Trademark Licensing

What trademark licensing is

Trademark licensing lets a brand owner authorize another person or entity to use the mark for a defined period. Industrial Property Code (Law No. 6769), Article 24: Trademark rights may be licensed for part or all of the registered goods or services. As the law states, licensing lets the other party use the mark.

License agreements typically involve the licensor (the brand owner) and the licensee agreeing on a set of conditions and terms. Those cover how the mark may be used, which products or services it applies to, and the license fee. A trademark license agreement also helps preserve brand quality, since the licensor retains the right to control how the mark is represented and used.

Parties to a trademark license agreement

A trademark license agreement is a legal contract between the brand owner (the licensor) and the party authorized to use the mark (the licensee). The parties fall into two main groups: the brand owner and the licensee. Each side’s rights, obligations, and responsibilities are set by the contract and the agreement between them.

The brand owner is called the licensor. This person or entity holds legal rights in a specific trademark and is free to transfer that right to another party. The licensor can set the terms of use, define the brand standards and quality controls, and retains rights around compensation claims and ending use of the mark when the license expires.

The other party is the licensee. The licensee has the authority to use the licensor’s mark for a defined period and on defined conditions. The licensee is expected to meet the use standards and the conditions the licensor sets. The licensee may also have to pay part of the revenue generated by the mark back to the licensor, typically as a percentage of sales or a flat fee.

Each side's rights and obligations together define the scope of the license agreement, which keeps the mark used properly and keeps brand ownership protected.

Partial trademark license agreements

License agreements can be integrated with other commercial contracts. That allows for a broader, full-scope business relationship. In franchise, distribution, or partnership arrangements, a trademark license can sit inside the larger agreement, which spells out each party’s obligations, rights, and responsibilities and cuts the risk of legal disputes.

Integrating the license with other agreements gives the brand owner specific advantages. When the license sits inside a larger contract, the owner can control protection and use more effectively. That preserves the owner’s reputation and value while giving the licensee defined use rights. Integration also builds trust between the parties and strengthens the partnership.

Registering the license agreement

Registering the license agreement is a critical step for validity and enforcement. A license agreement transfers use rights in a trademark to another party, and without registration, it may not provide sufficient protection against third parties. Registration matters both for protecting the brand owner’s rights and for securing the licensee’s position.

The trademark license registration process typically starts with an application to the relevant trademark office. The application has to include the details of the license agreement along with the registration fee and the required documents. Those cover the parties’ identity information, the scope of the license, its duration, and its operating context. Official registration creates a legal basis in case of disputes and reinforces the validity of the license agreement.

Registering the license protects the brand owner’s rights, and it also protects the licensee. If the mark goes unused or the license terms are breached, registration provides an effective path to enforce rights under the agreement. Against third-party claims or disputes, a registered license agreement becomes an important protective mechanism.

Exclusive and non-exclusive license agreements

License agreements are important legal instruments that govern how others can use a trademark or other intellectual property right. There are two main types: exclusive and non-exclusive (simple) license agreements. They differ significantly in the rights they grant and the restrictions they impose.

Which license type to choose usually depends on business goals and market conditions. An exclusive license is often better for brands with a limited market share, while a non-exclusive license tends to work better when the goal is expansion. Both sides should weigh these options carefully.

Trademark license agreement template

1. A trademark license agreement is a legal contract between a brand owner and a party that wants to use the mark (the licensee). It protects the owner’s intellectual property rights while granting the licensee permission to use the mark under defined terms. At minimum, the agreement should include the following elements:
2. Identification of the parties: The agreement should clearly identify Company A (the brand owner) and Company B (the licensee) at the outset, with each party’s legal status and contact information.
3. Description of the mark: The mark or marks covered by the license should be clearly specified. The registration status should be supported by the relevant documents.
4. Scope of use: The products or services on which the licensee may use the mark should be clearly stated to prevent future disputes.
5. Fees and royalties: The fees Company B pays Company A for use of the mark, and any royalty rates, should be clearly stated.
6. Term of the agreement: The validity period of the trademark license agreement, renewal terms, and revision procedures matter. The conditions the parties will follow during the term should be clearly stated.

The license agreement has to define each party's rights and obligations clearly; that is critical to maintaining a healthy long-term business relationship.

To download a trademark license agreement template, click here.

Ending the license agreement

License agreements end based on the pre-defined conditions in the agreement, expiry of the term, mutual consent of the parties, or breach.

Expiry of the term is the most common reason. License agreements are usually signed for a defined period, and when the term ends the agreement automatically becomes void. Unless the parties agree to amend or extend it, the license ends. After expiry, each side’s obligations around use of the mark have to be clearly set out, and the possibility of signing a new agreement should be considered.

Mutual consent is another reason. Both sides may decide to end the agreement jointly. That kind of termination often works for both parties and leaves open the option of signing a new agreement on renewed terms.

Breach of contract is another significant reason a license agreement can end. If one party fails to follow the terms, the other party has the right to cancel the license. In that case, the nature and impact of the breach should guide whether to pursue legal remedies.