Licensing Agreements

June 4th, 2015

Every business owner knows how important trademarks are to protecting their brand, or intellectual property.  However, sometimes it makes good marketing sense to allow another company to use the trademark without selling or transferring the rights to it.  This is called a licensing agreement and may be a profitable business arrangement for the licensor who can collect royalties for the licensee’s use.

A licensing agreement contract should contain language that expresses the extent and limitations of the use of the trademark.  These terms are crucial because you do not want to give away more rights to your property than necessary.  You may also include in the terms of the agreement prohibited uses of the trademark, the length of time the licensee is permitted to use the trademark, and the conditions associated with royalty payments.

Depending on the nature of the licensing agreement, there are several ways you may collect royalties, including:

  • A one time license fee
  • Licensing fees based on sales
  • An advance up front payment

It is also important to have knowledge of the licensee’s use of the trademark and monitor the use of it.  If you do not monitor its use, you run the risk of losing the rights to it.  Non-use for a certain period of time could result in “abandonment.”  A court could deem this inaction as an intent not to use the trademark again.

Whether you are the licensor or the licensee and are negotiating a licensing agreement that will help your business prosper, consulting with an attorney who is experienced in handling these matters is important to assure that your business is protected.  Bellavia, Blatt, & Crossett, P.C. can provide the legal guidance necessary to help your business thrive.  Call Bellavia, Blatt & Crossett, P.C. at (516) 873-3000 or (631) 224-7000.

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