Moreover, there are different types of fees within the trademark and brand licensing. 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.
For example, McDonald's licenses their trademark such as the "Golden Arches" or the "Big Mac", but the licenses gives McDonald's a right to impose strict quality standards to their franchisees as they can take back the right to the trademark if they do not meet McDonald's standards.[9]
When a licensor grants permission to a licensee to not only distribute, but manufacture a patented product, it is known as licensed production.
Artwork and character licensing
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). With such license, a licensee need not fear a claim of copyright infringement brought by the copyright owner.
Artistic license is, however, not related to the aforementioned license. It is a euphemism that denotes freedom of expression, the ability to make the subject appear more engaging or attractive, by fictionalizing part of the subject.
A licentiate is an academic degree that traditionally conferred the license to teach at a university or to practice a particular profession. The term survived despite the fact that nowadays a doctorate is typically needed in order to teach at a university. The term is also used for a person who holds a licentiate.[10][11] In English, the degree has never been called a license. In France, the licence is the first degree awarded in Universities.
In Sweden, Finland, and in some other European university systems, a 'licentiate' is a postgraduate degree between the master's degree and the doctorate. The licentiate is a popular choice in those countries where a full doctoral degree would take five or more years to achieve.
Vehicle licensing
This section needs expansion. You can help by adding to it. (December 2016)
A license to driving certain vehicles has been applied to many countries around the world. Being allowed to drive a certain vehicle requires a specific driving license, the type of license depending on the type of vehicle.
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".[12] 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. If they break the conditions of the licence, they can be "recalled" (returned to prison).[13][14]
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.[15]
Economic theory
Patent licensing has been studied in formal economic models in the field of industrial organization. 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.[16] 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. Subsequently, the seminal work of Katz and Shapiro (1986) has been extended in several directions. 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.[17] 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.[18][19] Antelo and Sampayo (2017) have studied the optimal number of licenses in a signalling model.[20]
Criticism
The provision of licenses and the agencies that mandate them are often criticised by American 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. 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. 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.
A copyright is a type of intellectual property that gives the creator of an original work, or another owner of the right, the exclusive, legally secured right to copy, distribute, adapt, display, and perform a creative work, usually for a limited time. The creative work may be in a literary, artistic, educational, or musical form. Copyright is intended to protect the original expression of an idea in the form of a creative work, but not the idea itself. A copyright is subject to limitations based on public interest considerations, such as the fair use doctrine in the United States.
Open-source licenses are software licenses that allow content to be used, modified, and shared. They facilitate free and open-source software (FOSS) development. Intellectual property (IP) laws restrict the modification and sharing of creative works. Free and open-source licenses use these existing legal structures for an inverse purpose. They grant the recipient the rights to use the software, examine the source code, modify it, and distribute the modifications. These criteria are outlined in the Open Source Definition.
A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention. In most countries, patent rights fall under private law and the patent holder must sue someone infringing the patent in order to enforce their rights.
A royalty payment is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset or a fixed price per unit sold of an item of such, but there are also other modes and metrics of compensation. A royalty interest is the right to collect a stream of future royalty payments.
The first-sale doctrine is an American legal concept that limits the rights of an intellectual property owner to control resale of products embodying its intellectual property. The doctrine enables the distribution chain of copyrighted products, library lending, giving, video rentals and secondary markets for copyrighted works. In trademark law, this same doctrine enables reselling of trademarked products after the trademark holder puts the products on the market. In the case of patented products, the doctrine allows resale of patented products without any control from the patent holder. The first sale doctrine does not apply to patented processes, which are instead governed by the patent exhaustion doctrine.
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or selling the patented invention. In many countries, a use is required to be commercial to constitute patent infringement.
A lease is a contractual arrangement calling for the user to pay the owner for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial or business equipment are also leased. Basically a lease agreement is a contract between two parties: the lessor and the lessee. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. The lessee also agrees to abide by various conditions regarding their use of the property or equipment. For example, a person leasing a car may agree to the condition that the car will only be used for personal use.
Reasonable and non-discriminatory (RAND) terms, also known as fair, reasonable, and non-discriminatory (FRAND) terms, denote a voluntary licensing commitment that standards organizations often request from the owner of an intellectual property right that is, or may become, essential to practice a technical standard. Put differently, a F/RAND commitment is a voluntary agreement between the standard-setting organization and the holder of standard-essential patents. U.S. courts, as well as courts in other jurisdictions, have found that, in appropriate circumstances, the implementer of a standard—that is, a firm or entity that uses a standard to render a service or manufacture a product—is an intended third-party beneficiary of the FRAND agreement, and, as such, is entitled to certain rights conferred by that agreement.
A software license is a legal instrument governing the use or redistribution of software. Under United States copyright law, all software is copyright protected, in both source code and object code forms, unless that software was developed by the United States Government, in which case it cannot be copyrighted. Authors of copyrighted software can donate their software to the public domain, in which case it is also not covered by copyright and, as a result, cannot be licensed.
Industrial property is one of two subsets of intellectual property, it takes a range of forms, including patents for inventions, industrial designs, trademarks, service marks, layout-designs of integrated circuits, commercial names and designations, geographical indications and protection against unfair competition. In some cases, aspects of an intellectual creation, although present, are less clearly defined. The object of industrial property consists of signs conveying information, in particular to consumers, regarding products and services offered on the market. Protection is directed against unauthorized use of such signs that could mislead consumers, and against misleading practices in general.
Assignment is a legal term used in the context of the laws of contract and of property. In both instances, assignment is the process whereby a person, the assignor, transfers rights or benefits to another, the assignee. An assignment may not transfer a duty, burden or detriment without the express agreement of the assignee. The right or benefit being assigned may be a gift or it may be paid for with a contractual consideration such as money.
In United States patent law, patent misuse is a patent holder's use of a patent to restrain trade beyond enforcing the exclusive rights that a lawfully obtained patent provides. If a court finds that a patent holder committed patent misuse, the court may rule that the patent holder has lost the right to enforce the patent. Patent misuse that restrains economic competition substantially can also violate United States antitrust law.
This is a list of legal terms relating to patents and patent law. A patent is not a right to practice or use the invention claimed therein, but a territorial right to exclude others from commercially exploiting the invention, granted to an inventor or his successor in rights in exchange to a public disclosure of the invention.
Humanitarian use licenses are provisions in a license whereby inventors and technology suppliers protect in advance the possibility of sharing their technology with people in need. Thus, humanitarian use licenses set the conditions for the provision of access to innovations for people in need at a royalty free basis or at lower costs. Humanitarian use licenses assure that products of research and development stay publicly available and that at the same time the incentive function of exclusive intellectual property rights are maintained.
Royalty rate assessment is a practical tool to gauge the impact of a royalty commitment in a technology contract to the business interests of the contracting parties. In this coverage, the terms 'royalty', 'royalty rate' and 'royalties' are used interchangeably.
Proprietary software is software that, according to the free and open-source software community, grants its creator, publisher, or other rightsholder or rightsholder partner a legal monopoly by modern copyright and intellectual property law to exclude the recipient from freely sharing the software or modifying it, and—in some cases, as is the case with some patent-encumbered and EULA-bound software—from making use of the software on their own, thereby restricting their freedoms.
A trademark is a type of intellectual property consisting of a recognizable sign, design, or expression that identifies a product or service from a particular source and distinguishes it from others. A trademark owner can be an individual, business organization, or any legal entity. A trademark may be located on a package, a label, a voucher, or on the product itself. Trademarks used to identify services are sometimes called service marks.
An implied license is an unwritten license which permits a party to do something that would normally require the express permission of another party. Implied licenses may arise by operation of law from actions by the licensor which lead the licensee to believe that it has the necessary permission.
Trademark infringement is a violation of the exclusive rights attached to a trademark without the authorization of the trademark owner or any licensees. Infringement may occur when one party, the "infringer", uses a trademark which is identical or confusingly similar to a trademark owned by another party, especially in relation to products or services which are identical or similar to the products or services which the registration covers. An owner of a trademark may commence civil legal proceedings against a party which infringes its registered trademark. In the United States, the Trademark Counterfeiting Act of 1984 criminalized the intentional trade in counterfeit goods and services.
The following outline is provided as an overview of and topical guide to patents:
↑ Intellectual Property Licensing: Forms and Analysis, by Richard Raysman, Edward A. Pisacreta and Kenneth A. Adler. Law Journal Press, 1999-2008. ISBN978-1-58852-086-9
↑ Licensing Intellectual Property: Law & Management, by Raman Mittal. Satyam Law International, New Delhi, India, 2011. ISBN978-81-902883-4-7.
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