Trademarks Have Value
Trademarks identify products or services of companies and organizations, distinguishing them from those supplied by others. Trademarks can be in the form of words, designs, images, colors, sounds, scents, or combinations of any of these. Trademarks are intellectual property. As such, they have value for the trademark owner, customers, and the public. Registering trademarks with federal or state governments, or both, signifies ownership and provides the owner protection from the mark being used by others for the same types of products and services.
Purpose of Licensing Trademarks
The main purpose of trademark licensing is to expand product and services distribution through licensees and provide earnings at very little cost to the licensor. Also, a particular product or service area may not be one in which the trademark owner wants to be. In that case, there can still be continued income from a trademark license to an interested and suitable trademark licensee.
Trademark Licensing Steps
Select an attorney experienced in trademark and other intellectual property law. This is a very important step. Trademark licensing is a simple concept, however, there are far too many provisions that should be included within an good trademark licensing agreement to be left to chance or to an inexperienced attorney.
Thoroughly investigate the proposed trademark licensee as to honesty, integrity, and reputation. Fully understand the current product line, production and marketing abilities. The licensee will represent the trademark to the world. Use care in licensee selection.
A trademark license may be exclusive or non-exclusive. Licensing of the mark may be territory-limited or territory-unlimited. The royalty payment to the trademark licensor may be a single fee or a continuing royalty fee based on sales under the trademark.
The licensing agreement should provide for licensor oversight of the quality of a licensee's trademarked goods and services. The agreement should be specific about how the trademark is to be used and displayed. The terms of license termination must be spelled out, either as regards an agreed duration or for cause.
A license to use a trademark is much the same as permission to use a person's name. A company or organization that licenses use of its trademarks by another company is truly permitting the licensee to trade on the licensor's reputation and on the public's perception of the licensor's products and services.
Licensing of trademarks should proceed with these thoughts well in mind.