A Letter of Marque was a license for privately owned ships that allowed them to capture other ships and their goods. Say you have a Spanish Letter of Marque, you would be allowed to capture the ships of Spain's enemies.
If a person using a letter of marque was caught, and put on trial, they would have to produce it or suffer hanging, sentenced as a pirate. The privateer William Kidd was caught and tried, and could not produce his document of marque, and was hanged.Whether he misplaced it or if it was stolen will most likely never be known. The letter mysteriously turned up 200 years later.
Privateers who were captured by the enemies were often given lighter punishments when they showed the letter, they would be sent to prison, sometimes floating on rivers or the ocean. This could end up a fate worse then death, the prisons were leaky, not seaworthy,and were basically hell on water for the inmates.