Trademark licensing is the process of allowing a third party to use a trademark that is owned by someone else. This is a common practice in the business world and can be a beneficial arrangement for both the trademark owner and the licensee. If you are new to the world of trademark licensing, here are some basics you should know:
What is a trademark?
A trademark is a symbol, design, or word that identifies and distinguishes the goods or services of one party from those of another. Trademarks are used to protect the reputation and goodwill of a company and can include things like brand names, logos, and slogans.
What is a trademark license?
A trademark license is an agreement between the owner of a trademark (the licensor) and a third party (the licensee) that allows the licensee to use the trademark in connection with their goods or services. The license typically outlines the terms and conditions of the use, such as the duration of the license, the geographical area in which the trademark can be used, and any quality control requirements.
Why license a trademark?
Licensing a trademark can be a mutually beneficial arrangement for both the licensor and the licensee. For the licensor, licensing their trademark can generate additional revenue streams without having to manufacture or sell any products themselves. For the licensee, using a well-known trademark can help build brand recognition and increase sales.
Types of trademark licenses
There are two main types of trademark licenses: exclusive and non-exclusive.
An exclusive license grants the licensee the sole right to use the trademark in a particular geographic area or industry for a specified period. This means that the licensor cannot grant any other licenses for that same use during the term of the agreement.
A non-exclusive license allows the licensee to use the trademark, but it does not prevent the licensor from granting licenses to other parties for the same or similar use.
One of the most important aspects of trademark licensing is ensuring that the quality of the goods or services associated with the trademark remains consistent. The licensor will typically include quality control provisions in the license agreement that require the licensee to maintain certain standards to protect the reputation of the trademark.
A trademark license agreement will typically include provisions for termination. For example, the agreement might be terminated if the licensee fails to meet quality control standards, breaches the terms of the agreement, or goes bankrupt.
Trademark licensing can be a beneficial arrangement for both the licensor and the licensee. If you are considering licensing a trademark or using a licensed trademark, it is important to understand the basics of trademark licensing and to work with an experienced attorney to ensure that your rights and obligations are protected.
You should contact us if you have questions about licensing a trademark or creating a franchise.