Trademark Licensing

By: Tyler Hampy

Say that you really want to use a phrase or logo that you know is trademarked. Is there a way you can use the mark without getting yourself into trouble? The answer is yes! You need a trademark license.

A trademark license is a permit to use another’s mark. It gives you the right to do something that would otherwise be infringing activity. A trademark license can be oral; however, it is better to get the agreement in writing and signed by both parties in order to avoid potential problems down the road. Because a license to use a trademark is a contract, disputes over the language of a trademark license are governed by the rules of contract interpretation, and we all know that it is better to have an agreement in writing.

So, how do you get a trademark license? It’s probably best to hire an attorney. An attorney will help you navigate the process and will provide assistance in drafting and negotiating the trademark license.

What will the attorney do? The attorney will contact the owner of the trademark, i.e., the licensor, and ask for permission to use the mark. Assuming the trademark owner agrees to allow you to use his/her trademark, the attorney will then negotiate the terms of the license. It is important that the agreement specify a term of length to ensure that it is not interpreted as a permanent assignment of rights.

Can you do anything you want with the mark once you get a license? No way. The mark must continue to serve as an indication of its source, so the licensor must control the nature and quality of the goods produced.

If the licensor does not maintain adequate control over the nature and quality of goods and/or services sold under the mark by the licensee, the result is called “uncontrolled licensing” or “naked licensing.” Naked licensing occurs when the licensee can place the mark on any quality or type of good or service. Naked licensing may cause the mark to lose any significance it may have, thereby raising a grave danger that the public will be deceived because the mark misrepresents the trademark owner’s connection with the good or service. Because a trademark carries with it a message that the trademark owner is controlling the nature and quality of the good or service sold under the mark, not only does the trademark owner have the right to control quality, it has the duty to control quality.

Naked licensing may result an “abandonment” of the trademark by the licensor. However, because uncontrolled licensing may result in a forfeiture of trademark rights, courts have required that a high degree of proof be made before a court declares that the rights to a mark are lost.

Another very important note is that when a trademark owner grants a license, it only transfers limited rights, not the entire interest in the mark. Therefore, a licensee’s use inures to the benefit of the licensor-owner of the mark, and the licensee acquires no ownership rights in the mark itself.

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