The verb license or grant licence means to give permission. The noun license (American English) or licence (British English, Canadian English, Australian English) refers to that permission as well as to the document recording that permission. A license 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 license is “an authorization (by the licensor) to use the licensed material (by the licensee).
In particular a license 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 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. A license 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 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” (United States/Canada) would not permit a licensee any protection from actions for use in Japan.
Trademark and brand licensing
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.
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 Gatos”) 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 approaches in art works where dramatic effect is achieved at the expense of factual accuracy.