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Trademark Licensing

As a brand owner, you hold the power of your brand’s identity. Licensing your trademark can be a way to maximize its potential. 

 Simply put, trademark licensing is an agreement where you, the brand owner, allow someone else to use your brand name, logo, or symbol for their products or services. 

In return, you receive a fee or a share of their sales (royalties).

Why Should You License Your Trademark?

  • Additional Revenue: Licensing can offer a steady stream of income without you making significant additional investments.
  • Brand Expansion: It’s an opportunity to introduce your brand to new markets or product lines.
  • Risk Sharing: You allow others to take on the costs of product development, manufacturing, or market introduction.
  • Brand Visibility: More products or services with your brand increases its visibility and reputation.
  • Pragmatic Solution: Licensing can be an alternative to litigation if an infringer does not want to stop using your trademark.

Essential Parts of a Trademark License Agreement:

  1. Scope: Specify what parts of your trademark they can use and how.
  2. Royalty Terms: Define how you’ll be paid, often as a percentage of their sales.
  3. Quality Standards: Set clear expectations for quality to protect your brand’s reputation.
  4. Time Period: Decide how long they can use your trademark.
  5. Where They Can Sell: Maybe you only want the licensee selling in certain areas or countries.
  6. Exclusivity: Will the license be exclusive to one licensee or do you want flexibility to 
  7. Ending the Agreement: Understand under what conditions either side can end the agreement.

What to Think About Before Licensing:

  • Licensee’s Reputation: Is the company or person you’re licensing to trustworthy? Will they uphold your brand’s standards?
  • Your Future Plans: Consider if licensing fits into your long-term business goals.
  • Oversight: How will you monitor their use of your brand? You want to ensure they’re upholding your standards.
  • Your Trademark’s Strength: The more well-known and unique your brand, the better position you’re in to negotiate favorable terms.

Common Trademark Licensing Mistakes:

  • Not Monitoring: If you don’t keep an eye on how they’re using your brand, it might be used in ways you don’t approve of.
  • Unclear Agreements: The more specific your agreement, the fewer chances there are for misunderstandings.

Licensing your trademark can be beneficial, offering added income and brand exposure. But it’s essential to carefully select who you license to and set clear terms in the agreement.

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