1. What is a trademark license?
A trademark license is an agreement between a trademark owner (the “licensor”) and another person (the “licensee”) in which the licensor permits the licensee to use its trademark in commerce. Usually, a trademark license is expressed in a written contract specifying the scope of the license.
2. What provisions are essential to a trademark license?
A trademark license will identify:
3. Why is a licensor required to exercise quality control over a licensee's goods and services?
- the trademark
- the licensor and the licensee
- the trademark right(s) to be licensed (including the territory in which the marks are being licensed)
- the nature and quality of the goods and services that the licensee may offer under the trademark
Control is needed because a trademark represents the trademark owner’s reputation for goods and services of a certain level of quality, and consumers tend to rely on this reputation in making purchasing decisions. If a licensor does not exercise sufficient control over the quality of the goods and services offered by the licensee, the trademark may, in some countries (for example, the United Kingdom and Canada), become vulnerable to attack by the licensee or a third party. In other countries, such as the United States, the trademark may be deemed abandoned.
A license will provide for quality control by the licensor by including provisions such as:
4. What other issues are commonly addressed in a trademark license?
- Trademark Usage - The licensor may specify the manner in which the trademark will be used on or in connection with the goods and services of the licensee and on advertising and promotional materials. The licensee may be required to obtain the licensor’s permission before using any new presentation of the trademark.
- Quality Control Monitoring - A licensor may require access to a licensee's facilities, raw materials, finished products, personnel and records to monitor the licensee’s adherence to the licensor’s quality standards.
5. Should a trademark license be recorded with the trademark office?
- Royalty - When a licensor grants a trademark license in return for royalty payments from its licensee, a royalty amount is usually stated explicitly in the license.
- License Term - A trademark license usually sets a fixed term for the license and the conditions under which the license may be (a) renewed for an additional period of time or (b) terminated for breach of the license conditions.
- Exclusivity - A trademark may be licensed exclusively to a single licensee or licensed non-exclusively to more than one licensee. In a non-exclusive licensing arrangement, the licensor retains rights to use the trademark itself, to license it to others, or both. A license may also be "sole," meaning that only the licensee may use the trademark.
In some countries, for example, the United States, there is no legal requirement that trademark licenses be recorded with the national trademark office. Such recording will simply provide notice to the public of the existence of the license agreement. In other countries, however, a license must be recorded to be effective against third parties.
6. Should an attorney be consulted in preparing a trademark license?
An attorney familiar with trademark licensing may provide significant assistance in drafting and negotiating a trademark license. Also, a trademark attorney can advise about local requirements regarding trademark licensing requirements, including possible anti-competition laws and recording the license.
Additional INTA Resources
Country Guides: Essential Information on Trademark Protection Worldwide
See Print Publications
for Trademark Administration: A Guide for Paralegals and Trademark Administrators