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A "license agreement" gives a person or entity the right to use someone else's assets. A license agreement spells out the precise terms of those rights. The party that gives someone use of a right (or a license) is the licensor; the party that receives the use of that right is the licensee. A common example of a license aAgreement concerns the use of software. When you buy a software product, you only buy the right to use the software in limited ways—you don't buy "ownership" of the software. The license agreement that comes along with the software sets forth these limits. Some other typical license agreements include trade name license, patent license, software license, and copyright lLicense. If you are negotiating to obtain a license or if you find yourself in the situation of giving a license to someone else, the license agreement should address the following key points:

• Exclusivity/Nonexclusivity: The license can be exclusive or nonexclusive. Licensors typically resist giving exclusive licenses. If the license grants exclusivity, over what areas is the license exclusive? If the license is exclusive, under what circumstances does the license convert to a nonexclusive one?
• Term: The license agreement should spell out the length of the license, plus any renewal rights.
• Payment: The license agreement should clearly state any up-front payments and any periodic payments required to maintain the license. A particular use of the license may also require an increase in payments. (For example, software licenses often require greater payments as the number of users increases.)
• Restrictions on the use of the license: Licensors often place a number of restrictions on use of the license, such as use in certain geographic areas, or for designated purposes. (For example, a trade name licensor may grant the right to use a name, but only in a certain city.)
• Infringement: The licensee may require the licensor to represent that the licensor actually owns the licensed item and that it does not infringe on the rights of third parties. Licensors will resist making such statements.
• Termination: The licensor typically defines various circumstances that allow the licensor to terminate the license agreement early, especially if the licensee breaches the license agreement.
• Assignment and sublicense: Depending on the agreement, the licensee may be able to assign or sublicense the license. An assignment typically means a transfer of all of the rights in the license, whereas a sublicense involves giving someone the right to use a portion of the rights in the license. Most license agreements prohibit assignment or sublicensing without the licensor's approval. Licensees may want to negotiate for broader rights if their business necessitates sublicensing the product.
• Requirements of the licensee: Licensors will often require the licensee to do a number of ongoing things for the benefit of the licensor. The licensee's failure to comply with these items often can be a material breach of the license agreement.

Sample license agreements can be found at www.LegalAgreements.com.