Steps To License Your Trade Mark

George Raptis

• 30 August 2021
• 3 September 2021
• 5 min read

For many trade mark owners, licensing your registered trade mark can lead to many advantageous commercial opportunities. Trade mark licensing is an agreement made by a trade mark owner (or licensor) to allow another person (or licensee) the right to use their trade mark for an agreed period. Licensing agreements are particularly useful when franchising, expanding or even just opening up an additional stream of income for your business. Therefore, it is important that you are aware of the steps involved to license your trade mark.

1. Negotiate With Your Licensee

Given the relative bargaining involved in drafting a licensing arrangement, there is a common misconception that these agreements promote antagonistic relations. However, it is important that you negotiate with your licensee. After all, they will be using your intellectual property which reflects the reputation of your business.

Trade mark licensing should involve some negotiation between you and the licensee. This is to ensure that you reach a mutual agreement that suits both your business arrangements. In this way, you can foster a healthy relationship and avoid any potential confrontation down the line.

2. Decide What Rights You Wish to Grant

As a trade mark owner, you have the exclusive rights to both use and license your trade mark. Before you formalise a trade mark licensing agreement, consider the extent of rights you wish to grant to your licensee. Generally, there are three main categories of rights, including rights that are:

• exclusive;
• non-exclusive; and
• sole.

You can find a detailed explanation of each category of rights in the table below. 

3. Draft Your Agreement

Once you have decided the extent of rights to grant your licensee, you should put your trade mark licensing agreement into writing. A licensing agreement typically covers:

• the duration of the licensing period;
• how the licensee can use your trade mark i.e. in relation to a select few services;
• the geographic limits of trade mark use;
• any quality control clauses which ensure that you have some say in how your trade mark is being used; and
• royalty clauses which are generally considered as ‘licensing fees.’

Since there is such a wide range of terms that should be included in a licensing agreement, it would be wise to seek the advice of a trade mark attorney.

 A trade mark attorney is an experienced lawyer who specialises in trade mark law. They can advise you on the most accurate terms to include in your trade mark license and any potential issues that might arise during the licensing period. In this way, you can ensure that your licensing agreement properly gives effect to you and your licensee’s negotiation.

4. Sign and Exchange the Agreement

To make your licensing agreement binding, both you and your licensee must then sign and exchange the agreement. By exchanging the contractual agreement, it signals your intention to be bound by the agreement. It is also useful for both parties to have a copy of the agreement so they can refer to it throughout the licensing period. After all, a licensing agreement functions like a road map that decides what a licensee can and cannot do with your trade mark.

5. Enforce Your Rights

In the instance where there has been a breach of the licensing agreement, you have the means to pursue legal action. If your business suffers a loss as a consequence of the licensee’s breach, you may have monetary remedies available to you. However, it is important that you first seek legal advice before deciding to enforce your rights. This is so you can first determine whether it is worth pursuing a claim for breach of contract.

Key Takeaways 

To license your trade mark, you should:

• negotiate with your licensee;
• determine the extent of rights you wish to grant your licensee;
• draft the terms of your negotiated agreement;
• sign and exchange the licensing agreement with your licensee; and
• enforce the agreement in the instance where there has been a breach. 

If you need help with licensing your registered trade mark, contact our experienced IP lawyers on 1300 657 423.

Frequently Asked Questions