Should You License Your Trademark?
When you registered a trademark for your brand, you likely did so to prevent others from misusing it and misleading consumers. So why do so many companies give others permission to use their trademark by issuing a trademark license? If the situation is right, licensing your trademark can be beneficial and lucrative, and the following are some reasons companies consider licensing a trademark.
Expanding into new markets – When you give another company the authority to use your brand, you can spread awareness of your brand through the licensee’s distribution and marketing channels. This can help expand your potential customer base substantially.
Increase recognition of your brand – A licensee can put your brand in a new context and on new products, allowing consumers to see the brand in a different light. This can refresh and renew your brand and bring new awareness to consumers.
Distribute your workload – When you license a trademark to another company, you become professional partners in a merchandising agreement. The other company can focus on product and service quality and related operations, taking a significant amount of the workload – and pressure – off your company.
Provide largely passive income – In exchange for a trademark license, your company will receive consideration, which can come in different forms. You may receive regular royalty payments or a percentage of the licensee’s sales of goods or services using your brand. You can receive this compensation without adding any additional operations to your own enterprise.
Benefits for both businesses – A licensor can gain a wider exposure and references when their brand is attached to the licensee’s goods and services. However, a licensor can also benefit from having their goods and services associated with a well-known brand, such as a sports team. The right licensing agreement should benefit everyone involved.
Once you’ve decided that you should license your trademark, it is important to ensure you select the right type of license and include all the necessary terms of the agreement. You can grant the following:
● Non-exclusive license agreement, in which the licensee, licensor, and any additional licensees can use the trademark
● Sole license agreement, in which the licensee and licensor can use the trademark but no additional licensees
● Exclusive agreement, in which only the licensee can use the trademark for commercial purposes
You want to ensure that as a licensor, you have the right to approve any marketing or promotions, determine options for renewal or assigning of the license, penalties for breaching the agreement, payment details, and much more. You always want to consult with a knowledgeable trademark attorney to determine the right type of license agreement and to help review and negotiate the terms of the agreement.
Discuss Your Trademark with Our California Intellectual Property Attorneys
Trademarks can be valuable not only to use for your own commercial purposes but also to license for others to use in the right context. The Jafari Law Group handles every aspect of trademark law for all types of companies. To speak with an IP lawyer, call (949) 362-0100 or contact us online to request a free consultation.