While most business owners understand that registering a trademark is important, other uses of this valuable intellectual property aren't that well-known. One of those is a trademark license agreement, a great way for the owners to monetize their trademarks without selling them (or their business) and for other people to hit the ground running by obtaining the right to use a trademark for their business.
This Lawrina trademark license agreement description will tell you how you can license your trademarks or use other well-established trademarks within your business. Not only will we give you explanations, but also offer a simple trademark license agreement template you can use.
A contract in which the licensor gives the licensee permission to use the licensor's trademark under specific and strict terms and conditions is called a trademark license agreement.
While the trademark license agreement definition might seem complicated, trademark licensing is very common in business – various kinds of franchises use licensed trademarks, and you can see it in industries such as fashion, food and beverages, automotive, fitness, etc.
A trademark license agreement (usually) has two parties:
Besides trademarks, parties, and their names, here are some important terms you should be aware of before creating or signing a trademark license agreement:
Trademark license agreements can come in various forms, with the main difference being the type of license they grant:
An exclusive license makes the licensee the only one who can use the trademark in the agreed location. That means that not even the licensor can use the trademark and can't give licenses to anyone else through another trademark license agreement.
Contrary to the exclusive license, a trademark license agreement containing a non-exclusive license allows the licensor to give trademark licenses to other parties within the same region.
A sole license only allows the licensor and the licensee to use the trademark. A trademark license agreement with a license of this type prohibits the licensor from giving more licenses to other businesses.
A trademark license agreement can be useful for various types of licensors or licensees, such as:
Those are just some examples of how licensors/licensees can benefit from a trademark license agreement. Our trademark license agreement template will serve as a great starting point you can customize.
Without a trademark license agreement, it would be very hard to define all the nuances that make up the terms and conditions of the licensing relationship. Plus, both parties would be unprotected if something goes wrong, which makes having at least a simple trademark license agreement a much better option than leaving everything to chance.
Our key terms section mentioned some important elements of a trademark license agreement, but here is a short trademark license agreement checklist:
Now let's give you some tips that will help you write a trademark license agreement:
When filling out your trademark license agreement template, ensure you specify both the licensor and the licensee in detail, mentioning full legal names, addresses, registration numbers, legal representatives, and other important information that will help in easily identifying parties.
Recitals of a trademark license agreement can contain the intention of the contract and further describe the parties and trademarks. However, recitals aren't a requirement and aren't legally binding, so make sure you put everything important in the contract body.
Grant of the license is a clause specific to a trademark license agreement in which the licensor specifies the trademark and the license conditions – its exclusivity, geographic limitations, the products or services it covers, as well as how long the license will last and the amount of the licensing fee or compensation.
Defining the territory where the licensee can use the trademark is an integral part of any trademark license agreement, so ensure you don't forget this clause.
The consideration section describes what each party should give to the other to fulfill their obligations from a trademark license agreement. As an example – the licensor can guarantee the trademark is registered and that they will transfer the license for selected goods and services in good faith, while the licensee agrees to pay a fee or royalty for trademark use.
The term describes the duration of the license and is a key component of any trademark license agreement.
We have mentioned that trademark licenses are often part of a larger franchising agreement, which is why they are accompanied by quality standards licensees must maintain.
Termination terms will specify how each party has the right to end the relationship and usually define a notice period and eventual compensation.
Whenever you want to allow someone to use your registered trademark or whenever you want to get access to another person's trademark, a trademark license agreement is a viable option for arranging such a deal.
Here are some common uses of a trademark license agreement:
A license only allows you to use a registered trademark but doesn't transfer ownership. Therefore, signing a trademark license agreement is not a good idea if you intend to acquire a trademark permanently.
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While it is not required to have a trademark license agreement in written form, it is highly recommended. In case of any disputes, it will be next to impossible to determine what was agreed upon if you only had an oral trademark license agreement.
A trademark license agreement is a contract between two parties, the licensor and the licensee. As with other contracts, it is enforceable by the law in cases when one party failed to deliver what was agreed upon, and especially if the other party suffered damages resulting from contract breaches. Because of this, it is always recommended to have things written and use a trademark license agreement template.
Recording a trademark license agreement is not required in the US. However, because trademarks are often used internationally, it may be wise to record them internationally. You may consider recording a trademark license agreement with the Madrid system.
Note that all these answers may vary depending on the state and should be discussed with a legal professional.