TRADEMARK LICENSING

Abstract- This article will delve into the brief layout of the procedure for licensing trademarks in India. The essentials of a licensing agreement and the benefits of licensing a trademark would also be highlighted. Trademark licensing is a procedure by which a registered trademark owner permits a third party to use their mark during business without surrendering ownership of the mark is known as trademark licensing. Through trademark licensing, the registered owner can grant permission for others to use the mark without really transferring ownership.

Keywords- Trademark, Licensing, Licensing agreement, Trademark owner, surrendering, third party

Hashtags- #Trademark, #License, #Intellectualproperty, #Licensingagreement

Video Link: https://www.youtube.com/@Sonisvision_Legal

Introduction- A trademark is a distinctive sign, symbol, logo, graphics, design, word, phrase, or any combination of these that sets apart and identifies a business from other entities and/or its name, goods, and services. It safeguards the owners against unlawful use of their trade name by third parties and reassures consumers about the authenticity of the goods produced by businesses using that particular trade name. A trademark needs to have a unique quality. They are unable to describe anything.

Licensing is the process by which the owner of a registered intellectual property grants permission to another party to use it in a certain way through a license agreement. A licensee is the individual to whom a license is granted, while the owner of the intellectual property who grants the license is referred to as a licensor. For a business owner, licensing is crucial because it enables him to interact with the organizations that distribute his goods to final consumers.

?

How to License a Trademark

By way of registration of the license agreement, a licensee becomes a "registered user" in lieu of Section 49. For the registration of a registered user, a joint application is to be filled to the Registrar through the TM-28 Form within six months from the date of the agreement. The registration process is hereby summarised in a few steps:

?

1. Filling of TM-28- The form TM-28 is to be filled in triplicate along with the documents

2. Drafting Supporting Affidavit- The supporting affidavit should contain the information

3. Ensure that License Agreement includes the adequate information

4. Filling of the Application- The filing of application through Form TM-28 can be done either online or offline to the Registrar.

5. Acceptance by the Registrar- The Registrar may accept the application either completely or conditionally. A conditional acceptance takes place when conditions/restrictions/limitations are put on the permitted use provided in the license. In the case of conditional acceptance, the registrar will issue a notice to the applicant.

6. Hearing in the case of Conditional Acceptance- On the issue of notice of conditional acceptance by the Registrar, the parties may apply for a hearing. On the application of hearing, the Registrar may appoint time within two months. After the hearing, the Registrar may accept completely or conditionally, or reject the application altogether. The order of the Registrar is to be communicated in writing. It is to be noted that if the party fails to apply for hearing within one month of the issue of notice, the registrar may accept the agreement with the conditions and limitations he imposed.

7. Entry in Registrar- When accepted, the Registrar records the proposed registered user as a registered user in the register.

8.Notification to other registered users, if any- After the recording takes place in the register, the Registrar needs to ensure that notice to every other registered user of the trademark (if any) is issued. The Registrar also needs to ensure that this fact is inserted in the Trade Mark Journal.

Rights of the Licensee/Registered User

A trademark infringement can be reported to the owner by a licensee or registered user. After giving the trademark's owner one month's notice, he can even file legal action against trademark infringement in his own name, acting as the trademark's proprietor. It is advisable that he name the proprietor as a co-defendant if he chooses to do so. But if he doesn't start any legal action, he won't have to pay for anything.

No transferable rights or rights to assign the trademark are granted to a registered user. This implies that he cannot authorize sublicensing to any third party without the owner's prior approval.

Benefits of Licensing Trademarks

·?????? It enables brand owners to profit as much financially as possible from the goodwill associated with their brand without having to make investments in infrastructure for product marketing. Because they will consistently get royalties from the trademark licensee, it guarantees them a steady flow of income.

·?????? A licensee benefits from licensing as well. A licensee might expect consistent profits when they launch their firm under the name of a respectable company. This significantly lowers the total risk associated with launching a new business.

·?????? Multinational corporations place a premium on licensing. A foreign business can still maintain control over its outlets even if the government has placed restrictions on shareholding in particular industries by imposing terms and conditions to the trademark licensee through a licensing agreement. Foreign businesses can establish their brand presence in this fashion, even if they may not have made significant investments in a certain country.

?

Essentials Clauses in Trademark Licensing-

In every licensing agreement, there are some clauses that should compulsorily be incorporated in order to ensure that the rights and obligations of each and every party are clearly laid down.?

·?????? Grant Clause- It gives the licensee permission to use the licensor's trademark, this paragraph in a trademark licensing agreement is crucial. The extent to which the licensee is granted rights must be expressly stated in it. The granted right may pertain to an exclusive or non-exclusive type of intellectual property, or it may be transferable or non-transferable.

·?????? Rights and Liabilities- The agreement should necessarily contain a clause that is clearly indicative of the rights and obligations of each of the parties. The licensor’s obligation must involve the fact ensuring the value with regard to the trademark is purely maintained, and adequate technique of marketing and advertising is done in conformity to the relevant extent. The licensee’s obligations must extend into ensuring the quality of goods and all the services upon which a licensor’s trademark is mentioned and used, and is also maintained.

·?????? Royalties Clause- Every royalty-related clause in a licensing agreement must explicitly specify how the applicable fee is to be calculated and paid by the licensor to the licensee. It should also specify any conditions associated with the payment, such as how royalties will be paid, when they will be paid, and what paperwork will be used to calculate royalties.

·?????? Product and Process Stewardship Clause- The clause in the agreement must specifically state all the responsibilities of both the parties with respect to safety, including the environmental, and all possible kinds of social impacts, on the goods which are produced under the relative trademark. ?

·?????? Quality Control Clause- One of the most crucial parts of trademark licensing is quality control, so the agreement must include a clause requiring the licensor to exercise that practice over the goods supplied to the licensee. This clause should include all relevant design details, guidelines for using the trademark, a list of all the different product types that should be positioned and promoted going forward, information about when and how often licensor inspections will take place, etc.

·?????? Termination clause- This clause must clearly lay down all the conditions as to when a party may possibly terminate the signed agreement. It can be either terminated on completion of the term of the license agreement, or on the breach of obligations in the agreement by either of the parties, prior to the expiry of the term of the agreement

·?????? Governing law clause?-It is another important clause in the agreement which specifies the law that will govern the agreement during its effectiveness. This clause has its own particular significance in the cases where the parties belong to different jurisdictions. The governing law clause is instrumental when it comes to determining the rights and liabilities of the parties to the agreement and the remedies which are available to them in case of a breach, and so on and so forth.?

·?????? Dispute resolution clause?-The disputes related to the agreement can arise at any point of time. Therefore, it is very important that the drafted agreement includes a clause that is relevant to determining the resolution mechanism in the case where any dispute arises between the parties.

·?????? Insurance clause?-The licensing agreement generally contains the insurance clauses that are included to protect the licensor from any kind of future third-party claims which might arise against the licensee. This can include the extent of loss or damages, or the fee and expenses to be incurred by them due to such future third-party claims.?

·?????? Confidentiality clause -In a licensing agreement, it is very common that both parties have their own confidential information about the other party. It would be quite prudent to have clauses related to confidentiality. Both the parties should be entitled to utilize the confidential information throughout the duration of the agreement; however, such information should not be disclosed to any third party.?

Conclusion

The trademark license agreement must be well-drafted and detailed to completely prevent any possibility of future conflicts between the parties. Furthermore, it is crucial to keep in mind that each license agreement that is prepared is unique due to the nature of the commercial arrangement that the parties have agreed upon. As a result, it is critical to clearly define each party's interests in the agreement and to create the appropriate document accordingly.

?

?

?

?

?

?