Trademark Licensing

Trademark licensing is the process by which a registered trademark owner, called a licensor or proprietor, allows another party, called a licensee, to make and distribute specific products or services under the licensor's trademark agreement. Trademark licensing is a type of merchandise agreement.

The licensor receives a certain amount of money or royalties, a percentage of all sales, in exchange for sharing the trademark. This compensation is also called consideration. Fashion and consumer products concerned with sports and entertainment are often sold under a trademark licensing agreement.

The licensee usually creates a trademark licensing agreement, but a licensor can also create this document. Both parties usually agree upon the terms before creating a trademark licensing agreement. To be eligible for legal enforcement, a trademark license agreement doesn't need to appear in writing. However, legal cases about written trademark license agreements are easier to resolve, less time consuming, and costly. Legal experts strongly recommend that all trademark licensing agreements get documented in writing and become signed and dated by both the licensor and licensee.

FAQs

Licensing of trademark means, owner of the trademark authorizes other person to use the trademark. The right to use the registered trademark is given through a Trademark licensing agreement.

1) Trademark Licensing helps the brand owner to grow his reach by partnering with others who are into similar business.
2) It helps well established brands to earn royalty through licensing and maintain quality of products.
3) For small entrepreneurs getting a license to use large brands will provide large business opportunities.
4) Trademark licensing is heart of Software and Pharmaceutical businesses

Brand Licensing Agreement is very crucial for business success and to reduce challenges and legal issues at later stage. Key points to be included in the Licensing Agreement are:
1) Amount of royalty fee or percentage of revenues to be shared between parties
2) Geographical area within which licensee can use the brand
3) Possibility or restriction on sub-licensing of trademark
4) Quality control clause to ensure that the products sold by the licensee meets Licensor standards
5) Grounds for termination of Licensing Agreement

To keep things clear for both the parties, the Agreement must be registered. Within six months of the date of the agreement, an application for registration for Trademark Licensing Agreement, need to be submitted with the Indian Trademark Department.
Licensing and Assignment of trademark may seem similar but there is lot of difference. Licensing of trademark is a permission given to use the brand name. Assignment is transfer or selling of the trademark to others. Licensing is for limited period of time.

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