What You Need To Know About Trademark Licensing Process?

Trademark licensing is an effective managerial strategy used in business development initiatives to establish brand equity without having to take on fees of direct operations. Licensing is the practice of giving the right to use a trademark to another entity under certain circumstances; it expands your company’s market impact while preserving its authority over the trademarked product. This blog post will help you understand what trademark licensing is, why it is important, how it works, and some legal key factors to consider.

What do you understand by Trademark Licensing?

Trademark licensing is an agreement through which the holder of a trademark allows someone else to use that trademark for certain goods, services, or territory. This is done under clearly defined terms and conditions with the proper objective of retaining the standard and quality image of the brand.

While Trademark Registration aims to grant ownership, licensing looks at how this ownership can be put to use for both the owner and the licensee. This means that through the correct acquisition of license, firms can make sales of the trademarks while at the same time preserving them.

Why is the Process of Trademark Licensing Important?

Brand Expansion: Licensing lets a business venture into new markets or extend its product lines or distribute its products through channels, it may not be willing to invest in directly.

Revenue Generation: Licensors make money by charges or receiving royalties, both giving a respectably steady income stream.

Enhanced Brand Recognition: Licensing in particular may increase the availability of your brand in the market hence making it more popular.

Risk Mitigation: A properly drafted licensing agreement helps in reducing all the possible risks in connection with the misuse of a trademark.

If a business is planning on licensing its products and services, Trademark Protection will make sure that your intellectual property is protected throughout the process.

Elements of a Trademark Licensing Agreement:

The most important aspect of a licensing relationship is a trademark licensing agreement. Below are its essential elements:

Scope of License: Describe the channels through which the licensee may use the trademark; and the goods and services in which the trademark may be adopted.

Duration: State the tenure of the licensing agreement, and other provisions for renewal of the license.

Quality Control: To monitor the continuous compliance with product or service quality under the trademark.

Royalties and Fees: Explain who will pay whom, what, when, and how: upfront fee, royalties, down payments, and other forms of payment.

Termination Clause: Describe the circumstances in which this agreement can be cancelled.

Dispute Resolution: Provide for matters that reflect the legal actions to be taken in case of a dispute arising as between the licensor and the licensee.

It is recommended that a Trademark Attorney is consulted when coming up with a licensing agreement to minimize conflict resolutions and legal issues.

Difference between Trademark Licensing & Assignment:

Trademark licensing on the one hand enables the owner to still own the trademark but through assignment, it has to be passed to another owner. One major step for both processes is strategizing on Brand Registration by focusing on Trademark Strength whereas Licensing is preferred in situations where the owner wants to make money from their trademarks but does not wish to transfer ownership, assignment is the complete transfer of ownership.

Various Types of Trademark Licences:

There are several types of trademark licenses, each catering to specific business needs:

Exclusive License: Often the license is only permitted to use the trademark and the licensor cannot even use it.

Non-Exclusive License: This enables several people to use the trademark at the same time.

Sublicense: Allows the licensee to sub-license, though normally under agreed up conditions to another party.

Franchise License: This type is also frequently used in franchising, here broad rights to use the trademark are transferred together with a business concept.

Selecting the appropriate type of license is governed by certain factors such as a business objective and level of trademark control.

Advantages of Trademark Licensing For Licensors:

• Another stream of income is through royalty receipts.
• Increased market visibility without incurring direct operating expenses incurred in the growth and sustenance of a sales force.
• Possibilities of internationalization.

For Licensees:

• Contact a popular brand and thereby save a lot of money that would have been used in branding.
• Increase the credibility of the product by affixing a recognized trademark.
• The advantage of being free to concentrate on operations as opposed to worrying about brand awareness.

However, with appropriate Trademark Protection for unregistered trademarks, both parties can optimize for the above benefits while at the same time shunning the risks.

Some of the Peculiarities in Trademark Licensing:

Quality Control Issues: It is consequently difficult to ensure quality satisfaction among licensees on a consistent basis for the products or services being franchised.

Trademark Dilution: One obvious danger is that sheer licensing or extending the brand to low-quality products or services can dilute the brand’s image.

Legal Disputes: Open to misunderstandings which are likely to cause tension between the licensor and the licensee.

Regulatory Compliance: Licensing has to be done in compliance with state laws especially where the agreement is between two different countries.

Some of the obstacles you are likely to encounter can be well handled by engaging the services of an experienced Trademark Attorney.

Regulations of Trademark Licensing in India:

Trademark licensing is regulated by the Trademarks Act of 1999 in India. The law permits the registration of symbols whether as registered trademarks or as trademarks that are not registered, however, the latter is more protected legally. With trademark protection one can elevate their online presence effectively.

To license a trademark, the following steps are crucial:

• Ensure Trademark Registration: Although it is legal to license unregistered trademarks, there are added merits of registering your trademark, to begin with.
• Draft a Licensing Agreement: Many times, it should include all the basic elements discussed earlier.
  Register the License with the Trademark Office: While not necessary, it is advisable to record the license because this way there will be no arguments regarding the real value of the license.
• Monitor Licensee Compliance: There will always be a way of inspecting and reviewing the licensee to make sure that he follows the agreed quality standards and other requirements.

Important Strategies While licensing a trademark:

Conduct Due Diligence: They should get potential licensees so that they can be suitable partners of the brand and share the same values as the latter.

Focus on Quality Control: Another consideration is that companies using the license should agree on certain quality thresholds that can be easily regulated if incidences of poor-quality products arise.

Consult a Trademark Attorney: Consult the best and most experienced trademark attorneys in reviewing and drafting agreements to ensure that they are very embracive and legal.

Regularly Monitor Licensee Activities: Check occasionally to ensure your trademark is not abused or washed by other people in the market.

Keep Your Trademark Registration Updated: Make sure your trademark is active and protected legally the whole time of the licensing terms.

Conclusion

Licensing of trademarks is a management concept that can be employed to diversify the market front of a trademark, increase its earnings, and consolidate its presence in the market. However it must be well implemented, and this involves competent legal advice and an enduring management process. The basic difference between the licensor and licensee must be fully understood when engaging in this form of trademark licensing.

Why Choose LegalRaasta?

At Legal Raasta, it’s never been easier to understand Trademark Licensing or to register your Trademark, drafting the license agreement. Our team of professionals is always ready to offer relevant advice to ensure your brand is safe and meets all your objectives. Call us now for all your Brand Registration licensing, and other dependable services.