Once you secure trademark protection of a product, you've got two choices - market the product yourself or license it to another party, sit back and let them do the work for you and share the financial benefits. In a well drafted and managed licensing agreement, both parties reap benefits. As the licensor, you'll be able to reach more markets of potential buyers with minimal capital, time and energy investment on your part while enjoying royalty payments. Licensees are afforded the opportunity to market a product in specified territories without having to spend the time and cost to develop the product, service or brand.
To assure that your trademark licensing agreement is rock-solid, Daniel Law Offices shares these seven essentials of an effective contract:
- Put it in writing: Verbal agreements won't hold water in court should a dispute arise.
- Identify all parties: List the names and addresses of all involved parties including licensors, licensees and attorneys.
- Define all grants: Specify exactly what rights are being granted, in what geographical territories and for how long a period of time. Also be sure to specify whether the license is exclusive or non-exclusive, transferable or non-transferable, etc. The more detailed the terms, the less likely you'll face a dispute between parties later.
- Define the trademark itself: Specify exactly which goods and services your trademark covers, plus whether and where your trademark is registered or pending registration. If your American-trademarked product will be marketed internationally, you'll want to consider applying for protection in each applicable country.
- Payment consideration: Details of how much and in what way a licensor is paid for licensing rights is a crucial part of a written agreement. For instance, some licensors require a large one-time license fee while others prefer to collect periodic royalties from sales of your trademark-protected product or service.
- Quality control: A trademarked product or service's brand reputation can quickly be harmed if your licensee uses it in an irresponsible manner such as creating shoddy products with inferior parts. Your licensing agreement should specify required minimum quality control measures that the licensee must take to protect goodwill.
- Termination: Even the best of agreements can come to an end. Make sure that your trademark licensing agreement details precise terms for either party to terminate the agreement and how affected goods or services will be handled afterward.
When it comes to legal written agreements, the devil is always in the details, as they say. Dedicated trademark attorneys with Orlando's Daniel Law Offices can help you draft a solid trademark licensing agreement that will protect and benefit all parties. Call 866-37PATENT to schedule a consultation.