Service Mark License Agreement
Parties and Intellectual Property – Identify the parties to the agreement and the intellectual property (the marks) that is licensed (these issues may be described in the grant clause). Warranty – A licensee may require that its interests be protected by a clause in which the licensor provides an explicit guarantee in the event of non-infringement of the rights of third parties. This may mean that the licensor agrees to compensate the licensee for all costs related to the infringement of intellectual property. Remuneration – A common form of remuneration is a royalty based on the percentage of net sales. The licensor may even wish to verify the licensee`s operation to ensure that the licensor is duly compensated. This can be defined in a registration and monitoring clause. The licensor may also wish for some form of assurance that the licensee will make its best efforts to use the licensed marks. This may take the form of a “best efforts” clause or there may be a minimum licence fee. Some provisions are found in most trademark licenses. The following issues should be dealt with under a license agreement: Litigation – This clause defines the rights of the parties to the application of the trademark. Quality Control – A detailed quality control clause is essential for a trademark license.
Control of the licensor is necessary, as the trademark constitutes the reputation and goodwill of the owner. For purchasing decisions, consumers rely on the reputation of a trademark owner with respect to the quality of goods or services. It is typical for the licensee to recite that “all goodwill acts for the benefit of the licensor”. Definitions – There is often a definition section (key terms are defined in the agreement). Insurance – This provision requires the licensee to take out insurance in order to protect the licensor from liability for claims against the licensee and possibly a failure by the licensee to fulfill its obligations under the license agreement. Choice of Law & Forum – Choice of law provisions are preferred because they provide some certainty as to the application of the license agreement. In addition, courts often impose the choice of jurisdiction clauses as long as the forum has a reasonable and logical relationship with the parties and the license. (A) Exclusive rights are granted to the licensee, to the exclusion of all others, including the licensor, and this may also relate to a given geographical area or region. (C) Non-exclusive – rights may be granted to other third party licensors and the licensor may also use the trademark.
Arbitration – In the event of a dispute under the license agreement, it is customary to provide that the dispute is settled by arbitration, as this is an inexpensive method. The clause specifies whether the arbitration procedure is binding on the parties and what kind of remedy is obtained through the arbitration. These are some of the most common provisions contained in a trademark license agreement, if you need advice on more detailed matters, please contact our office for a courtesy consultation with one of our trademark attorneys. Trademark licensing agreements are very different in length and subtlety. While many licenses contain a similar structure, each license contains different details and clauses based on the goods or services being licensed….