Agreement For Use Of Trademark

Feb 5, 2023
3 min read

Written by Sudipta Bandyopadhyay, Lawyer

Famous brands have trademarks. Cases of IP infringements are filed before the court by these brands now and then. Infringement is an activity where one person uses another’s registered designs and marks without the owner’s permission. Through a license agreement, the actual owner can only permit another person to use the trademark.

Explanations on the use of the trademark by agreement

“Trademark” is defined by the Trademark Act, 1999. Trademarks can be words, symbols, or phrases. It is used to distinguish from other goods. Section 49 of the Trademarks Act, 1999, discusses licensing trademarks and service marks in India. License agreements for the use of trademarks are of different types.

Types of licenses

Exclusive license: It is an exclusive grant to the licensee to use the licensor's trademarks for commercial use.
Non-exclusive license: It is a non-exclusive grant to use the licensed trademark for multiple users.
Sole license: The licensor cannot grant the license to multiple users. The use of a trademark is limited between the licensor and the licensee.

Use of trademark

Franchising: In simple language franchising agreement lets the mother company open a branch in any location. McDonald, KFC, and Domino are some examples.
Merchandising or product licensing: Pictures of Disney characters, superman in apparel are found in retail stores. This famous production houses enter into license agreements with big retail stores to promote the brand names, pictures and characters.
Brand extension: Breyer’s ice cream is a famous ice cream brand. It launched a new ice cream with Oreo cookies. These two brands use their brand values to launch a new product to attract customers.

Clauses of the agreement to use a Trademark

Names and registered addresses of both licensor and licensee are to be mentioned in the agreement. The respective parties must address the designation of the licensor and licensee.
The agreement must mention that the licensor is the absolute and registered owner of the licensed trademark.
The agreement will further state that the licensee seeks permission from the Licensor to use the licensed trademark. The description of the trademark is to be mentioned in the agreement.
The purpose of the licensee must support public policy.
Every agreement is done in place of monetary consideration. Both parties must accept the payment methods.
The agreement must mention that the licensor agrees to grant permission to the licensee to use the registered trademark for the goods.
The licensor will acknowledge through the agreement that it maintained a minimum standard to control the quality of the licensed Product. Goodwill is earned only because of that quality. The licensee should agree to maintain the quality of that licensed Product.
If the licensor approves where and how the trademark will be displayed, then only the licensee will display the licensed trademark.
The agreement must mention the geographical area where the licensee can use the trademark.
Protecting and preserving the licensed trademark is the duty of both the licensor and licensee.
The licensee must declare that he will not involve himself or assist others in any third-party infringement of the licensed trademark.
The agreement shall define the date and time. It must specify the tenure of the agreement. The licensee can use the permitted trademark only within the terms of the agreement.
The agreement can be terminated at any time till the end of the term of the agreement. If certain conditions are breached or not fulfilled, termination notices are served.
Upon termination of the agreement, the licensee will stop using the licensed trademark. The licensee must pay all the dues of the licensor within time.
At its own expense, the licensor shall register the trademark in the territory. The licensor must protect the trademark. The licensee will protect the granted IP rights.
The licensee shall pay a certain amount to the licensor per the agreement's terms.
The agreement must declare the personal data and information to be confidential. The licensee will thereby agree as per the clauses of the agreement to maintain such trade secrets.
Both parties must acknowledge and sign the document with free consent and in sound mind.

Conclusion

The local weavers, tailors, and potters are actual artists. These local artists can protect their masterpieces through IP protection. They can also use it for business expansion and prevent any commercial exploitation.

References

Module 12, Trademark Licensing (WIPO)
Ryan Kernan, What is product licensing? Merchandise Licensing and product licensing explained (Greenlightrights)
Martha Guarisco, Why is trade mark registration important for franchising? (Scintilla-ip)