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Trademark Licensing Agreements

By Eric Misterovich

Trademarks identify the source of goods or services. They serve to protect the public by reducing confusion in the marketplace regarding the person or company providing the goods or services. For example, if the corner gas station was permitted to slap a national coffee chain’s logo on its cups, the public would assume that coffee to be of the type and quality associated with the national brand. Trademark law prevents that confusion from taking place. To learn more about trademark registration, click here.

However, there is a situation in which a third party is permitted to provide another’s trademarked goods or services: trademark licensing agreements.

In this situation, two entities enter into an agreement that permits the licensee to provide the licensor’s goods or services. This agreement should contain a number of important points.

First, the licensor has a duty to control quality. Remember, this is a large part of a trademark’s function in the first place. The public expects a type and quality associated with a name brand. And when an entity other than the original creator is providing the goods or services, trademark law requires the licensor to take steps to ensure the quality of the goods or services.

If the licensee violates the standard for quality, the licensee is liable not only for breach of contract, but also for trademark infringement.

Second, the agreement should clearly detail the payment terms. These terms can vary greatly depending on the industry, however, a payment calculation, due date, and remedies for failure to pay as provided must be included.

Third, the license agreement should call for the licensee to keep accurate books and records and to provide detailed monthly reports to the licensor. This is critical as many times the payment is tied to the sales of the good or services.

If you need a trademark licensing agreement, or are experiencing problems enforcing your trademark licensing agreement, contact our experienced trademark lawyers today. Simply complete the contact form on this page or call us directly at 855-473-8474.

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