In non-legal terms, a trademark license is the giving of permission to use a trademark from the owner of a trademark to another. In legal terms, the owner of the trademark — who grants permission — is called the “Licensor,” and the business or person receiving permission is called the “Licensee.” With a license, importantly, the owner of the trademark retains ownership. In this manner, a license is different from the sale of a trademark, where ownership changes hands.

Generally, the person/business receiving permission to use the trademark pays ongoing fees — royalties or licensing fees — for the right to use the trademark, and the license to use a trademark is generally limited in time. In this sense, one might think of a license to use a trademark as a rental agreement of sorts. In addition, a trademark license is in writing and subject to extensive negotiations between the Licensor and the Licensee.

The essential key to trademark licensing is that the owner MUST maintain contractual power to control the use of the trademark and also exercise that control. If the Licensee is using the trademark incorrectly, the Licensor must object, correct the usage or terminate the license if the violations of use continue. Otherwise, the existence and legal protections afforded by the trademark can be called into question.

Trademark licensing arrangements are very common. One common use of trademark licensing is in franchise business relationships. This is often observed in restaurants like McDonald’s and Starbucks. Often, the main company operates most of the restaurants but allows others to operate franchise locations. These franchise relationships involve the licensing of the parent company’s trademarks for use by the franchise operators. In franchise relationships, typically, a large number of trademarks are licensed so that the franchise operation has the same look, feel, and quality control as the company-operated locations.

Another common example of trademark licensing involves the use of trademarks for ancillary merchandising. Generally, a trademark denotes the commercial source of a product. Thus, the Mercedes symbol seen on vehicles indicates that the vehicles were made and sold by Mercedes-Benz. However, that same symbol can be licensed for use on non-automotive products like hats and t-shirts. This is very common with trademarks associated with sports teams.

Another common use of trademark licensing exists with co-trademarking. For example, a trademarked ice cream brand might partner with a trademarked cookie brand to create a dessert that combines the two trademarked items. This applies, too, with a trademarked component or ingredient being included in a larger product. Certain trademarked sweeteners, for example, are used as ingredients in foods and beverages. Under these types of license agreements, the trademark for the ingredient/component is allowed — or required — to be placed on the larger product. Generally, the license agreement will specify that no alteration of the component/ingredient is allowed. This is part of the quality control mentioned above.

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.