Trademark owners who license their trademarks—BEWARE!
One of the best ways to protect your valuable trademark is to monitor its use in the marketplace, especially if you’ve issued a license to someone to use that mark. It is your responsibility to protect it, and the USPTO, as do most courts, expect you to do so—or risk losing it.
One of the easiest ways to lose your trademark is to NOT pay attention to how your licensees use it. First, you want to make sure they know how to use your valuable trademark, and then, you want to hold them accountable for doing what they agreed to do. Not putting into place effective quality control mechanisms, in legal parlance, is called issuing a “naked license”. For licensing agreements to be enforceable, the specific legal language can get tricky. That’s why, having a competent trademark/contracts attorney, who knows exactly what to say and how to say it, comes in handy.
Several courts have spoken on this topic essentially saying, “if you enter into a licensing relationship, whereby you permit someone to use your trademark, and you do not include quality control mechanisms, you will lose your trademark rights.”
So what does this mean for trademark owners who license their marks?
- Include a quality control provision in your licensing agreement.
Make sure you include an express contractual right to inspect and supervise your trademark(s). In reviewing a number of court decisions, overall the courts have upheld contracts which include certain language, and rejected others. Make sure you include the language that will protect you and your trademark rights.
- Monitor & Supervise your Trademarks. It’s one thing to include in your contract that you have the right to monitor and supervise the licensee’s use of your trademark, it’s another to actually follow up. And yes, it will cost you some money, but it will cost you more if you lose your rights, and have to pay a lawyer to help you get them back. Follow-up.
That’s it for now. Feel free to join the conversation on my Facebook Fan Page, in one of my LinkedIn discussion groups, or on Twitter.
Until next time, I’m Attorney Francine Ward helping you protect what’s yours!