Has anyone had to deal with leasing vs. licensing?

Typically, colocation is offered on a lease basis where the client places their data center equipment in the provider's facility and is responsible for administering that equipment while the colocation provider provides the physical space, bandwidth, routing, and electricity, etc. I have never heard of licensing in the context of data center colocation. And, none of those aforementioned things strike me as licenseable. Hence, I would have to agree with your legal department. Having said that, many providers of colocation also provide many other services and solutions and some of these might very well be offered on a license or even a service contract, rather than lease, basis.