Trademarks could be the bodyguard to your business. They are an important business asset that could protect your brand.
Importantly, you can use, sell and license rights that come from your trademark and receive royalties.
They make one of the core assets a business could have. Licensing your trademark can be a beneficial business strategy that can enhance your brand and allow for expansion into new markets.
Simply put, Trademark licensing refers to the process where the licensor (which is the owner of the trademark) gives the licensee the right to use the trademark.
Registering your trademark makes the mark more valuable for licensing.
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If you are considering Trademark Licencing, take a look at the benefits below:
1. Expand your business: Giving licensees the right to use your trademark gives your business the chance of brand recognition and expansion.
2. It Increases consumer recognition and;
3. Partnerships: trademark licensing could be a beneficial strategy that can result in lifelong benefits for your business and all involved parties.
4. Building a recognizable brand adds value to the mark if there are intentions to license a trademark
Types of trademark License
Basically, there are three types of trademark License:
1. Exclusive Licence:
This is an agreement between a trademark owner and another party. The owner gives a licensee the right to make certain use of the trademark. The agreement is made on the basis that the licensor will not grant this right to another party.
As an example:
Bobby has a trademark named “Bobo”. He gives Olanna the right to use “Bobo”. Ade, another person comes to Bobby to make use of “Bobo” but he cannot use it because Olanna is the existing licensee.
Note: Licensing of trademarks can result in the loss of the trademark unless the license contains careful controls over the licensed use. If you need help with your Licensing, we can help you out.
2. Sole License:
This adapts a part of the exclusive license. The license is exclusive but the licensor also reserves the right to exploit the trademark as well. It means the both of them can use the trademark however the licensor cannot licence the trademark to a third party.
As an example:
Bobby can now use the mark “Bobo” at the same time with Olanna but he still cannot license “Bobo” to Ade.
3. Non-exclusive Licence:
This is the direct opposite of the other types. The licensor can grant a non-exclusive license to multiple parties.
Bobby can grant the mark “Bobo” to Olanna, Ade and as many people as he wants.
What you should know about Trademark Licensing Agreement
If you are considering licensing your trademark, it’s very important that you conduct your due diligence on potential licensors. This ensures that they have the capacity to use the trademark in a way that can be beneficial to you.
The benefits you can get from licensing your trademark(Royalty) is the singular most important reason you are licensing the trademark in the first place.
So you’ll want to make sure the agreement explains in details what the royalty rates are. You should pay attention to the details below
1. Is there an expiry date? What is the date of commencement of the licensee to use the trademark;
2. Details of the parties and their firm structure;
3. Determine from the onset what type of license you are granting: is it exclusive, sole or non-exclusive; and
4. Payment details – how does the licensor get paid? in the form of a lump-sum payment or royalties.
To reduce the chances of a future dispute, it is better to pay attention to the trademark agreements, negotiate well with the other parties, draft a clear contract and protect your rights.
Interested in licencing your trademark? Start by registering your trademark here.