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Considerations in Drafting Trademark License Agreements

On Dec. 15, I’ll be presenting on “Litigation Planning for Licensing Attorneys” as part of the Washington State Bar Association’s CLE on “Licensing Essentials” (brochure here). 

Here are some drafting and negotiating considerations for trademark license agreements I put together while gearing up for the program:

  • Parties. Identifies the licensor and licensee.
  • Description of mark. Identifies the licensed mark.
  • Form of use. Identifies any restrictions on use of the licensed mark, including on the goods/services sold under the mark.
  • Term. Identifies the duration of the agreement.
  • Consideration/royalty. Describes the means in which the licensor will be compensated.
  • Territorial scope. Identifies geographic restrictions on the licensed mark.
  • Quality control. Clarifies licensor’s right and means to control quality of goods/services sold under the licensed mark.
  • Self-renewing/non-self-renewing. Clarifies whether the agreement will automatically renew and, if not, the conditions under which the agreement will be renewed.
  • Exclusive/nonexclusive. Clarifies whether the licensor may license the trademark to parties other than the licensee.
  • Sublicensable/non-sublicensable. Clarifies whether the licensee may sublicense the mark and, if so, under what conditions.
  • Assignable/non-assignable. Clarifies whether the parties may assign the agreement and, if so, under what conditions.
  • Ownership of mark. (Favors licensor) Clarifies the licensee does not acquire any rights to the licensed mark, and may not challenge the licensor’s exclusive right to the licensed mark.
  • Goodwill inures to licensor’s benefit. (Favors licensor) Clarifies that licensee’s use of the licensed mark benefits the licensor and does not give the licensee independent trademark rights.
  • Right/duty to enforce trademark rights. Clarifies which party has the right to enforce the licensed mark, and which party has the duty to do so.
  • Termination. Describes conditions in which the agreement may be terminated.
  • Tax liability. (Favors licensor) Clarifies the licensee is liable for all taxes assessed in connection with the licensed goods/services.
  • Indemnity. (Favors licensor) Clarifies the licensee must indemnify the licensor for tort and other claims third parties bring against the licensor in connection with the licensed mark.
  • Insurance for tort claims. (Favors licensor) Clarifies the licensee must obtain adequate liability insurance to cover claims brought in connection with the licensed mark.
  • Irreparable injury/right to obtain injunctive relief. Clarifies that any breach of the agreement will cause irreparable harm and the non-breaching party may obtain injunctive relief to cure the breach.
  • Licensee’s ability to register domain names. Clarifies whether the licensee is permitted to register domain names containing the mark.

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