Before actually knowing the nature of trademark licence agreement, it is necessary to know the basics of trademark. A trademark can be any symbol, logo, word or a statement that defines any company or a product or service. It differentiates the product or the service from the rest of the crowd. Trademarks are like IDs of the products. People buy the products having their desired trademark on them. So trademarks directly influence the buying behavior of individuals. People loyal to particular brands always look for particular trademarks. This inclination towards any trademark can be due to the quality of the product, its appearance, its wide availability or overall customer relationship management. A well drafted trademark licence agreement can be helpful in various circumstances.
A company that is desirous of entering into new markets by expanding its product line then trademark license agreement is the best option available. Through lending the trademark to licensee, company can easily and very effectively expand its product/service range. This not only adds to the goodwill of the company but also handsome revenues are generated. Whereas for those who are acquiring the trademark under an agreement don’t own the trademark but acquire it for an agreed period. It is helpful for the licensee as an already established name and repute is being handed over to him. Licensee doesn’t need to put in a lot of efforts in making his brand recognizable. So less budget is allocated towards marketing and more towards the quality of the service or the product. So trademark license agreement is beneficial for both parties equally.
Here is preview of a Free Sample Trademark Licence Agreement Template created using MS Word,
Trademark license agreement must be properly written like any other kind of agreement. Some do’s and don’ts must be followed to acquire suitable understanding of the agreement. Sample agreements are also available online which can be customized to particular needs. But a legal advice must also be taken to avoid ambiguities later on. Some of the terms that must be included in the agreement are:
- The range of products or services that are allowed to be sold under the company’s trademark. This limits the licensee to only few number of products.
- The sum of money for which the license is issued. Usually companies agree to share the profits earned through the use of their trademark. Because this is more profitable in long run.
- As there is a goodwill associated with the products so close attention is given to the quality. Licensee is bound to follow this standard quality and company can also check the licensee’s product to make sure that the products bearing the trademark are of same quality as original. This must be ensured to retain and grow the goodwill.
- One of the most important clauses in the agreement is of proper term used regarding the agreement. It should be clearly written whether it is assignment or licensing agreement. Because assignment gives all rights whereas licence gives only limited rights and that too for a limited time period.
Necessary precautions must be observed while drafting the agreement. And trademark license agreement for software must be differentiated from an assignment agreement.