License

is a legal instrument (by way of contract law) governing the usage or redistribution of software. All software is copyright protected, irrespective of whether it is in the public domain. Contractual confidentiality is another way of protecting software.In other words you are NOT allowed to sell,or share a software without the consent of the owner.

Example If buy the newest Microsoft word software and if you copy and sell it you are going against the software license.

Purpose The reason why companies have have software license is because if they didn't have one the people they first sell it to could copy and sell or share it thus putting the company in debt.

Link http://www.microsoft.com/About/Legal/EN/US/IntellectualProperty/UseTerms/Default.aspx