A trademark license is a contractual agreement that authorizes a third party, the licensee, to use a trademark belonging to another party, subject to the terms defined in the contract. In return, the licensee typically pays compensation, for example, a percentage of sales. For instance, a candy manufacturer might obtain a license to produce candies featuring a cartoon character in exchange for a share of the profits. Trademark licenses are frequently used in sectors such as toys, school supplies, and luxury goods.