Insurance - This provision requires the licensee to obtain insurance to protect the licensor from liability for claims brought against the licensee and possibly to cover a failure of the licensee to satisfy its obligations under the license agreement.
Warranty - A licensee may require that its interests be protected through a clause wherein the licensor provides an express warranty of non-infringement.
This may involve the licensor agreeing to indemnify the licensee for any expenses relating to infringement of the intellectual property.
If a breach occurs, the defaulting party is given an opportunity to correct the deficiency within a specified time period. If the defaulting party remains in breach of the agreement, the non-breaching party will have the right to terminate the agreement.
Arbitration - Should a dispute arise under the licensing agreement, it is common practice to provide that the dispute be resolved via arbitration because it is a cost effective method.
The clause will specify if the arbitration will be binding on the parties and what type of relief will be obtained through the arbitration.
In addition, courts often enforce choice of forum clauses as long as the forum has a reasonable and logical relationship to the parties and the license. These are some of the most common provisions included in a trademark license agreement, should you require counsel on more detailed matters, kindly contact our office for a courtesy consultation with one of our trademark attorneys. Please do not include any confidential or sensitive information in a contact form, text message, or voicemail.
The contact form sends information by non-encrypted email, which is not secure. Submitting a contact form, sending a text message, making a phone call, or leaving a voicemail does not create an attorney-client relationship. Learn More. Free Consultation Trademark Law. Exclusivity - A license can be of three types: A Exclusive -Rights will be granted to the licensee to the exclusion of all others including the licensor and this can pertain to a particular geographic area or region as well.
Both parties usually agree upon the terms before creating a trademark licensing agreement. To be eligible for legal enforcement, a trademark license agreement doesn't need to appear in writing.
However, legal cases about written trademark license agreements are easier to resolve, less time consuming, and costly. Legal experts strongly recommend that all trademark licensing agreements get documented in writing and become signed and dated by both the licensor and licensee.
Some added provisions can help improve the agreement for both parties. These include provisions that:. A trademark license can become a very complex and long document, easily reaching pages, if it has multiple marks, products, geographic locations, and financial provisions. UpCounsel provides a sample trademark licensing agreement.
Trademarks must be protected. Under the Trade Marks Act , licensors must keep control over the authorized use of their trademarks.
If they don't maintain financial control over trading activities and quality control over the products and services associated with trademarks, they could lose the rights to them in the future. Being proactive is important; unfortunately, enforcing trademarks can be difficult. Major brands can afford to pay lawyers to constantly look online and offline for people using branded trademarks in illegal ways.
For example, MGM Metro-Goldwyn-Mayer would likely find and send a cease-and-desist letter to a community magazine using a logo that is like or copies MGM and the lion in a full-page advertisement for a Main Street jewelry store. Small companies without these resources can find enforcing their trademark more challenging. While enforcement is vital for maintaining a trademark, small businesses can damage customer goodwill if they handle this issue carelessly.
Proposing a trademark licensing agreement, rather than threatening to sue, is a good way to support goodwill. Businesses screen potential licensees to make sure they are financially secure and well run enough to use their trademark. That's why most licensors create requirements that new licensees must meet. Harvard University is one example of an entity that regularly enters into trademark licensing agreements.
Harvard's Trademark Program governs licensing of the university's trademarks on products sold domestically. These products typically include apparel, stationery, bags, and novelty items.
Harvard will not license the university's trademarks on the following products:. The program gets coordinated using in-house resources, with staff responsible for managing the process, from identifying prospective licensees to contract negotiations. Managing the program with in-house resources helps protect the university's name, values, and reputation.
Generally, companies must fulfill a stringent set of requirements to get a standard trademark license from another business entity :. Example 1: Sally's registered mark "Sally's Samplers" for chocolate has boosted the sale of her boxed chocolates.
When a large candy maker decides it wants to use the mark, the company offers to buy it from Sally. If Sally sells the mark to the candy maker, she can no longer use it and the candy maker can use her mark however it chooses to do so. Example 2: After selling "Sally's Samplers" for a big sum, Sally decides to step away from her business to do some sewing and gardening. When she moves into her rustic mountain retreat, she discovers a heart-shaped hoe in the garden shed.
Her Aunt Lucy had made the hoe many years ago. Sally has witnessed how this business situation works. She wants to prevent her Aunt Lucy's good name from being treated in this way. She agrees to sell the rights to the mark, but not the right to create derivative marks.
Since Sally is not familiar with trademark law , she doesn't realize her decision won't protect her against others who want to use "Aunt Lucy" in connection with products or services that meet Sally's disapproval.
Example 3: After the heart-shaped hoe incident, Sally promises herself that she won't make the same decision again. She develops a new invention called "Cat Call," a device that allows a cat owner to call a cat-back indoors after it takes an outdoor bathroom break. The new invention skyrockets and Sally again gets offers from other brands.
She decides to license the mark to a manufacturer that specializes in items for pets. The license restricts the mark's use to the specific product. Most countries including the UK fall somewhere in between; that is to say, it is possible but not compulsory to register the licence, and there are some advantages to the licensee, and sometimes also to the licensor, in doing so.
We can advise on this, on a country by country basis. In some circumstances, such as where the trade mark owner and the licensee are within the same group of companies, these provisions concerning infringement proceedings will make it advantageous to the trade mark owner, as well as to the licensee, to register the licence at the Trade Marks Registry. This information is simplified and must not be taken as a definitive statement of the law or practice. Our IP specialists work at all stage of the IP life cycle and provide strategic advice about patent, trade mark and registered designs, as well as any IP-related disputes and legal and commercial requirements.
Read our blogs to keep up to date with developments in the IP world and what we are up to at Mewburn Ellis. We have an easily-accessible office in central London, as well as a number of regional offices throughout the UK and an office in Munich, Germany. All rights reserved. Trade Marks: Licensing. Select Option. For further advice, or for our sheet on Technology Licensing, please contact us.
Special considerations in trade mark licensing Unlike other forms of intellectual property, trade mark rights in most countries can arise from, and can be destroyed by, the use that is made of the trade mark. In particular,the trade mark owner should ensure that the licensing arrangement does not jeopardise: the value of the trade mark the security of the trade mark registration his exclusive ownership of the trade mark rights Protecting the value of the trade mark The value of a trade mark is dependent upon its reputation in the market place.
Security of the trade mark registration If the trade mark that is being licensed is registered in all or some of the countries covered by the licence, care must be taken to comply with the trade mark laws of those countries. Ownership of the trade mark As mentioned earlier, in many countries trade mark rights can be acquired through using the trade mark.
It is particularly a danger where: the licensee or user of the trade mark is local and is known to local traders or consumers, and the trade mark owner is foreign and is not known locally, and no obvious connection is made between the trade mark and the trade mark owner.
Product liability By permitting his trade mark to be used in connection with the goods or services of the licensee, the trade mark owner is holding himself out as having a connection with those goods or services. Infringement The trade mark owner and the licensee will need to agree upon what action is to be taken by either of them in the event of the trade mark being infringed by a third party, and who will bear the costs of such action. Competition Law Many countries and regions suh as the European Union EU have competition or antitrust laws which may prohibit certain terms which the trade mark owner and the licensee would like to include in their licence agreement.
Royalties There are no standard royalty rates in trade mark licensing, as the value of the licence in each case will depend very much upon the reputation of the trade mark in question. In considering the value of the trade mark, the licensee will need to take many factors into account, including: the level of market recognition of the trade mark how long the trade mark has been established whether it is time or fashion sensitive whether its use might be extended to other goods or to other countries whether the licensee will need to spend substantial sums on marketing.
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