Trademark license: Overview, definition, and example
What is a trademark license?
A trademark license is an agreement that allows one party (the licensee) to legally use another party’s (the licensor’s) trademark under specific conditions. This license helps businesses expand their brand reach while protecting the trademark owner’s rights. The agreement typically outlines how the trademark can be used, any limitations, quality control requirements, and financial terms such as royalty payments.
For example, a clothing company might obtain a trademark license from a well-known sports brand to produce and sell apparel featuring that brand’s logo.
Why is a trademark license important?
A trademark license allows businesses to use established brand names and logos without infringing on intellectual property rights. For trademark owners, licensing can generate revenue while maintaining control over how their brand is used. For licensees, it provides access to a recognizable brand, increasing product credibility and marketability.
Without a clear trademark license agreement, unauthorized use of a trademark could lead to legal disputes, brand damage, or loss of trademark protection due to lack of proper oversight.
Understanding a trademark license through an example
Imagine a coffee chain wants to sell beverages under a well-known coffee brand’s name. Instead of purchasing the brand, they enter into a trademark license agreement that allows them to use the brand’s name and logo while following specific quality control guidelines. In return, they pay royalties to the trademark owner.
In another example, a toy manufacturer secures a trademark license to produce and sell toys featuring a popular cartoon character. The agreement specifies the approved designs, markets where the toys can be sold, and the royalty percentage owed to the trademark owner for each sale.
Example of a trademark license clause
Here’s how a trademark license clause might appear in a contract:
"Licensor grants Licensee a non-exclusive, non-transferable license to use the Licensed Trademark solely for the purposes described in this Agreement. Licensee shall comply with all quality control standards set by Licensor and shall not use the Licensed Trademark in any manner that could harm its reputation or distinctiveness."
Conclusion
A trademark license allows businesses to legally use a brand’s name, logo, or other identifiers while ensuring the trademark owner retains control over its use. These agreements provide valuable opportunities for brand expansion and revenue generation but must be carefully structured to protect both parties.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.