Trademark Licensing in India |

Trademark Licensing in India

If you or your company is interested in using our legal services to license or assign a registered trademark in India, please fill out our form. Trademark licensing is a method of transferring rights in which the trademark owner retains full ownership of the mark while granting limited rights to third parties. This allows the third party to use the trademark for commercial purposes in exchange for a royalty on sales without transferring ownership or being designated as a “registered user”.

A Comprehensive Overview

Legal Framework: The Trade Marks Act of 1999
Trademark licensing in India is governed by the Trade Marks Act of 1999. Although the Act does not explicitly mention "licensing" or "licence," its legislative provisions relating to registered users cover the rules for trademark licensing.
Understanding Trademarks
Under Section 2(m) of the Indian Trademarks Law, a mark can take various forms such as a logo, trademark, heading, label, ticket, name, signature, word, letter, number, shape of a product, packaging, or a combination of colors. In other words, a trademark is any graphical representation that differentiates the goods or services of one person from those of others.
Definition of Trademark License
While the Trademarks Act of 1999 does not specifically define "Licensing of TM," a license, in general, is the authorization granted to someone to perform a specific act. In the case of trademark licensing, it refers to the consent given by the trademark owner to a third party to use the trademark in exchange for royalty payments.
Authority to Issue Trademark Licenses
Only the owner/holder of a registered trademark has the authority to issue trademark licenses. It's important to note that Indian law allows for the transfer of both registered and unregistered trademarks through licenses or assignments.
Under Section 48 of the TM Act, a person other than the registered proprietor of a trademark may be registered as a registered user. This means that the use of a registered trademark may be permitted under certain conditions and compliance with relevant requirements.
Conditions in a Trademark Licensing Agreement
A trademark licensing agreement must include certain conditions to protect the reputation of the trademark. These conditions typically involve quality checks and controls over the products or services being provided under the licensed trademark. Key provisions to consider include:
Region of License: Specify the region where the license is being issued.
Duration of License: Clearly define the duration of the license agreement.
Consideration: State the consideration or payments exchanged as part of the licensing arrangement.
Termination Provision: Include a provision outlining the circumstances under which the license agreement can be terminated.
Indemnification Clause: Address potential losses or damages and allocate responsibility between the licensor and licensee.

Advantages of Trademark Licensing

Trademark licensing offers various advantages to both the licensor and the licensee:

Financial Gain: By issuing a license, the trademark owner can capitalize on their trademark and generate revenue through royalties. The licensee also benefits from access to the trademark and a share of the revenue generated.
Business Growth: Licensing allows the trademark owner to expand their business into new regions and leverage the expertise of licensees as distributors. This helps to increase market reach and growth opportunities.
Brand Recognition: Through licensing, the trademark becomes more widely known in previously untapped markets. Licensees can utilize their resources to promote the trademark, further enhancing its brand recognition.
Increased Popularity: As the trademark gains recognition among consumers, its popularity grows. This leads to increased sales, revenue, and continued licensing opportunities.
Workload Redistribution: Licensees effectively become partners, sharing the responsibilities of maintaining the quality of goods and services associated with the trademark. This enables the licensor to reduce their workload while maintaining quality standards.
Trademark licensing provides a mutually beneficial arrangement for both trademark owners and third-party licensees. By understanding the legal framework, conditions for licensing agreements, and the advantages it offers, individuals and companies can make informed decisions when it comes to licensing or assigning registered trademarks in India.

How to Obtain a Trademark Licence in India

In order to obtain a trademark licence in India, both the registered owner or licensee and the proposed registered user or licensee must complete an application on Form TM-U and submit it to the trademark registrar. The application should include the following documents:
Agreement or Written Licence Agreement
A certified copy of the agreement or written licence agreement between the registered owner or licensee and the proposed registered user or licensee outlining the permitted use of the proposed trademark.

Affidavit
An affidavit signed by the registered owner or licensee providing information about the relationship between the parties, the products or services to be registered, and any proposed restrictions or conditions related to the features of the products or services.
Power of Attorney
A signed power of attorney for representatives, if applicable.
Additional Documentation
Any further evidence or documentation required by the Trademark Registrar.
Once the application and supporting documents are reviewed and approved by the Trademark Registrar, the potential licensee or registered user will be registered for the specific goods or services as mentioned in the application. The Trademark Registry entry will include the date of the registered user's application. Within two months of trademark registration, the records will be published in the Journal.
The Trademark Registrar will inform other licensees or registered users of the proposed trademarks in accordance with the recommended method for registration. The Registrar will also take necessary steps, as requested by the applicant, to ensure that the application remains confidential, except for the information recorded in the Trademark Register, to prevent competitors or business rivals from accessing it.
Cancellation of a Trademark Licence
A trademark licence may be subject to cancellation if certain conditions are met. According to Section 50 of the Indian Trademarks Act, registration cancellation notifications are preceded by an opportunity for a hearing. Cancellation can occur in the following situations:

Breach of the agreement terms
Unauthorized use of the mark
Misleading consumers or the public
Withholding important information related to the agreement
Making false statements or engaging in fraudulent activities

Difference Between Trademark Licensing and Trademark Assignment

Trademark licensing and trademark assignment are both methods of monetizing a registered trademark or service mark. However, there are significant differences between the two:
Trademark Licensing
A trademark licence is a contract that allows another individual or business to use the trademark for a specified period.
The licensee pays a recurring royalty fee in exchange for the use of the trademark and related rights.
The licence agreement does not necessarily need to be in writing.
Trademark licensing does not require registration with the registrar.
Trademark Assignment

Trademark assignment involves transferring permanent and exclusive ownership of the registered trademark to another person or business.
The assignment must be in writing and filed with the trademark registrar.
There are no time limitations on trademark assignments.
All associated legal rights are permanently transferred to the new owner.
By following these guidelines, it is possible to obtain a trademark licence in India and understand the distinction between licensing and assignment of trademarks.

How Estabizz Fintech can help in getting the Trademark Licensing

Estabizz Fintech offers services related to trademark registration[1]. They can assist in obtaining a trademark licensing by providing guidance, support, and legal expertise throughout the process. Here's how Estabizz Fintech can help in getting trademark licensing:
Legal Assistance: Estabizz Fintech has a team of professionals, including lawyers, who specialize in intellectual property law. They can provide expert advice on trademark licensing requirements and procedures.
Documentation: Estabizz Fintech can help in preparing the necessary documentation for trademark licensing, such as drafting license agreements and affidavits, ensuring that all legal requirements are met.
Application Submission: Estabizz Fintech can assist in submitting the trademark licensing application to the concerned authorities, ensuring that all required forms and supporting documents are completed accurately and submitted within the specified timelines.
Compliance and Follow-up: Estabizz Fintech can help in ensuring compliance with trademark licensing regulations and follow up with the trademark office on behalf of their clients to track the progress of the application.

FAQ

What is a trademark license?

A trademark license is a legal agreement that allows another party to use a trademark owned by someone else.

What does a trademark license grant?

A trademark license grants the licensee the right to use the trademark for specific goods or services according to the terms outlined in the agreement.

Who can grant a trademark license?

The owner of the trademark, who is typically the registered owner or licensee, can grant a trademark license.

What are the advantages of obtaining a trademark license?

Obtaining a trademark license allows businesses to expand their reach, generate additional revenue, and leverage the reputation and goodwill associated with the trademark.

Can a trademark license be exclusive?

Yes, a trademark license can be exclusive, meaning that only the licensee has the right to use the trademark for the specified goods or services.

Can a trademark license be non-exclusive?

Yes, a trademark license can be non-exclusive, allowing multiple licensees to use the trademark.

How long does a trademark license last?

The duration of a trademark license depends on the terms agreed upon by the licensor and the licensee. It can be for a specific period or remain valid indefinitely.

Can a trademark license be transferred to another party?

In some cases, a trademark license can be transferred to another party with the consent of the licensor.

Can a trademark license be terminated?

Yes, a trademark license can be terminated if either party breaches the terms of the agreement or if the agreed-upon term expires.

What happens if a trademark licensee exceeds the scope of the license?

If a trademark licensee exceeds the scope of the license, they may be in breach of the agreement and face legal consequences.

Can a trademark licensee sublicense the use of the trademark?

In some cases, a trademark licensee may have the right to sublicense the use of the trademark to other parties, subject to the terms of the agreement.

Can a trademark license be limited to a specific geographical area?

Yes, a trademark license can be limited to a specific geographical area, allowing the licensee to use the trademark only within that region.

Can a trademark license be limited to specific goods or services?

Yes, a trademark license can be limited to specific goods or services, granting the licensee the right to use the trademark only for those specified items.

How is the royalty for a trademark license determined?

The royalty for a trademark license is typically determined through negotiation between the licensor and the licensee, taking into account factors such as market value, licensing exclusivity, and the extent of use.

Can a trademark license be subject to quality control provisions?

Yes, a trademark license can include quality control provisions, allowing the licensor to ensure that the licensee maintains the desired quality standards for the goods or services bearing the trademark.

What is the difference between a trademark license and a franchise agreement?

A trademark license grants the right to use a trademark, while a franchise agreement involves a broader business relationship, including the transfer of various rights and business operations.

What is the difference between a trademark license and a trademark assignment?

A trademark license grants permission to use a trademark owned by someone else, while a trademark assignment involves the transfer of ownership of a trademark to another party.

Is it necessary to register a trademark license?

In most cases, it is not necessary to register a trademark license. However, it is advisable to have a written agreement to establish the rights and obligations of both parties.

Can a trademark licensee enforce the trademark against infringers?

Generally, a trademark licensee cannot independently enforce the trademark against infringers. Only the trademark owner or licensor has the right to take legal action against trademark infringement.

Can a trademark license be renewed?

The possibility of renewing a trademark license depends on the terms specified in the original agreement. If renewal is allowed, the licensee and licensor can enter into a new agreement.

Can a trademark license be revised or amended?

Yes, a trademark license can be revised or amended if both parties agree to the changes and formally document them.

Is it advisable to consult a lawyer when obtaining a trademark license?

Yes, it is advisable to consult a lawyer specializing in intellectual property law to ensure that you are properly protected and that all legal aspects of the license agreement are addressed.

What happens if a trademark licensee fails to pay royalties?

If a trademark licensee fails to pay royalties as specified in the agreement, it may constitute a breach of contract, allowing the licensor to terminate the license.

Can a trademark licensee use the licensed trademark in advertising and marketing materials?

Yes, a trademark licensee can use the licensed trademark in advertising and marketing materials as long as it is in accordance with the terms outlined in the license agreement.

Can a trademark license be terminated early?

A trademark license can be terminated early if either party violates the terms of the agreement or if both parties mutually agree to terminate the license.

Can a trademark license cover future improvements or modifications of the licensed goods or services?

Yes, a trademark license can include provisions to cover future improvements or modifications of the licensed goods or services, if agreed upon by both parties.

Can a trademark licensee prevent the licensor from using the trademark?

Typically, a trademark licensee cannot prevent the licensor from using the trademark, unless specified in the license agreement.

Can a trademark license be obtained for a pending trademark application?

In some cases, a trademark license can be obtained for a pending trademark application. However, the licensor must have a valid basis for granting the license.

Can a trademark license be granted for an unregistered trademark?

Yes, a trademark license can be granted for an unregistered trademark. However, the licensor must have the rights to use the trademark.

Can a trademark license be amended to include additional goods or services?

Yes, a trademark license can be amended to include additional goods or services if both parties agree to the expansion of the license scope.

Can a trademark licensee sell products or services under their own brand using the licensed trademark?

A trademark licensee cannot sell products or services under their own brand using the licensed trademark unless specifically authorized in the license agreement.

Can a trademark license be terminated if the licensor transfers the trademark to another party?

If the trademark is transferred to another party, it may lead to the termination of the trademark license agreement unless the new owner agrees to continue the license.

Can a trademark license be granted for a well-known or famous trademark?

Yes, a trademark license can be granted for a well-known or famous trademark. However, the licensor may have stricter requirements and quality control measures to protect the reputation of the trademark.

What happens if a licensee wants to terminate a trademark license early?

If a trademark licensee wants to terminate a license agreement early, they must refer to the termination provisions outlined in the agreement and comply with any notice period or other requirements specified.

Can a trademark license be revoked by the licensor?

A trademark license can be revoked by the licensor if the licensee breaches the terms of the license agreement, fails to pay royalties, or engages in activities that harm the reputation of the trademark.

Can a trademark licensee sublicense the licensed trademark to third parties?

Typically, a trademark licensee cannot sublicense the licensed trademark to third parties unless specifically authorized in the license agreement.

Can a trademark license be transferred to a new owner if the trademark is assigned?

If a trademark is assigned to a new owner, the license agreement may or may not be transferable, depending on the terms specified in the original agreement.

Can a trademark license contain restrictions on the licensee's use of the trademark?

Yes, a trademark license can contain restrictions on the licensee’s use of the trademark, such as specific design or color limitations, to ensure consistency and avoid confusion.

What types of businesses can benefit from obtaining a trademark license?

Various businesses in industries such as franchising, manufacturing, distribution, and merchandising can benefit from obtaining a trademark license.

Is a trademark license the same as a copyright license?

No, a trademark license and a copyright license are different. A trademark license grants the right to use a specific mark, while a copyright license grants the right to use a creative work protected by copyright.