License agreements allow a person to use another’s intellectual property. This agreement is typically between two parties, the licensor and the licensee. The licensor is the party who owns the intellectual property and the licensee is the party who would like to use that intellectual property.

Intellectual property comes from people’s minds and includes art, designs, or inventions. Intellectual property holders can protect and control their property by licensing it. Once the intellectual property holder obtains this license, it can then be given to others to permit them to utilize the property for a specific use.

In business, license agreements should always be in writing. These agreements can include many provisions, some of which could be the scope of the license, the revenue generated, and the length of the license. The scope of the license in particular must be carefully constructed. If one license is bundled with other licenses then it may amount to what is considered a business opportunity or franchise. Businesses should be cautious of this since it can result in the involvement of other areas of law, which will make for further complications. Additionally, license agreements can include a non-disclosure clause to protect trade secrets that may be divulged during the business relationship between the license provider and the licensee.

One common type of license agreement is a software license. A software license governs the use of software and allows the licensee limited use of it. Since software is protected by copyright, these licenses give licensees permission to use the software without infringing on copyright law. When using a software license, the licensee will typically receive a physical or installed copy of the software. Because the licensee will be taking the software and downloading it to or installing it on their own computer, they are given a license that allows them to do this.

In conjunction with software licenses, one will also commonly find clickwrap agreements. These agreements can be found online on websites as part of software installations. For users to agree to these agreements, however, they must be made aware of the agreement in some way or be given an opportunity to read and review it before agreeing.

Likewise, a Software as a Service (SaaS) agreement might seem similar to a software license at first glance, but there are some key differences between the two. Unlike software licenses, a SaaS agreement does not allow licensees to download or install the software on their own computers. Instead, the software stays with the licensor and the licensee is merely allowed access to it through the Internet, which is typically done through a “cloud.” As such, the licensee here is really getting a service rather than a license from the licensor.

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