Trade mark licence agreement

A trade mark licence lets someone else use your registered marks on agreed goods or services, on agreed terms, for an agreed period. Clause 2 gives three options. An exclusive licence, which stops even the licensor using the marks within the licensed scope. A sole licence, where the licensor may continue to use them but may not appoint anyone else. A non-exclusive licence, where the licensor may do both. Keep one option and delete the other two, because the difference is commercial rather than technical.

Quality control protects the mark, not just the brand

The quality control clause and the standards in Schedule 2 look like brand management, and they are, but they also protect the registration. A mark that the owner allows to be used inconsistently, on goods it has no oversight of, becomes harder to enforce and easier to attack. Licensing without supervision is how owners lose control of marks they still nominally own.

What the agreement covers

The grant and the scope of the licence, ownership and goodwill, quality control, and how the marks must be marked and used. Royalties and payment, with records and audit rights and an audit threshold to set. Registration and maintenance of the marks, which stays with the licensor. Infringement and proceedings, covering who may act when a third party starts using something similar and who bears the cost. Then warranties, indemnities, liability, confidentiality, term and termination, the consequences of termination, assignment and the general provisions.

Register the licence

File the licence at the UK Intellectual Property Office on Form TM50 shortly after signing. Until it is registered the licence may not bind someone who buys the marks, and the licensee may be unable to recover its costs in an infringement claim. It is a short form and a small fee set against a significant loss of protection.

Points to settle before signing

Schedule 1 should list every mark as registered, with its UK registration number, its classes and the specific goods and services the licensee may use it for. The template is drafted for UK registered marks: take advice where a mark is unregistered or registered only abroad.

Royalty rates, the audit threshold and the notice periods are commercial choices rather than legal ones. Competition law becomes relevant where the licence is exclusive across a wide territory, so take advice before agreeing that combination.