Helpful Tips for Drafting a Licensing Agreement
When you register a trademark for your business, there is a crucial next step you need to be prepared to address – licensing the rights to that trademark so other individuals and companies collaborating with you to manufacture or sell your product featuring that mark are legally compliant. It is important to understand the impact of a trademark license agreement. If this agreement is detailed and well-crafted, it can play a big role in determining how much you, the owner of the trademark, will benefit financially from the commercial success of the product. A trademark license agreement will also help in protecting both your registered trademark and the resources you invested into building goodwill and a positive affiliation with the consuming public.
To help ensure your trademark licensing agreement is valid and detailed, here are some helpful tips to consider when drafting a licensing agreement.
No. 1 – Clearly Establish the Licensee Requirements
In a trademark license agreement, you, the owner of the registered trademark, are known as the licensor. The party that pays you money in exchange for the right to market or manufacture products bearing your trademark is known as the licensee. In the trademark license agreement, you should be as specific as possible about what trademark rights you are licensing and what the licensee is and is not allowed to do with your trademark. If, for example, you own the trademark to a children’s character, and you want to preserve their child-friendly image, say so. Don’t want your trademark adorning beer bottles? Specify this in the agreement. Don’t want your character hawking weight loss supplements? Put it in writing.
No. 2 – Ensure All Key Pieces of Information are Included in the Agreement
Relying on a cookie-cutter printout of a license agreement you found online, or hastily drafting an agreement, is often a recipe for disaster and heightens the risk that vitally important pieces of information are not included in the final agreement. Do not make this mistake. You need to ensure the license agreement clearly addresses the following issues:
- Who owns any new intellectual property that the licensee creates incorporating your trademark;
- The geographic region where the licensee may sell the licensed products; and
- Which state will have jurisdiction to decide legal disputes that may arise from the trademark license agreement (this is often referred to as a “choice of law” provision).
No. 3 – Be Transparent About Duration of the Agreement and the Timetable for Payments
Mistakes and oversights regarding the duration and payment terms in a trademark licensing agreement can lead to costly disputes and glaring loopholes. Hence, it is imperative to not gloss over these sections of the agreement or merely state, in broad terms, how long the agreement lasts. You need to provide specific details about what happens at the end of the established license period. For example, you should address what happens if the parties take no further action. Does the licensing agreement automatically terminate, or does it automatically renew? Likewise, does the licensee pay a fixed amount or a share of their sales? Do they pay a lump sum at the beginning of the contract period, or do they pay you in monthly or quarterly installments? These are critically important questions and issues that need to be fully fleshed out in the licensing agreement.
Have Questions? Contact an Experienced Trademark Lawyer in Los Angeles Today
It is extremely important to draft a detailed, airtight trademark license agreement to help safeguard your financial and brand interests, as well as the interests of the licensee, or licensees. Hence, it is in your best interest to retain the services of a skilled and knowledgeable trademark lawyer in Los Angeles such as the professionals at Omni Legal Group. Omni Legal Group is a premier Patent, Trademark, and Copyright law firm located in Los Angeles, California. For further information or to schedule a consultation please contact Omni Legal Group at 855.433.2226 or visit www.OmniLegalGroup.com to learn more.