Standard trade mark licence?
Thursday, 24 March 2011 10:32
A standard trade mark licence does not exist. If what you seek is a short and basic trade mark licence agreement of say two pages length, then yes, we can assist. So can many other IP lawyers and probably even general business lawyers. And it could be prepared for a low fee.
Would you be comfortable with a short and basic trade mark licence agreement? A missing feature can hurt in some eventualities, especially if you are the trade mark owner.
A short and basic two page agreement will "glue" the owner and the licensee together under the law of contract. But it is unlikely to have detailed features to deal with a wider range of legal issues. Moreover it would hardly skim the surface of very important and practical creative, commercial and management issues.
What are these features missing from a short and basic trade mark licence? The 15 points below set many out and indicate why they can be important. Go through them. Imagine you are the owner of a trade mark or a prospective trade mark licensee. With each point, consider if they are needed in your circumstances.
- Restrictions on trade mark use rights. For example, are the rights exclusive for some things, non-exclusive for others; or exclusive for a limited territorial area or for a limited time?
- Right of the licensee to subcontract those rights, or is the licence to be only personal to the licensee?
- Provisions regarding remuneration by the licensee to the owner. For example, who is to pay who, how much, and when?
- Obligations regarding who is going to sue and run cases against infringers. For example, what is to be the role of each party if an infringer comes onto the scene, who'll pay to attack?
- Obligations about the marketing strategy and collateral, IP notices, sales methodology, quality control, design approvals. Without such stipulations the licence is a bare grant of a licence under law, with minimal creative and managerial restrictions on what the licensee can do with the trade.
- Clarification regarding who will be the owner of derivative names and associated identification (logos, tag lines, brand colours etc)
- Obligation to keep, maintain and provide royalty/remuneration accounts on regular dates, with sufficient data breakdown, and agree to accounts inspection and auditing rights
- Obligation sometimes to commission and supply an annual business plan or budget forward estimate
- Prohibitions against solicitation of each party's staff, disparagement, and competition between the parties operating in similar fields. Those fields may be split by geography, market channels or times.
- More detailed warranties, and an additional indemnity - usually given by the owner, but can be both owner and licensee
- Obligations on the licensee to obtain and maintain various types of insurance, eg workers compensation and product liability insurance
- Provision to permit reversion of rights granted (by the owner to the licensee) in the event certain or all rights are not used by the licensee, or not used within certain time frames
- Minimum performance obligations on the licensee, failing which some or all rights revert to the owner or the contract can be terminated by the owner giving due notice
- Dispute resolution obligations, typically requiring operation of a mediation process before litigation
- Expanded termination rights.
This list makes it clear that a short and basic trade mark licence agreement is a sketch, not a blueprint. It does not have the detailed features for a full pre-planned business relationship.
Now, are you happy to go with a short and basic contract instead? If so, happily seek a generic two page trade mark licence agreement. I'm not knocking them. I've used them for clients after assessing circumstances and considering it the right way to go. But short and basic is not always good and wonderful.
Where you have concerns, you'd like to know that there are various "securities" in place to keep you comfortable as a contractually bound trade mark owner or licensee.
Maybe it really is important in your case to have features for greater control of the licensing business relationship and of your right or interest in the trade mark assets. That'll be especially useful if things don't go to plan. That's the reason why sometimes detailed trade mark licences are preferable. It's why fees for professional advice are for just that, for advice on specific circumstances, not a short and basic artifact you can download off the internet with no customisation or advice.
Note on the illustrations
. The famous Gowings
retail name (used in Sydney since 1868) was retained by its owner even after its exclusive licensee went into insolvency in the last decade. A key reason was that Gowings had strong trade mark licensing provisions in its relevant contract with the licensee.