An experienced trademark lawyer can probably provide useful information about trademark licensing conditions. Quality control – A detailed quality control clause is essential for a brand license. The control by the licensee is necessary, because the mark represents the reputation and goodwill of the owner. Consumers rely on a brand owner`s reputation for the quality of goods or services when making purchasing decisions. It is typical for the licensee to recite that “any goodwill for the benefit of the licensee inures”. Compensation – A common form of compensation is a levy based on the percentage of net sales. The licensee can even check the activity of the taker to verify that the licensee is properly compensated. This can be defined in a registration and monitoring clause. The licensee may also wish for some form of assurance that the policyholder will do his best to exploit the licensed brands. This may take the form of a “Best Efforts” clause or there may be a minimum royalty charge. The trademark licence fee is also another key element of the trademark licensing agreement. The more valuable the brand, the higher the royalty for the brand`s licensees.
As such, it is not uncommon for licensees to set minimum sales targets or expectations in the licensing agreement. A well-developed trademark licensing agreement will also be specific to how the licensee will be paid, how often payments can be made and the consequences if payment is delayed. (C) Not exclusively – rights may be granted to other third-party licensees, and the licensee may also use the trademark in trade. Arbitration – If a dispute were to arise as part of the licensing agreement, it is common practice to ensure that the dispute is resolved through arbitration proceedings, as it is a low-cost method. The clause will indicate whether the arbitration will be binding on the parties and what type of discharge will be obtained by the arbitration. These are some of the most common provisions contained in a trademark licensing agreement, if you need a lawyer for more detailed questions, please contact our office for a courtesy consultation with one of our brand lawyers. Other key concepts include definitions, geographic scope, licence requirement/duration, royalty rate and contract terms and conditions; and the following points are important in establishing a trademark license: a trademark licensing agreement is a legal contract between a trademark holder and another party who have agreed to use the trademark on pre-approved terms and have been decided between the parties. The geographical scope of a trademark licensing agreement is another important element of a trademark licensing agreement since a licensee can license multiple takers, so it is important that the licensing agreement clearly defines the geographic areas in which the licensee can use the trademark. For example, a licensee may grant trademark rights to different takers based on the continent, state or city in which it is located. This is particularly often the case in franchising agreements, as there may be several overlapping licensees in the same area.