A trademark is transferable in two ways: Assignment and License. Assignment results in the transfer of the whole trademark, i.e., the initial proprietor ceases to be the trademark owner. Simply put, an assignment is the transfer of ownership of the trademark. On the other hand, a license transfers certain limited rights, and there is no transfer of ownership in a license. In this blog post, let us delve into the different licensing modalities.
So, What does Licensing of Trademark Rights exactly mean?
When a trademark owner allows a third party to use his trademark, it is called licensing of a trademark. A trademark license usually takes effect on specific mutually agreed terms and conditions between the parties.
Why License Trademark Rights? (Benefits)
The most common reason for licensing a registered trademark or unregistered trademark is the extra revenue. Whenever you license your trademark, the licensee will pay you a royalty (money for using your trademark). This royalty usually proves to be a good source of revenue.
Another reason for licensing your trademark is the expansion of geographical territory. Suppose you want to make your product available in other countries without wishing to undertake the cost of setting up a production unit in that country. The best option then is to license your trademark to a production unit in that country. This will ensure the availability of your brand in that geographical area without extra expenditure from your end.
It increased consumer recognition. This is probably the most significant advantage of licensing your trademark. Licensing ensures increased availability of your trademark. The more a trademark is used, the more it is recognized among consumers; this increases the brand value of the trademark. In the long run, it has a positive effect on the business.
What about the quality of the Licensed Trademark?
The whole point of a trademark is that consumers can recognize the source of the goods. Consumers associate the source with the quality of the goods. So won’t licensing the trademark to jeopardize the quality of the goods? After all, the licensee doesn’t have to maintain the same quality as the Licensor. This is why the onus is on the Licensor to ensure that the licensee retains the quality. The Licensor can ensure this in two ways:
Usage control– The Licensor will control how the trademark is to be used by the licensee. The Licensor will decide how the goods are promoted, marketing strategies, etc.
Quality control– The Licensor will monitor the quality of the goods the licensee produces before the goods are released in the market.
The Licensor needs to retain quality and usage control over the licensed trademark to protect the brand value of his business.
Licensing a trademark in India is an essential tool for the proprietor to gain access to new geographical territories, increase his revenue, and enhance his business’s brand value by increasing his trademark’s availability far and wide.
