Trademark licensing agencies give you a head start

Trademark licensing is the legal right given to the licensee to use a trademark in return for regular payments known as royalties. The Meaning of Trademark licensing is leasing of intangible asset. Companies may choose to license its products and services when they believe that there is strong consumer acceptance for products. Trademark licensing agencies give you a head start as it helps in getting new products to the market that severely reduces the risk and investment needed for a trademark holder to enter a new product category. Trademark licensing agencies specialize in extending brands through various strategic and creative developments of licensed products.

Trademark licensing is a well established business in the area of trademarks as well as of patents. Trademark licensing largely begins with the rise of mass communication like movies, televisions and comics. Increasing business operations, bringing growth in the market presence and fostering partnerships are the offerings of trademark licensing which you can take advantage of by giving the most efficient financial growth. Trademark licensing can be classified into classical and manufacturing type license; the licensee has to manufacture the products but they can only use the trademark license that the licensor has licensed. Other style of trademark licensing involves franchising, merchandising, movies brand placement and many more. Trademark licensing comes to hugely beneficial for both the licensor as well as for the licensee. From the perspective of licensor, trademark licensing is a successful tool for entrepreneur that enables them to expand their business and the geographical reach. One can explore new region and market places which will further allow them to gain profit. According to licensee’s trademark licensing plays a vital role as it gives them the opportunity to quick start his business with something that already has a name in the market. Licensing of a brand entirely depends on the decision of business and commercial market value; you need to take care of the agreement and negotiations.

A trademark means when the product originated hence it is important for the trademark owner to keep a check on quality as per the trademark norms. What you can do is include an outline in you agreement of trademark licensing which will make sure that the license owner follows the condition firmly as per the guidelines of the brand of the licensor. The guiding principle of brand usage must be attached to the agreement. It should have all the guidelines about the product, manner of arrangement of mark in terms of size, color and typography. Licensor holds the authority to explain to the licensee regarding the quality of products and all guidelines should be clearly mentioned in the agreement. The provisions of quality control are planned to make that services provided in the name of licensed trademark should be almost similar if not of a higher quality than the services given by your licensor. Another clause which should be mentioned in the agreement is that a licensor should have the right to examine, audit and observe the quality of products and services offered by the licensee.

Under the trademarks act, 1999, trademark licensing agreements need not to be registered with the trade marking office. The most important clause of trademark licensing agreement is grant clause as this determines the quality of the possessions rights that will be given by the licensor and this means that the licensee cannot function beyond that limit. It is very important to clearly specify the trademarks that needs to be approved, the license also mention point like the area within which a particular license will operative, the time period and which section of the business the license was granted. Licensee has to pay the royalty for using the trademark and it is charged in provisions of percentage on the calculated net sales. Net sales are the results of deducting returns, applicable taxes, and discounts of the gross sales. To avoid any surprise in future, both parties should be aware of the items that can be deducted. To avoid any kind of third party violation, licensee should keep a back up that should be guaranteed. Licensor wants from licensee to indemnify any kind loss of status or goodwill that might result due to the usage of mark according to the guidelines of Brand usage provided with trademark licensing agreement.

Companies have a trademark department which takes care of the trademark licensing agreements and the task of these legal departments is to assure the protection of company’s trademarks. The main duty of this department is to protect and administer the trademark of the company and this can be done by getting registration under the relevant laws of particular country. These departments are also authorized with the task of managing the licensing trademarks and drafting licensing agreements and they also look after other areas such as patents, copyrights and designs.

Licensee can incorporate the brand into their merchandise but can’t share the ownership of it. When the trademark licensing terminates, the owner or the licensor gets his licensed rights back with the help of agreement. After the termination of Trademark licensing, the licensee can no longer use any thing of the licensed subject matter. Most important is marketing power the brand gives to the licensee’s products. A brand manager creates an opportunity for a licensee to grow their company by extending new product categories by licensing. Trademark licensing can be very effective business strategy for licensors to build a global brand if provided with proper contracts in place. A company can allow others to use their mark only if the licensee ensures to maintain the quality of goods and services. Trademark licensing exists for a limited duration and trademark owner may license the mark that the ownership does not pass to the licensee. When the trademark licensing terminates, the licensed rights will revert back to the licensor. After the termination of Trademark licensing, the licensee can no longer use any thing of the licensed subject matter. There is no doubt that trademark licensing agencies give you a head start over competition as these agencies increase the publicity of brand in the market and gives legal protection for the trademarks. These agencies enable their clients to reap the rewards of targeted licensing programs with minimal risk.

Contact Paul Cookson at 416.286.2860