# License

Source: https://contracko.com/glossary/license

# License

Permission to use intellectual property under defined conditions without transferring ownership.

## Definition

A license grants permission to use protected intellectual property (such as software, content, or a trademark) while ownership stays with the licensor. Licenses are defined by scope: exclusive or non-exclusive, territory, duration, permitted uses, and whether sublicensing is allowed. Breaching the scope can be both a contract breach and an act of IP infringement.

## Example

> A SaaS contract grants a non-exclusive, non-transferable license to use the software for the customer's internal business only.

## Why this is a business risk

Using licensed IP outside the permitted scope, whether in a different territory, for an extra purpose, or by sublicensing without permission, can be both a contract breach and an act of infringement. Companies that grow through acquisition or group restructuring often inadvertently violate license scope restrictions that were never updated.

## How to manage it

- Map the exact scope of each key license: territory, duration, permitted uses, exclusivity, and sublicensing rights.
- Check at each business event (acquisition, new product, new geography) whether existing licenses cover the new use case.
- Track license expiry dates with reminders so you do not unknowingly operate after a license has expired.

### How Contracko helps

Contracko extracts license scope, territory, and expiry from contracts and tracks them as obligations with smart reminders. When a license is approaching expiry or a business change is being considered, the AI review surfaces the relevant scope restrictions so your team can assess coverage before acting.

## Relevant for

[Software & SaaS](https://contracko.com/industries/software-saas)[Music](https://contracko.com/industries/music-industry)[Gaming & Esports](https://contracko.com/industries/gaming-esports)[Film & TV](https://contracko.com/industries/film-tv)

## Related clauses

- [License Grant Clause](https://contracko.com/clause-library/license-grant)
- [Intellectual Property Clause](https://contracko.com/clause-library/intellectual-property)
- [Assignment Clause](https://contracko.com/clause-library/assignment)

## Related terms

- [Intellectual property](https://contracko.com/glossary/intellectual-property)
- [Assignment](https://contracko.com/glossary/assignment)
- [Confidential information](https://contracko.com/glossary/confidential-information)

### Never miss a contract deadline again

- AI finds renewal and notice dates
- Risks and obligations are surfaced automatically
- Reminders help you act before dates slip

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## Frequently asked questions

Common questions about this term.

- **Q:** What is the difference between an exclusive and non-exclusive license?
  **A:** An exclusive license means even the licensor cannot grant the same rights to others (and sometimes cannot use them itself); a non-exclusive license can be granted to many users at once.

- **Q:** Can a license be transferred to another company?
  **A:** Only if the contract permits it. Non-transferable licenses are common in SaaS and software; a change of control or corporate restructuring may technically violate them unless a carve-out is included.

- **Q:** What happens when a license expires?
  **A:** All licensed rights revert to the licensor. Continued use after expiry is infringement, not merely breach of contract. Renewal should be negotiated before expiry, not after.

- **Q:** Can a licensor terminate a license if the licensee breaches its terms?
  **A:** Yes, if the contract provides a termination-for-cause right. For serious breaches (e.g. using the IP outside the licensed scope), the licensor may also have a statutory right to dissolve the license agreement.

- **Q:** Is a software license a sale or a service?
  **A:** It depends on the model. A perpetual license for a one-time fee is closer to a sale; a subscription (SaaS) is a service with ongoing obligations on both sides. The distinction matters for accounting, tax, and the applicable legal rules.

## See these terms in your own contracts

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