The existing licensing models for commercial applications are focusing on software used on compute resources within an administrative domain. A problem occurs when we want to use this software in a distributed service oriented infrastructure where the resources are often not in the same administrative domain that hosts the license server which is authorizing the application use. Today licenses usually are bound to hardware within the domain of the user and do not allow access from outside thus enforcing local use of the protected applications only. The Grid approach in contrary is about using distributed resources from different domains. The experience made in many recent projects trying to use commercial applications in Grid systems clearly indicates a technological barrier of current licensing mechanisms that must be overcome before the Grid becomes a fully commercial productive environment.SMARTLM solution is to implement licenses as Grid services thus providing platform-independent access just like other Grid resources. Service Level Agreements based on evolving standards will then govern licenses. Depending on the level of trust signed or encrypted, agreements will be used to transport licenses through the Grid to the resource to which a user has been granted access to execute his application tasks. The agreement on a license and the conditions of use for an application will be reached through negotiation between service providers and service customers.SMARTLM will provide new generic licensing virtualization technology based on standards as WS-Agreement and WS-Negotiation and integrate it in the major Grid middlewares. The project will also identify new service-oriented business models for this approach. A number of widely-used license-protected commercial applications will be adapted to be executed under control of the new licensing mechanisms and will become part of a highly quality show-case to convince more code-owners to adapt their applications.