The verb license or grant licence means to give permission. The noun licence (license in American English) refers to that permission as well as to the document recording that permission.
Licence may be granted by a party ("licensor") to another party ("licensee") as an element of an agreement between those parties. A shorthand definition of a licence is "an authorization (by the licensor) to use the licensed material (by the licensee)."
In particular a licence may be issued by authorities, to allow an activity that would otherwise be forbidden. It may require paying a fee and/or proving a capability. 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.
A licensor may grant licence 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. A licence under intellectual property commonly has several component parts beyond the grant itself, including a term, territory, renewal provisions, and other limitations deemed vital to the licensor.
Term: many licences are valid for a particular length of time. This protects the licensor should the value of the licence increase, or market conditions change. It also preserves enforceability by ensuring that no licence extends beyond the term of IP ownership.
Territory: a licence may stipulate what territory the rights pertain to. For example, a licence with a territory limited to "North America" (United States/Canada) would not permit a licensee any protection from actions for use in Japan.
Mass licensing of software
Mass distributed software is used by individuals on personal computers under licence from the developer of that software. Such licence is typically included in a more extensive end-user license agreement (EULA) entered into upon the installation of that software on a computer.
Under a typical end-user licence agreement, the user may install the software on a limited number of computers.
The enforceability of end-user licence agreements is sometimes questioned.
Trademark and brand licensing
A licensor may grant permission to a licensee to distribute products under a trademark. With such a licence, the licensee may use the trademark without fear of a claim of trademark infringement by the licensor.
Artwork and character licensing
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