Get a Quote
Get a Quote and Find Services to Fit Your Needs 50000+ Satisfied Clients
5000+ Licenses & Registration
15 Branches across India
75 Years + Combined experience
A trademark is a unique brand or name associated with a service/product of a business. In India, the trademarks are protected under Trade Marks Act, 1999, and are registered with Trade Marks Registry. If the trademark owner wants to authorize another party to use their registered trademark, having a trademark license agreement in place is of utmost importance.
This agreement lays down all the terms and conditions governing such use. In this blog post, we shall discuss this agreement in a detailed manner, and also explain its elements and advantages.
Trademark license agreement, also known as trademark licensing agreement and brand license agreement, is a specialized contract that permits a third party (licensee) to use the brand owner’s (licensor’s) trademark under certain defined conditions without transfer of the trademark ownership. It ensures the rights as well as the obligations of both the parties are well-protected and reduces the risk of misuse/disputes to a great extent.
The agreement allows the licensee to take advantage of the brand’s reputation while the licensor retains control over its ownership. The agreement is valid for a fixed period as clearly mentioned within its terms.
The trademark license agreement is quite detailed and clearly specifies how the licensee can use the trademark. Here are some of the most important elements that must be included in this agreement:-
The TM license agreement must contain the description of the parties involved. The description must include the nature of their businesses and the ownership of the trademark to be licensed. It should also specify the class of goods/services that are covered under the license.
The trademark’s complete description must be mentioned in the agreement. This includes all its details like colors, words, shapes, symbols, labels, packaging or any other representation. Mentioning such details is extremely important to ensure proper protection of intellectual property.
The grant of licensee to the licensee by the licensor must be described in a well-detailed manner. The nature of the trademark license must be non-transferable and the same must be included. All incidental matters pertaining to the license grant must be stated clearly.
The agreement should clearly mention the permission being granted and the limits of how the trademark can be used. The licensee is not authorized to go beyond the limits specified in the agreement.
The trademark licence agreement must detail whether the license will be exclusive or non-exclusive in nature. In the case of an exclusive license, the licensee is granted the sole right by the licensor to use the trademark within the scope agreed upon in agreement.
However, in the case of a non-exclusive license, the licensor can grant the same rights to multiple licensees simultaneously. This could potentially be more profitable.
The ownership of the trademark shall remain exclusively with the owner/proprietor. The agreement must clearly state that the licensee cannot claim any ownership rights over the trademark at any time whether during the term of the agreement or after its termination.
The exact duration of the trademark license must be stated. After the expiry of the term, the license could be renewed at the discretion of the licensor and licensee.
The trademark license agreement must specify the quality of goods to be maintained by the licensee at all times. The licensor may also require the licensee to provide samples of goods, packaging, etc., when deemed necessary. A requirement for quality check audits may also be included in the agreement.
The agreement must specify the grounds for termination. It could include the following termination grounds:-
Termination may occur if the licensee fails to use the TM for commercial purposes within a specified time frame following the agreement date.
The license may be terminated if the licensee stops using the product for profit for a specified duration, such as one year.
Termination can also happen due to the licensee's failure to meet the product quality requirements specified in the license.
If there is a change in the ownership of the licensee's business, the termination of contract will take place. The new owners may not be obligated to adhere to the licensing terms agreed upon by previous owner.
Lastly, violation of any other clause, condition or term outlined in the contract by the licensee can lead to termination.
Additionally, the procedure for termination must also be mentioned in the trademark licensing agreement. It could include a prior notice period/immediate cessation, manner of serving notice, steps to be followed after termination, etc.
The agreement must specify how payment for trademark licensing will be structured. It may include the fixed fees for the duration of the agreement, royalty charged per unit of goods sold under the trademark, etc.
In the agreement, certain other provisions could be included to ensure the agreement is enforced in a smooth manner. The following can be stated in the agreement:- governing law, jurisdiction for disputes and arbitration as a preferred method of dispute resolution. It can also cover clauses related to indemnity, limitation of liability, force majeure (unforeseen circumstances) and confidentiality among others.
The advantages of a trademark licensing agreement are as follows:
The agreement specifies that the trademark owner/licensor is the sole owner and that the licensee is only an authorized user. This helps to prevent ownership claims and disputes.
Through the agreement, the licensor can earn royalties and initial fees for allowing the use of the trademark.
It specifies how the trademark is to be used and prevents misuse that could damage its reputation and goodwill.
As it allows for increased use of the trademark, it directly increases brand visibility and recognition in the market.
A trademark license agreement is a must-have document for a trademark owner who wants to permit another party to use their trademark under defined terms and conditions. It helps prevent unauthorized use, improper handling or misuse of the trademark and unnecessary legal disputes between the parties.
Want to register a trademark in India but unaware about what the requirements are? To learn about the requirements for trademark registration, you can visit this link → https://www.registrationwala.com/trademark-registration. For assistance in the registration process, you can connect with our team.
Disclaimer :- This blog post is purely intended for educational purposes. While we have made every effort to provide our readers with accurate and complete information in this post, we cannot guarantee its full accuracy or completeness. Therefore, information in this content should not be interpreted as professional/academic/business/financial/legal advice.
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.
Want to know More ?
