Trademark licensing allows brand owners to authorize others to use their mark in connection with goods or services—often in exchange for royalties or business partnerships. When done properly, licensing can strengthen a brand and expand its reach. But done improperly, it can weaken rights or even lead to loss of protection.
The key to a successful trademark license is quality control. The trademark owner must maintain quality control over how the mark is used and the delivery of goods or services under the licensed mark. Failure to do so results in what is called a “naked license,” which can cause the mark to lose its distinctiveness—and ultimately its enforceability.
A well-drafted licensing agreement should address:
- Scope of use (e.g., territory, products/services, exclusivity)
- Quality control standards and inspection rights
- Term and termination provisions
- Royalty structure and reporting requirements
- Ownership and goodwill clarification
The inclusion of quality-control provisions and enforcement of those standards are particularly important. Courts have invalidated marks where licensors failed to exercise sufficient oversight, leading to consumer confusion or degradation of brand quality.
If structured properly, licensing can be a powerful tool to grow brand recognition, enter new markets, or form strategic alliances—without compromising legal protection.
