A license agreement is a written contract granting permission to use a creative work, trademark or invention to another party. This license will provide a way for the inventor or creator to profit from an invention or creative work while avoiding the necessity of personally manufacturing and selling copies of the invention or work. Licensing a work or invention to a company will enable a creator to receive money, often as royalties, in exchange for granting permission to the company to produce, use, and/or sell copies of their work or invention in the appropriate market.
A license agreement basically grants the right to use a thing or do something. The word itself comes from Latin and means "permission." The license is therefore given by an individual or group that controls a thing. There are actually three types of licenses. The first grants permission or the right to conduct and activity that would otherwise be prohibited or regulated by the government. The second grants the right to use an image, name or representation, which includes a brand, in any signage, packaging, marketing or promotions. The third type grants the right to use and apply specific knowledge or expertise, whether it is patented or not patented, for a legal purpose.
A license or a permit is simply an official authorization enabling a person or company to do something that they would otherwise not be authorized to do. There may be a license fee. If so, the license fee is required to be reasonable and may not be so high that it will prevent an individual from pursuing an occupation or trade. Often licensing is used to raise income or to fund regulation of a specific activity.
There are other restrictions on licensing, such as the need to meet due process requirements of the constitution for any qualifications that are attached to issuing a license. This doesn't mean that educational, training, or financial qualifications may not be required, simply that they may not be discriminative. Applicant may be required to supply background information only if it is related reasonable to issuing the license. In some cases, issuing a license is conditional, based on the actions of government agencies.
It is important to note that the words license and permission are often used interchangeably when discussing licensing. This is one of many reasons why you may choose to have a lawyer look over any license agreement that you are considering signing, whether you are selling or purchasing the license, particularly when it involves a private venture. It is always best to consult with someone who has a thorough understanding of any laws of rules that may be related to your agreement.
In our litigious society, it is important to note that license agreements, like any other document, can end up in court. This is why it is important to spell out exactly what permissions are being granted, for how long, and under what circumstances. Any money or fees exchanged should be spelled out in great detail. Again, when in doubt, consult an attorney.
Mark Warner is a License Agreement Research Analyst for RealDealDocs. RealDealDocs gives you insider access to millions of legal documents online drafted by the top law firms in the US that you can download, edit and print. Search For Free at http://www.RealDealDocs.com
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