Trademark License Agreement

Trademark License Agreement

Drafts a defensible Trademark License Agreement that protects mark ownership and goodwill while establishing enforceable commercial terms for licensee use.

Prerequisites

1. Party details — full legal names, entity types, jurisdictions of organization, principal places of business
2. Licensed marks — mark names, registration numbers, jurisdictions (registered or common law), visual representations for Exhibit A
3. License scope — exclusive or non-exclusive; field of use; licensed products/services (specific categories, not broad descriptions)
4. Territory — countries, states, or distribution channels; treatment of online/passive internet sales
5. Financial terms — upfront fees, royalty rate (% of Net Sales or per-unit), minimum guarantees, payment frequency
6. Term — initial duration, auto-renewal mechanics, notice period for non-renewal
7. Quality control requirements — approval process, sample submission timelines, applicable standards

Output Structure

1. Header & Recitals

• Title: TRADEMARK LICENSE AGREEMENT
• Effective date, full party identification, defined terms ("Licensor," "Licensee")
• Recitals: licensor's mark ownership; licensee's desire for authorized use

2. Grant of License

3. Licensed Marks (Exhibit A)

• Reference Exhibit A for visual representations, registration numbers, jurisdictions
• Specify required symbols (®, ™, ℠) per mark
• Address combination use with licensee's or third-party marks; state prominence requirements

4. Licensed Products & Services

• Specific product categories or service descriptions; avoid broad class-level language
• Approval process for expanding scope during term
• Pre-launch sample/prototype submission requirement

5. Territory

• Define by country, state, province, or distribution channel
• International: address online sales and passive internet reach beyond territory

6. Quality Control

• All goods/services bearing marks must meet licensor-specified standards
• Approval workflow: licensee submits samples → licensor has 15 business days to approve/reject → silence = deemed approved
• Licensor right to inspect facilities on reasonable notice
• Immediate discontinuation right upon quality failure
• Short cure period or immediate termination for QC violations (distinguish from standard 30-day cure)

7. Ownership & Goodwill

• Licensee acknowledges licensor's sole ownership of all right, title, and interest, including goodwill
• All use inures to licensor's benefit
• Licensee prohibited from challenging mark validity during and after term
• Required trademark notices and source indicators

8. Royalties & Payment

9. Reporting & Audit Rights

• Quarterly reports: units sold, gross sales, deductions, net sales, royalties due
• Audit right on 30 days' notice, business hours, once per year
• Unlimited audits if prior audit revealed underpayment > 5%
• Licensee bears audit cost if underpayment exceeds threshold
• Record retention: 3–5 years

10. Term & Renewal

• Initial term (e.g., 3 or 5 years)
• Auto-renewal unless notice given (e.g., 90 days pre-expiration)
• Option: adjusted royalty rates or expanded territory on renewal

11. Termination

Post-termination obligations:

• Immediate cessation of all mark use (products, packaging, web, social media)
• Sell-off period: 60–90 days for existing inventory; royalties continue
• Written certification of destruction of remaining materials
• Transfer of domain names and social media accounts incorporating marks
• Survival: accrued royalties, confidentiality, post-term use restrictions

12. Standard Provisions

• Indemnification: licensee indemnifies licensor for claims from licensee's use or licensed products
• Representations: both parties — authority to contract; licensor — mark ownership; licensee — quality compliance
• Liability cap: mutual, appropriate to transaction value
• Dispute resolution: governing law, jurisdiction, litigation or ADR
• Assignment: licensee may not assign without consent; licensor assignment permitted
• Notices: method, addresses, deemed receipt timing
• Boilerplate: entire agreement, written amendment, severability, waiver, force majeure, counterparts, e-signatures

13. Exhibits

• Exhibit A: Licensed marks — visual representations, registration numbers, jurisdictions
• Exhibit B (if applicable): Quality control standards and guidelines

14. Signature Block

• Authorized representative: name, title, date
• Entity-appropriate authority (officer for corp, manager/member for LLC, general partner for LP)
• Counterparts and electronic signature clause

Guidelines

• Quality control is validity-preserving: naked licenses (no QC) can result in mark abandonment — ensure QC provisions are substantive, not pro forma
• Exclusivity precision: distinguish exclusive license (no other licensees) from sole license (licensor retains own use rights)
• Field of use and territory: define narrowly to avoid scope disputes
• Goodwill inurement: mandatory — all use must accrue to licensor
• Minimum royalties: tie to breach mechanics if commercially significant
• International deals: confirm mark registrations in each territory; unregistered marks may lack protection
• For registered marks, verify current USPTO or foreign registry status before drafting [VERIFY registrations with client]
• Anti-challenge clause: review enforceability in applicable jurisdiction [VERIFY]