+91 7305 345 345Trademark Licensing
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Trademark licensing is a legal agreement in which the licensor, or owner of a registered trademark, allows the licensee or other party to use the trademark for commercial reasons.
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Trademark Licensing - Overview
Since there is a mutually beneficial purpose, trademark licensing has gained popularity. For commercial purposes, the licensee may use the mark and a licensor shall be entitled to receive royalties. The licensor gains not only monetary advantages but also from the mark’s growing popularity and reach. However, licensing may potentially damage the reputation of the mark if it is not monitored. Therefore, it is crucial to include provisions in the license agreement for quality assessments of the products or services.
Let’s look at trademark license definitions and types, the benefits, and the process in detail.
Definition of Trademark:
In addition to the shape of a product, its packaging, or a combination of colours, a mark may also include a logo, trademark, heading, label, ticket, name, signature, word, letter, or number, according to Section 2(m) of the Indian Trademarks Act, 1999. A trademark is stated as a mark that may be visually conveyed, and that can be used to identify one person’s goods or services from those of another under Section 2(zb). This logo could be the products’ shape, their packaging, or a mix of colours. Therefore, everything that can be used to identify the goods or services of the relevant applicant is considered a mark. This can include a name, logo, an item’s form, or even a combination of products.
Meaning of Trademark Licensing:
Section 49 of the Trademarks Act 1999 addresses the Indian trademark and service mark licensing system. Trademark licensing is a legal agreement in which the licensor, or owner of a registered trademark, allows the licensee or other party to use the trademark for commercial reasons. The fundamental definition of trademark licensing is an agreement that details specific terms and conditions, like the length of the license, the area in which the trademark can be used, and the types of Business operations in which the licensee may use the trademark.
For whom is a TM License Granted?
A trademark license may be granted by the registered trademark holder or owner. It would be appropriate to note here that transfers are allowed under Indian law for both registered and unregistered entities. A trademark can be transferred through an assignment or a license.
Who is the Grantor of the TM License?
It may be given to anyone the trademark holder wants to use or exploit the trademark, including third parties.
Why is a Trademark License Issued?
To allow a third party to lawfully use a registered trademark, a trademark license is given. International businesses- particularly tech companies- often grant TM Licenses to other nations so that those nations may use their trademarks for commercial purposes.
For example, a brand owner may permit a third party to use his trademark for goods and services in the course of business.
A sale does not occur when the TM License is granted. The owner of The brand keeps ownership of the trademark; licensing merely transfers the right to use it. The rights granted are time-limited and may include the ability to use the trademark, sell goods, and other things. There are two types of TM licenses: non-exclusive and exclusive.
A third party may register as a registered user in accordance with the statutory provision outlined in Section 48 of the Trade Mark Act instead of the registered owner of a trademark. Consequently, the provisions of this act may allow the use of the registered trademark, offering that both parties meet the requirements.
Benefits of Trademark Licensing:
Financial Gain: Since the TM is extensively used for commercial gain and the owner receives royalties, both parties financially gain. By giving the license to the licensee, the licensor, who was earlier unable to profit from his trademark because of, say, a lack of resources or visibility, can now take advantage of the licensee’s resources and increase his earnings. A part of the profits is also given to the licensee.
Growth of the Trademark Owner’s Business: The Trademark Owner’s Business grows and reaches new areas. Instead of being confined to a particular area, the business can now grow by using the licensee’s competence in distribution.
Growth in the awareness of the trademark: The TM as a brand gains recognition in areas where it was originally unidentified. The licensee is free to promote widely using his resources.
Growth in Trademark Popularity: A trademark profits popularity and acknowledgement since it reaches an increased quantity of people or customers. This increases revenue through higher sales and makes more trademark licensing possible.
Allocation of Workload: Essentially, the licensee joins the licensor as a partner. Because the licensee bears equal responsibility for upholding the quality of the goods created using the trademark, the licensor’s workload decreases and he is relieved of the burden pertaining to the goods and services.
Drawbacks:
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Even while registering your brand gives superior brand protection, it’s crucial to weigh the possible drawbacks before moving further.
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Taking into account of several aspects like cost, time, enforcement challenges, limited protection, and continuing maintenance requirements is crucial.
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Consumers may not be clear about where the goods or services are coming from.
Types of Trademark Licensing
The various categories of trademark licenses are as follows:
Sole License: A sole license permits both the licensee and the licensor to use the trademark. It is a variant of an exclusive license. However, the licensor has no right to grant the License to other parties.
Exclusive License: This license grants the licensee the right to commercial use of a trademark only. The licensor has no right to use, and granting to other parties would be not applicable.
Non- Exclusive Licensing: This license is at the discretion of Licensors and Licensees, a person or a number of licensees may make use of such nonexclusive licensing.
Sub-License: Under this kind of agreement, the rights are applicable to third parties in addition to the licensor and licensee.
Rules for India’s Trademark License
In order to get a trademark license in India, the trademark registrar must receive an approved application on Form TM-U from both the registered proprietor or licensee and the potential registered user or licensee.
The following documents should be attached to the application:
1. Written license agreement or agreement
A certified copy of the written license agreement or agreement between the proposed licensee or registered user and the proposed registered owner or licensee detailing the proposed licensee or permitted uses for the proposed trademark by the registered user.
2. Affidavit
A signed affidavit from the registered owner or licensee that details the products or services to be registered, the parties’ relationship, and any proposed limitations or conditions pertaining to the features of the products or services.
3. Power to Attorney
A signed Power of Attorney for representative, if applicable.
4. Extra Documentation
Any additional proof or records that the Trademark Registrar requests following the Trademark Registrar’s review and approval of the application and accompanying documentation, the prospective licensee or registered user will be registered for the particular goods or services specified in the application. The date of the registered user’s application will be included in the Trademark registry entry. Records that are not registered within two months will be penalized in the Journal.
As per the suggested registration procedure, the Trademark Registrar will notify additional licensees or registered users of the proposed trademarks. In order to keep competitors or business rivals from accessing the application, the registrar will also take the required actions, upon request from the applicant, to guarantee that the application remains confidential, with the exception of the information entered into the Trademark Register.
What does a TM License Agreement need to Include?
The agreement will put quality assurance procedures and controls in place for the products and services it is being granted. By doing this, the trademark’s reputation would not be damaged or tarnished. The contract must always contain this crucial Clause.
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The region that the license is being issued for
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The duration of the license
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The consideration that this is being given
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Clause of termination
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Clause of indemnity (in the event of a loss).
A popular illustration of Trademark License:
Disney. You’ll find Mickey Mouse, Marvel, and Star Wars characters on merchandise all over the world, not just official Disney merchandise. Third-party brands get a license to use Disney’s characters on their clothes, home décor, and mugs.
These trademarks pass over into entertainment. Disney also licenses its movies, TV shows, and music. Even footage of its theme parks can only be used by those with a brand license.
Cancellation of a Trademark License
A trademark license could be revoked if specific requirements are satisfied. Section 50 of the Indian Trademarks Act states that notices of registration cancellation are accompanied by a hearing opportunity. The following circumstances may result in cancellation:
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Violation of the terms of the agreement
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Use of the mark without authorization
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Misleading the public or customers
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Omitting crucial information about the agreement
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Presenting false information or participating in fraudulent activities.
When is it possible to cancel a TM License?
The following conditions may allow for cancellation:
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In the event that the terms of the agreement are broken,
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If the mark is utilized for objectives not specified in the agreement;
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Should the mark be utilized to perplex individuals or customers;
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If a party withholds information that is material and essential to the agreement;
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If any participant engages in fraud or false representation.
The TMO notifies the TM owner and any other registered users who may be impacted by the cancellation of the TM License. The official cancellation fee is Rs. 4500/- per mark.
What Makes Trademark Licensing Different from Trademark Assignment
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Trademark License |
Trademark Assignment |
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A third party is given a restricted amount of usage rights when a trademark is licensed; the original owner still maintains ownership and proprietary rights |
Transfer of ownership of a trademark registration |
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A written license is not required |
A written assignment agreement is required |
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The license grants you rights for a predetermined amount of time |
The Assignment may be full or in part |
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The license is only good for a limited time |
There is no time limit on assignments, and ownership has been changed. |
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Why Choose Kanakkupillai
Kanakkupillai is a leading legal consulting company in India that offers comprehensive services related to Trademark Registration. Protect your brand and register your trademark with ease. Secure your business identity with Kanakkupillai’s Trademark services. Let us handle your Trademark registration while you focus on your business. We have the most trusted professionals for hassle-free Trademark registration. Register your trademark virtually, anytime, anywhere with Kanakkupillai.
If you want to obtain a Trademark License, don’t hesitate to contact us immediately.
Frequently Asked Questions
Who is the TM License Grantor?
It can be granted to anybody, including outside parties, whom the trademark proprietor wishes to use or profit from the trademark.Who is the Beneficiary of a TM License?
The owner or holder of a registered trademark may provide a trademark license.How long is a trademark license valid?
After the date of application, all registered trademarks are valid for ten years. A trademark can be simply renewed at the end of its validity by paying the government registration cost.Describe the exclusive trademark license.
Exclusive agreement: The Licensee is granted the exclusive right to utilize the trademark for business usage under the conditions of this agreement. Non-Exclusive License: The licensee can issue one or more licenses under this type of license.What distinguishes a trademark from a license?
The transfer of ownership of a trademark registration is called a trademark assignment. A third party is only given a restricted amount of usage rights when a trademark is licensed; the original owner still maintains ownership and property rights.What drawbacks come with licensing a trademark?
Even though registering your trademark offers great brand protection, it’s vital to weigh the possible drawbacks before moving further. The consideration of several aspects, such as cost, time, enforcement challenges, limited protection, and continuing maintenance requirements, is crucial.What is the symbol for the licensed trademark?
Symbol ® To inform the public that a trademark or service mark has been registered, the symbol ®, often seen in superscripts like this: ®, is used. The majority of jurisdictions restrict the use of the ® to the period following mark registration. Making use of ® with an unregistered mark is illegal or illegal in many jurisdictions.What use does licensing serve?
A licensee is granted certain rights or resources through licensing in order to produce and/or market a particular product in the country where it is licensed.Is it possible to register a trademark that has expired?
The Trademark Act of 1999 states in Section 25(4) that you may request restoration through submitting an application and paying the required amount. However, you are only able to do this up to a year after the registered trademark expires.What does trademark licensing without consideration entail?
A trademark assignment that is made without any legal consideration is referred to as a transfer without consideration. It basically indicates that there is no payment or other valued thing exchanged in exchange for the trademark transfer.What makes Us Different
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