In the world of IPR, one of the most important documents is inarguably the trademark license. It refers to a legal agreement in which the trademark owner (known as licensor) gives another person/business (known as licensee) permission to use their brand name, logo, slogan or some other trademark. The agreement lets trademark owner continue to own their trademark but at the same time, also allows someone else to use it in accordance with conditions mutually agreed upon. In return, the owner of mark may receive trademark royalty or licensing fee, which can actually be a great source of income at times. A trademark license helps businesses expand their brand and enter new markets all the while retaining legal control over their trademark.
For example, a company may permit another company to use its brand name/logo/characters to sell products/provide services. Before grant of trademark usage rights, both parties should carefully negotiate all the terms and conditions of arrangement and accordingly, they must sign trademark licensing agreement.
The agreement should clearly mention the scope of TM use, quality standards to be maintained, license duration, termination grounds and all other important clauses so that there is no room for confusion or dispute in future. In this blog, we shall discuss trademark licensing in detail.
Trademark licensing, also commonly known as brand licensing, is the legal process whereby a trademark owner gives permission to another person or business, as the case may be, to use their registered trademark for good/service. The trademark owner remains the legal owner of the mark while the licensee gets the right to use the trademark for approved goods/services as per trademark licensing agreement.
By licensing trademark, the trademark owner can earn money in the form of royalties/licensing fees and licensee can benefit from using an established brand that customers already recognize as well as have trust in. Frankly speaking, it’s a win-win situation for both parties.
The registered proprietor of a trademark is the legal owner of the mark and the exclusive right to use the mark lies with him u/s 28 of the Trade Marks Act, 1999. This also means that only the trademark owner gets to authorize others to use trademark through a licensing arrangement. Further, u/s 48 of the Act, it is provided that when a registered user (licensee) uses trademark with permission of the registered proprietor, such use is deemed to be used by the proprietor himself. This helps maintain the trademark's legal protection as well as strengthens the owner's rights.
In very simple terms, trademark licensing in India allows trademark owner to permit others to use brand while retaining ownership and control over it. The law also ensures that the trademark continues to receive legal protection even when it is being used by an authorized licensee.
The procedure for registering a trademark license is mentioned u/s 49 of the Act. It is entirely a voluntary choice to record a trademark license with the Trade Marks Registry. It isn’t mandatory at all. Even then, it is usually advisable to register the arrangement. The reason is that the registration creates an official record of the permitted use and helps avoid future disputes.
It must be noted that a trademark license can only be recorded if trademark is registered with the Registry. Generally speaking, the application for registration of a registered user should be filed within six months from the date of the license agreement.
Using Form TM-U, the trademark owner as well as the licensee must jointly file an application with Registrar of Trade Marks to register the licensee as a registered user. The following documents must be submitted along with the application:
A copy of trademark license agreement.
An affidavit from trademark owner containing details of:
The relationship between licensor and licensee.
The degree of control owner will exercise over TM use.
The goods/services for which trademark will be used.
Any conditions/restrictions relating to TM use including quality standards, place of use or manner of use.
Duration of permitted use.
A Power of Attorney, in case an agent is hired for the filing of application.
Any additional documents or evidence as deemed necessary by Registry.
After application is submitted along with supporting documents, it will be subject to examination by Registrar. Upon examination, the Registrar may proceed to register the licensee as a registered user of trademark. The date on which the application was filed will be recorded by the Registrar. This very date becomes effective against the third parties. Upon the completion of registration, the details get published in the Trademark Journal.
Also, any existing registered trademark users may be notified by the Registrar. If the applicants ask for it, some private information given with the application can be kept confidential (other than details entered in the Register) and not shown to the public/competitors.
In simple words, trademark licensing in India requires trademark owner and licensee to file a joint application, submit the license agreement and supporting documents and obtain approval from the Trade Marks Registry for the licensee to be officially recorded as a registered user of trademark.
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A trademark license is a legal agreement between the trademark owner (licensor) and another person or business (licensee). It allows licensee to use trademark for goods/services agreed upon. In return, licensor may receive trademark royalties or licensing fees. Legally speaking, recording of a trademark license with Trade Marks Registry is not mandatory at all. Despite this, the process is still recommended by many IPR experts out there. The reason is that it creates an official record of permitted use of trademark and helps to avoid future disputes or confusion.
For this purpose, a joint application must be filed with Trade Marks Registry using Form TM-U. For assistance in filing a trademark application or ensuring trademark compliance, you can get in touch with our IPR experts at Registrationwala.
Q1. Is it legally mandatory to register a trademark license?
A. No, registering a trademark license is not mandatory in the legal sense. A trademark owner can license their brand through a written agreement. But it is still recommended to register the license so as to protect intellectual property rights better.
Q2. Can a trademark license be recorded if the trademark is not registered?
A. No, trademark license can only be recorded provided that the trademark is registered with Registry.
Q3. Who is a registered user of trademark?
A. Under Section 49 of TMA 1999, a registered person is defined as a person/entity, other than trademark owner, who is authorized to use a registered TM.
Q4. What happens if I use a trademark without trademark owner permission?
A. Using a trademark without the owner’s permission may amount to trademark infringement. It may lead to legal action by the owner against you, including a court order to stop using TM, payment of damages and seizure of infringing goods among others.
Hi, I'm Sachin Chawla. I’m a commerce graduate from Agra University and a Chartered Accountant (2015) with DISA certification. I focus on helping businesses with formation, management, tax and FEMA matters, business licenses and regulatory compliance, IP advisory, risk management and auditing among others. Through my articles, I aim to share my expertise and provide practical guidance in these areas.
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