A company or person with intellectual property protected by law who wishes to license that property enters into a licensing agreement with a user, and that agreement becomes a contract, governed by applicable contract laws, which can vary from state to state. International licensing agreements also may be subject to additional regulations, depending upon what is being licensed and how it will be used.
An intellectual property license also varies with what is being licensed, but generally has several common components, including a specified length of time, agreement as to where the license is valid, provision for renewal, and any limitations the licensor deems important to the agreement. Sometimes, other laws will limit what limitations may be imposed in a licensing agreement. In most licensing agreements, the licensee pays a fee to the licensor in order to use his or her intellectual property for financial gain.