Quality control – A detailed quality control clause is essential for a brand license. The control by the licensee is necessary, because the mark represents the reputation and goodwill of the owner. Consumers rely on a brand owner`s reputation for the quality of goods or services when making purchasing decisions. It is typical for the licensee to recite that „any goodwill for the benefit of the licensee inures“. (B) Rights are granted exclusively to a licensee, but not to the exclusion of the licensee. Guarantee – A licensee may demand that his interests be protected by a clause, the donor offering an explicit guarantee of non-counterfeiting. This may mean that the licensee agrees to release the licensee for all costs related to the intellectual property infringement. (C) Not exclusively – rights may be granted to other third-party licensees, and the licensee may also use the trademark in trade. Termination and right of appeal – This provision is contained in a licence to encourage parties to cooperate in the settlement of small disputes arising from the agreement. In the event of an infringement, the defaulting party will have the opportunity to remedy this deficiency within a specified period of time. If the defaulting party continues to violate the agreement, the uninjured party has the right to terminate the contract. Brand licensing agreements are very different in length and subtleties.
Although many licenses have a similar structure, each license contains different details and clauses based on the products or services granted. While it is more common to license brands as service marks, licensing agreements may include products or services. In addition, licensing agreements are often federally registered trademarks, but unregistered trademarks may also be licenses. As far as registration is concerned, some countries retain the legal obligation to cover licensing agreements. The United States does not require a trademark license from the United States Patent trademark Office. (A) Exclusive rights are granted to the licensee to the exclusion of any other, including the licenstant, and this may also apply to a specific geographic area or region. Arbitration – If a dispute were to arise as part of the licensing agreement, it is common practice to ensure that the dispute is resolved through arbitration proceedings, as it is a low-cost method. The clause will indicate whether the arbitration will be binding on the parties and what type of discharge will be obtained by the arbitration. Insurance – This provision requires the policyholder to receive insurance in order to protect the donor from liability in the event of claims against the taker and to possibly cover the inability of the taker to fulfil his obligations under the license agreement. Compensation – A common form of compensation is a levy based on the percentage of net sales.
The licensee can even check the activity of the taker to verify that the licensee is properly compensated. This can be defined in a registration and monitoring clause. The licensee may also wish for some form of assurance that the policyholder will do his best to exploit the licensed brands. This may take the form of a „Best Efforts“ clause or there may be a minimum royalty charge. These are some of the most common provisions contained in a trademark licensing agreement, if you need a lawyer for more detailed questions, please contact our office for a courtesy consultation with one of our brand lawyers. Definitions – There is often a definition section (keywords are defined in the agreement). Choice of Law – Forum – The choice of legislation is preferable because it offers some security with regard to the application of the licensing agreement. In addition, courts often impose the choice of litigation clauses as long as the forum has a reasonable and logical relationship with the parties and the license.