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12+ SAMPLE Trademark License Agreement
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What is a Trademark License Agreement?
A trademark license agreement is a document that denotes an authorization that a licensor, an owner of a trademark, gives to a licensee, a company that wants to use an established trademark for its products. The license gives the right to the licensee to manufacture products with the trademark to a given territory, according to what he or she and the licensor had agreed upon. When you have a business and you want your products the best marketing that they can have, you will have the resort to using a trademark that is already established in the market. This way, you can ensure consumers that can buy your products. You will ride on the fame of the trademark. You know that if you will use a trademark that is already popular in the market, you can get more profits than if you will use a trademark that will be new to people. You just have to make the licensor secure that you are going to do everything to take care of the reputation of their trademark. You have to ensure that the products that you will create will be according to their standards. Because of this, a deep business relationship is needed between the licensor and the licensee. They have to make sure that there will be no problem with the products of the licensee. The licensee must keep up with the reputation of the products of the licensor. With this, the operational plan and production plan of the licensor are shared. Because sometimes, the licensee needs to have products that are the same as the style of the licensor’s business. It can be a good business that can happen between the licensor and the licensee. The licensor will get royalties from the licensee’s profits and the licensee can have a good trademark for his or her business.
Elements of a Trademark License Agreement
Whether you are having a perpetual trademark license agreement, an exclusive trademark license agreement, or a non-exclusive trademark license agreement, you have to ensure that your agreement has all the essential elements. Read the following and know the elements of a trademark license agreement:
The first part of the trademark license agreement is the introduction. Put the title of the document, stating that it is a trademark license agreement. Include the date when you will sign it. State the name of the two parties, the licensor and the licensee. The ‘Licensor’ is the party that is going to grant their trademark and the ‘Licensee’ is the party that is going to have the right to the trademark. If they have organizations, you must mention them. Be accurate in including these details because they are important. You have to be clear to whom the document is addressed.
Then you should have to make a clause for the things that are referred to as ‘recitals’. It defines the agreement and gives some background information on both parties. It is a statement of intent that is giving the license to rights. Describe the kind of business that the licensee is going to have. This is where the licensed marks are going to be used so it is important to mention it. The use of the license will be limited to the industry that the licensee will have. Then list the products and services where the licensed marks will be used.
This is the clause where the acceptance of the trademark license is given. Usually, the marks that are being licensed are not described in the agreement. It is described in another document called ‘Schedule’. The full description of the licensed mark is written there. In the grant of a license, you need to make a complete description of the products that will have the licensed trademark. In this section, you will tell whether the right will be exclusive or non-exclusive. An exclusive right means that the licensee will be the only one who will receive authorization to use the trademark. The non-exclusive right on the other hand means that there can be many of you who can use the trademark. Another thing in this section is you have to mention whether the trademark license is ‘worldwide’. This means that the trademark is licensed not only in the United States. It is also accepted throughout the world. If it is not applicable, then delete this word in the agreement.
No Transfer Term
This clause states that the licensee has no right to transfer the trademark license to another company. He or she will only use it on their manufactured products. In case the licensee will like to transfer the license rights, he or she should ask the permission of the licensor. It is up to the licensor to give him or her the rights to transfer.
Here, the limited territory where the licensee can use the trademark is stated. There should be a geographical area where the licensee has the right to use the licensed mark. If there will not be a clause about this, it only means that the licensee has no physical restrictions in using the trademark. The licensee can use the trademark anywhere in the world. He or she will have no restrictions.
You have to be clear about the license fee. This is the payment that a licensee has to pay to get the trademark license that he or she needs. Before you can write the license fee in the agreement, the two parties have to agree on a particular amount.
This is the payment that the licensor will ask from the licensee. It may be a percentage from the sales of the licensee when using the trademark on his or her products. This thing will be discussed by both parties and there should be a negotiation that has to happen on their part. Royalty is important because if the licensee will use the trademark, he or she has to give some share of his or her profits. If the licensee will not agree on a percentage of sales, there should be a minimum royalty that should be given to the licensor. The licensee will have to give a particular amount of money each year to the licensor. This will be the payment for using the licensor’s trademark.
This contains the length of the time when the licensee will have the right to use the trademark. You have to state how long will the agreement last. Sometimes, you can make an agreement where the term automatically renews after the end of each term. The licensee can request the length of time when he or she will want to use the trademark and it is up to the licensor to accept the request.
This clause states the ownership of the licensor of the trademark. It supports that the licensee has no right to own the ownership or transfer the legal rights for it to him or her. It also states that the licensee will not do anything to contest this right. The licensee will not try to own the right. There should be goodwill needed in this. The licensee has to respect the right of the licensor.
In this section, the licensee should guarantee that the products that he or she will manufacture will keep to the standards of the licensor’s trademark. The licensee has to agree to keep his or her production plan according to the standards of the licensor. If the licensee will not do this, his or her products will destroy the reputation of the trademark of the licensor. It will not be good for the business of the licensor.
There should be a clause where the licensor can ensure that if ever there will be damage to the reputation of his or her trademark, the licensee will pay him or her an amount to pay for damages. The licensor will entrust rights to the licensee and it is only fair that if his or her business will be damaged due to the negligence of the licensee, he or she deserves payment.
A clause about termination should be given. Both parties have to know what to do if ever one of the parties want to leave the agreement. It can happen after unexpected chances of disputes or maybe if ever the licensee will not benefit much from the trademark. Or if the licensor will not receive the royalty that should be given to him or her. Both of them will have the right to terminate the agreement.
Tips on Trademark License Agreement
If you are a businessman who is about to enter a trademark use license agreement or a trademark and copyright license agreement, you may need some tips so that you can draft an agreement better. Read the following and consider these tips that we can provide for you:
How to Successfully Get a Trademark License
Maybe you are searching for a trademark license example or a Trademark License Agreement Template because you want to make your trademark license agreement to be successful. But for you to know, we can offer some steps so that you can successfully get a trademark license:
Step 1: Create Requirements
Before you can enter a trademark license agreement, you should be sure that you can comply with the requirements of the licensor. Prepare all the things that you need to make the licensor create an agreement with you. Be careful to keep all the requirements. If you want the licensor to grant the use of the trademark to you, you must make them know that you are good at keeping things that should be agreed about. Send the requirements early to the licensor, so you can start negotiating the agreement.
Step 2: Write the Agreement
Negotiate with the Licensor. Agree on terms that you have to put in the agreement. After you have agreed on things, you can start drafting the agreement. Consider all the important components of the agreement. You should write an introduction, recitals, license grant, no transfer term, things about license territory, license fee, royalty, license term, things on quality control, termination, and indemnification. Review all the clauses after you have finished. Then write the agreement.
Step 3: Get a Trademark Lawyer
Hire a lawyer that specializes in trademarks. Many legal decisions are included in the process of trademark licensing. You need a lawyer for this. An Agreement Template may not be enough for you to create the agreement. It requires a professional to perfect the agreement. The help of a lawyer is important in this.
Step 4: Establish Your Brand
After you have signed the agreement, you can start using the trademark of the licensor. Follow the standards of the products of the licensor and start establishing your brand. Just remember, you have to keep all the things in your agreement. Comply with all the terms.
What Percentage Does the Licensor Get in Royalty?
Usually, the percentage that should be given to the licensor as royalty is 25% – 75%. The royalty is commonly more than half of the profits of the licensee. It is the right of the licensor to ask for this percentage because they own the trademark.
Is Trademark License Worth it?
Yes. Imagine that you can have the same market as the established trademark has. You can be assured of consumers that will patronize your products. In business, it is hard to establish a brand. But through a trademark license agreement, you can use other company’s popularity.
If you want your products to sell, you have to secure a trademark that can make it to be patronized by consumers. You can use the licensor’s trademark to boost your business. You just have to pay royalties and you can make this possible. Well, are you looking for a template for a trademark license agreement? This post can give you what you need. It has 12+ SAMPLE Trademark License Agreement in PDF. Download now!