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What problems should be paid attention to in trademark licensing?

Release Time：

2022-08-29

Trademark licensing refers to the act of a trademark registrant allowing others to use its registered trademark through legal procedures. The trademark owner permits others to use his registered trademark, often by signing a trademark license agreement with the licensee, the licensee is authorized to use, so as to obtain the corresponding license fees. Trademark licensing solves the urgent need of the licensee to use the trademark, and also brings economic benefits to the licensor. Behind such a win-win situation, there are some legal problems in details.

1. The Licensee shall not use the registered trademark on the licensed goods beyond the scope of the license

After obtaining the trademark license, some licensees use the registered trademark of the licensor beyond the scope of the licensed goods, for example, the category and content of the licensed goods are 25 categories of clothing, and the licensee goes beyond the scope and uses the trademark on the category 18 "package" and distributes it together with the clothing.

News reported a case, Ningbo Customs seized a hardware accessories export case due to unauthorized expansion of the use of the scope of infringement of the "UL and graphics" trademark, the value of the case is as high as 1.008 million yuan. It is reported that a company in Hangzhou declared the export of a batch of guide rail, pipe clamp and other hardware accessories to Ningbo Customs, declaring the brand as "ekoline", worth more than 1 million yuan. In the inspection of this batch of goods, the customs inspector of Beilun under the Ningbo Customs found that in addition to the brand, specifications and other information on the outer packaging of the goods, but also printed a logo containing "UL". In addition, all goods are also etched with the word "UL". The customs officer checked the authorization status of UL Safety Laboratory in the Customs protection filing system and found that there was no license information of the company.

In this regard, the customs regulatory department contacted the right holder to verify the authorization, the verification results are surprising, the entire 2 containers of hardware accessories, only the construction of the joint for authorized products, other goods are not authorized. Originally, the United States UL safety laboratory only authorized the company to use the "UL and graphics" trademark on the construction joint, but the company arbitrarily expanded the scope of use, forming a de facto infringement.

As can be seen from the above cases, no matter whether the licensee subjectively has malicious intent to exceed, his act of surpassing, that is, there is a risk of trademark infringement.

On the one hand, the exclusive right to register a class of goods beyond the scope of the license, even if it is in the hands of the licensor, the licensor is not necessarily willing to license the class to the licensee. If the licensee needs to use, it must obtain a new authorization from the trademark owner, otherwise it will constitute trademark infringement. The intention of the trademark owner to authorize one class does not automatically affect its intention to authorize other classes.

On the other hand, the exclusive right to use a registered trademark for these categories of goods beyond the scope of the license may be in the hands of a third party. If the licensee does not have this legal awareness and thinks that his use is a lawful use within the scope of the authorization of the exclusive right to use the trademark, the licensee may constitute trademark infringement and face compensation once the third party carries out rights investigation in the future.

2. The licensee shall use the trademark in accordance with the licensed trademark sample and shall not exceed the scope of the license

After obtaining the trademark license, some licensees arbitrarily redesign the authorized trademark samples and put them into use, which may also exceed the scope of the license. For example, the graphic design of the word trademark makes the new trademark too different from the licensed trademark, and forms a new approximation with the third party's previous registered graphic trademark, thus causing confusion and misrecognition in the consumer market. Such new design use behavior will bring trademark infringement risks to the licensee.

The licensee's approach may also bring market losses to the licensor. The brand image vividly represents the image and character of the trademark owner. The licensee's new design may contradict the trademark owner's style, convey wrong information to consumers, and affect the market performance of the trademark owner's brand.

In addition, the trademark owner's registered trademark may be filed by others to revoke the application for non-use for three years, at which time, the trademark owner shall submit evidence of use within 2 months from the date of receipt of the notice, if no evidence of use is submitted, the trademark will be revoked. As for the evidence of use, it shall clearly state what the trademark being used is. If the trademark owner licenses the trademark, and the licensee does not use the trademark in accordance with the licensed trademark sample, and the change of the trademark sample is large, once the future intervention to revoke the three-year non-use procedure, it is easy to appear that the trademark use evidence provided by the licensee does not meet the requirements. At this time, if the trademark owner does not use the trademark, there is a legal risk that the trademark will be revoked.

Therefore, when the two parties sign the license contract, it must be clearly agreed that the licensee shall not arbitrarily change the licensed trademark sample into use, and the trademark owner shall regularly review the licensee's use of the trademark in order to find the problem in time.

3. The licensed trademark shall be legal and valid

On the one hand, the licensed trademark should be a trademark that has been approved for registration, and the scope of the goods that have been approved for registration should be greater than or equal to the scope of the licensed goods. When the licensee accepts the license, it shall conduct a legal investigation in a timely manner to find out whether the licensed trademark samples and the content of the goods are approved and registered by the Trademark Office, so as to ensure that the trademark should be legally registered trademarks. Otherwise, the following risks may exist:

Trademark infringement. The content of the licensed goods exceeds the scope of the approved registered goods of the trademark, and if the licensee is weak in legal consciousness and blindly uses the goods according to the license contract, it will constitute trademark infringement if it happens to be registered by others at this time.

Fraudulent licensing. Trademark licensing generally requires the payment of licensing fees, and the licensee does not identify the legal status of the licensed trademark by itself. If the trademark owner subjectively cheaters and licenses an unregistered or unregistered trademark to the licensee, the licensee will incur the loss of trademark licensing fees.

On the other hand, the licensed trademark should be valid. When accepting the license, the licensee shall also find out in time whether the licensed trademark has been renewed, whether the trademark right is held by the trademark licensor, and whether the trademark licensor has the right to dispose of the trademark right. In reality, no matter whether the licensee is subjectively cheating, the time defect of the licensed trademark is not renewed in time or the license term is longer than the trademark exclusive right period, which makes the licensee obtain an invalid registered trademark, resulting in the legal risk of infringement and the loss of trademark license fee.

To sum up, for trademark licensing, the licensing parties should pay attention to the design of contract terms when signing the contract to avoid the above problems.

* Excerpted from China Trademark Magazine.

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