> ## Documentation Index > Fetch the complete documentation index at: https://docs.story.foundation/llms.txt > Use this file to discover all available pages before exploring further. # License Token > An ERC-721 NFT that allows you to register your IP as a derivative of another, based on the License Terms defined in the token View the smart contract for License Tokens. A **License Token** is represented as an **ERC-721 NFT** and contains the specific [License Terms](/concepts/licensing-module/license-terms) it represents. Its associated `licenseTokenId` is global, as there is one License Token contract. Once License Terms are attached to an IP Asset, it becomes public so that anyone can mint a License Token for those terms. A License Token is burned when it is used to register another IP as a derivative of the original IP Asset. A diagram showing what happens when a License Token is minted.

A diagram showing what happens when a License Token is minted.

## Private Licenses A diagram showing how private licenses are minted.

In order to mint a private License Token, the owner of a root IP Asset can issue License Tokens that have terms **not yet attached to the IP Asset itself**. It is important to also note that derivative IP Assets cannot issue private licenses because it is restricted to only issue licenses of its inherited terms. ## Transferability of the License Token License Tokens might be transferrable or not, depending on the values of the License Terms terms they point to. Once a non-transferable License Token is minted to a recipient, it is locked there forever. ## Registering a Derivative You can register an IP Asset as a derivative of other IP Assets, each with their own license terms agreement. This creates a legally binding agreement between IP Assets that enforces things things like automatic payments in the [💸 Royalty Module](/concepts/royalty-module/overview). ### ⚠️ Restrictions There are a few restrictions on registering a derivative: * An IP Asset can only register as a derivative one time. If an IP Asset has multiple parents, it must register both at the same time. * Once an IP Asset is a derivative, it cannot link any more parents. * When you link an IP Asset as a derivative, it cannot have license terms attached. It will inherit its terms from its parents. * None of the parent IP Assets or the child IP Asset can be disputed. * The child IP Asset cannot have derivatives already. * If at least one of the license terms is commercial, then they all must be commercial (`commercialUse = true`) *** There are two ways to register a derivative IP Asset. An IP Asset can only register as a derivative one time. If an IP Asset has multiple parents, it must register both at the same time. Once an IP Asset is a derivative, it cannot link any more parents. ### 1. Using an Existing License Token A License Token is burned when it is used to register another IP as a derivative of the original IP Asset.

### 2. Registering a Derivative Directly You can also register a derivative directly, without the need for a License Token. Remember that if License Terms are attached to an IP Asset it is public to mint the License Token anyway, so this is simply a convenient way to go about it, thus skipping the middle step of minting a License Token. Registering a Derivative Directly