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Drafting and Negotiating Trademark Licenses
Practical Law Legal Update 9-616-4868 (Approx. 4 pages)
Drafting and Negotiating Trademark Licenses
by Practical Law Intellectual Property & Technology
| Published on 16 Jun 2015 • USA (National/Federal) |
A discussion of key Practical Law resources to aid in trademark license drafting and negotiation. This Legal Update includes links to sample templates, precedents and other resources with more detailed trademark licensing guidance.
Brand extension is big business, and trademark licensing is a key tool for businesses seeking to extend their brands into new markets. According to a recent press release issued by the International Licensing Industry Merchandisers' Association, in 2014, retail sales of licensed merchandise totaled an estimated $13.4 billion in royalty revenues and $241.5 billion in retail sales. The complexity and length of trademark license agreements vary depending on a variety of factors, including:
- The relationship between the parties.
- The types of licensed products or services.
- The arrangement's value and duration.
Key issues to address include:
- The scope of the license grant, including geographic territory, types of permissible uses and any exclusivity.
- Sublicensing.
- License fees and royalty payments.
- Quality control.
- Risk allocation.
- Assignability.
For detailed guidance on trademark licensing, including a model license agreement template, see:
In addition, Practical Law What's Market includes a continuously updated database of publicly filed trademark license agreements covering a variety of industry sectors. The database includes summaries of agreements and direct links to the underlying agreements. Access the license agreement database directly from the Practical Law Intellectual Property & Technology homepage under the What's Market heading. From the What's Market license agreement database, select "Trademark" under the categories of licensed IP listed on the left side of the page. For example, this sample search lists trademark license agreements in the consumer goods industry.
Other Types of Trademark Agreements
In some cases, a full trademark license agreement may not be the most appropriate agreement between the parties. Other agreement types to consider include:
- A simple permission letter, which authorizes another party to make a limited and specific use of a trademark (for example, see Standard Document, Trademark Permission-to-use Letter).
- A coexistence agreement, which is typically used for two parties to agree to certain terms and conditions for coexistence of their trademarks in the market (for example, see Standard Document, Trademark Coexistence Agreement).
- A consent agreement, which is typically used when one party grants another party consent to register and use a mark (for example, see Standard Document, Trademark Consent Agreement).