Owners of trademarks can allow others to use those trademarks. This is done through the preparation and execution of a trademark license. This is a type of agreement or contract between the owner of the trademark (the “licensor”) and the person or company who will be allowed full or partial use of the relevant trademark or trademarks (the “licensee”). It is probably more common for an owner to grant a partial license limiting the use of the trademark to specific goods or services, areas, channels of commerce, and subject to other limitations. A commonly known example of trademark licensing is franchise-franchisee relationships, as many restaurants have.

For trademark owners, there are many advantages of trademark licensing. These include:

• Creating new revenue streams since the licensee will pay royalties for the use of the trademark
• Opening new market and sales options for the trademark owner independent of markets being exploited by the licensee
• Expanding the trademark to new products/services without the risk of capital investments
• Expanding reach and fame of the trademark, enhancing the commercial value of the trademark
• Allowing for commercial exploitation of a trademark that may not be fully exploited for lack of capital or other reasons
• Creating brand “synergies” where a licensee has its own trademarks which are being combined with the licensed trademark

For licensees, the advantages of licensing include the use of an established trademark with a loyal customer base that mitigates start-up risks, the ability to expand existing products/services to a new customer base, and the creation of brand synergies if trademarks are being combined with a product or service.

A typical Trademark Licensing Agreement will have the following types of provisions:

• Scope, terms, and limitations — all trademarks that are being licensed will be clearly defined along with the scope of us,e including terms and limitations (such as “internet only” or only for X type of products); terms may also include the requirement that the licensee purchase certain products from the licensor (or that are approved by the licensor); this is part of quality control and, often, generates additional revenue for the trademark owner
• Term and length — the agreement will set forth the temporal duration of the license and any renewal conditions
• Default and termination provisions — license agreements will contain provisions that allow the trademark owner to terminate the license for breach of the license or other reasons; related provisions will govern what happens if the license is breached and what remedies are available to each party
• Payment terms — the licensee pays royalties and fees for being allowed to use the owner’s trademark(s); there may be up-front fees and ongoing royalties
• Quality control — by law, a trademark owner must police how its trademarks are used; otherwise, the owner can risk the loss of the trademark either as a functioning trademark or through dilution or tarnishment; thus, all license agreements will contain provisions requiring the licensee to meet quality standards, to maintain the goodwill associated with the trademark and to not allow use of the trademark by others
• And more

Contact the Trademark Attorneys at Revision Legal

For more information, contact the experienced Trademark Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.