Trademark license allows the owner of a trademark not to loose the ownership of the trademark but to give to another subject the right to use it for a limited period of time.
It is therefore different from the assignment of the trademark, when the ownership is transferred.
In this post we talk about:
Trademark Licence Agreement: what the law provides for
With regard to the trademark license agreement, Article 23, paragraph 2 of the Italian Industrial Property Code provides that:
“A trademark may be licensed, also on a non-exclusive basis, for all part of the products or services for which it is registered and for the whole or part of the territory of the Country provided that, in case of a non-exclusive license, the licensee expressly undertake to use the trademark to distinguish the products or services equal to those traded or rendered in the territory of the Country with the same trademark by the holder of any other licensees”
Trademark license agreement: exclusive, non exclusive and territorially limited
There exist several types of trademark license agreements, let’s see them in detail:
The trademark license agreement is exclusive when the use of the trademark is given to one subject only and it can be:
- Total License, when it concerns all the goods and/or services distinguished by the trademark;
- Partial License, when it concerns only some of the goods and/or services distinguished by the trademark
With the non-exclusive license (which can be total or partial), a trademark owner can:
- To grant one (or more) licensees the right to use the trademark reserving to itself, however, the right to continue using the mark;
- To grant more licensees the right to use the trademark through several trademark license agreements.
Through a territorially limited license it is possible to limit the places in which the license is granted: for example, you can sign a license agreement in which you grant to use an Italian trademark only limited to Lazio region or only limited to the province of Rome.
Royalties in the trademark license agreement
For the granting of the license, the licensee (ie the one to whom the use of the trademark is granted) will pay royalties of a percentage value calculated on the net price of each sold product or service identified by the trademark. License agreements usually provide that the licensee pays royalties calculated for each year of the contract’s validity.
In some license agreements, finally, the fee is not calculated with the royalties but on a flat rate basis and in a single solution.
Trademark license agreement in EU law
You can find identical rules for EU trademark with regard to the possibility of an exclusive or non-exclusive license agreement, total or partial license and territorial limits.
Article 25, paragraph 1 of the European Union Trademark Regulation states that:
“A EU trademark may be licensed for some or all the goods or services for which it is registered and for the whole or part of the Union. A license may be esclusive or non-exclusive.”
Trademark license agreement and consumer protection
In the light of the above, it is possible that the same mark is used to distinguish products coming from different companies (namely, licensees of the same brand).
The law intervenes to prevent deception for the public and therefore requires the same level of quality among the products, no matter if they come from different companies.
The licensor can take action against the licensees who break this obligation: in this respect, article 23, paragraph 3 of the Italian Industrial Property Code provides that:
“The holder of a trademark may invoke the right to the exclusive use, conferred by that trademark against a licensee who breaks the provision of the license agreement as to duration, the manner of use of the trademark, the nature of the products or services for which the license has been granted, the territory within which the trademark may be used or the quality of the product manufactured and of the services rendered by the licensee”.