Licensing of Trademarks
A trademark is an important business asset that offers protection to a brand.
Businesses own valuable trademarks, which, once registered, can be licensed out.
The rights that flow from a trademark can be licensed to others to receive
royalties for commercialization. Licensing your trademark can be a beneficial
business strategy that can not only strengthen the brand but also allow for
expansion into new markets. Licensing involves permitted use by a person on his
goods or services of a trademark belonging to a proprietor, provided the
proprietor exercises the quality control and authorizes the application of the
trademark on such goods and services.
What is Trademark Licensing?
Trademark Licensing refers to the process where the owner of a trademark (the
licensor) gives another person (the licensee) the right to use the trademark.
Common examples of trademark licensing include merchandising partnerships,
franchising, or beverage brands such as Coca-Cola allowing independent bottlers
of their soft drinks to label the finished product with the COCA-COLA trademark.
Advantages of Trademark Licensing
There are many advantages of licensing a trademark, such as:
Access to new markets: In the case of marketing and distributing channels,
allowing licensees the right to use one’s trademark can help to expand the
Increase in consumer recognition;
Distribution of workload; and
Partnerships: Trademark licensing can lead to benefits for the business life and
functioning of the parties involved.
Types of Trademark Licenses
1. Exclusive License
It grants the rights to commercial use of the trademark solely to the licensee. In
effect, it also excludes the licensor from using it. The licensor receives a sum for
licensing, and the licensee receives any future profits or incurs losses arising from
Limitations can be placed on exclusive licenses so that the licensee is restricted to
use the mark within a specific class of product or geograp