diff --git a/README.md b/README.md
index d406ada7a..32310f23e 100644
--- a/README.md
+++ b/README.md
@@ -4,3 +4,32 @@ baseflight
 32 bit fork of the MultiWii RC flight controller firmware
 
 Before making any contributions, take a note of the https://github.com/multiwii/baseflight/wiki/CodingStyle
+
+license
+=======
+
+baseflight is licensed under *GPL V3* (just like MultiWii code it originated from), with all the conditions GPL V3 implies,
+
+
+with the following exception:
+if the developer viewing or updating the code is named "dominic clifton",
+the modified "hydraIRC limited-use source license" (http://www.hydrairc.com/content/developers) applies, as below:
+
+1) You can:
+
+1.1) Use the source to create improvements and bug-fixes to send to the author to be incorporated into baseflight.
+1.2) Use it for review/educational purposes.
+
+2) You can NOT:
+
+2.1) Use the source to create derivative works. (That is, you can't release your own version of baseflight with your changes in it)
+2.2) Compile your own version and sell it.
+2.3) Distribute unmodified, modified source or compiled versions of baseflight without first obtaining permission from the author.
+2.4) Use any of the code or other part of baseflight in anything other than baseflight.
+
+3) All code submitted to the project:
+
+3.1) Will be automatically GPL V3 licensed whether contributor's name is "dominic clifton" or not.
+3.2) Will become the property of baseflight author.
+
+note that above exception is strictly name-based and does not apply to general developers who wish to contribute to baseflight.