Trademark Licensing: Best Practices

Trademark Licensing: Best Practices
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The Ins and Outs of Trademarks


Trademarks are used to protect intellectual property. The United States Patent and Trademark Office defines a trademark as a “word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.” For example, when you think of yellow sticky notes often you will think of the brand name -“Post-Its®.”

To register a Trademark, you can fill out a form and file it over the internet or you can mail in an application. However, you don’t have to register the trademark to use it. You can use “TM” after the trademarked item at any time, but you can only use the R with a circle if you have, in fact registered it. Benefits of registering a trademark include:

  • notice to the public of the mark’s ownership
  • the ability to take legal action regarding the mark
  • and a legal ownership to the mark and the ability to use the mark nationwide

Best Practices in Trademark Licensing

Now that you know what a trademark is and how to get one, here’s a list of tips for best practices in trademark licensing.

  1. Perform a thorough search of the item to be trademarked before using TM or attempting to register the trademark.

  2. If you are going to license the trademark, make sure you register the trademark.

  3. When granting a license for trademark use, always use a contract. Be very specific in the contract as to what constitutes fair use.

  4. Before signing a licensing agreement, be sure you understand the business the licensee practices and how the trademark will be used.

  5. There is a reason you want to perform background research on the licensee. You will need to determine whether she will be paying a flat fee or a percentage for the usage of your trademark. If it’s only going to be used a few times, a flat fee may be sufficient and a better choice. If there is potential that the products she is using the trademark for will sell like crazy, then a percentage may be a better choice. Consider putting a combination of the two into the agreement.

  6. Make sure to supervise the quality of the products being used.

  7. Be sure in your agreement to include a termination clause - you want to be able to save your name if the quality is not up to par.

  8. Don’t allow your trademark to be used by just anybody. Be very selective about who you allow to license your work.

  9. Make sure you have some form of veto power over the usage of the trademark. If your trademark is being used on offensive merchandise, this might not be the best reflection of your business.

  10. Do not enter into a licensing agreement if you do not have the resources to monitor the licensee’s usage of your mark.

  11. If you register nothing else, you may wish to register your association name - this way potential customers and clients will know it’s you and not the competition they are purchasing goods or services from.