Difference Between a Licensed Mark and a Trademark

By Stephanie Dube Dwilson

The ins and outs of intellectual property law can be a complex minefield if you don't have the right information at your fingertips. If you're selling products or services and want to protect the logo or name that identifies your product, you'll want to register for a trademark. You can't have a licensed mark that you give to other businesses or franchises until you get a trademark.

The ins and outs of intellectual property law can be a complex minefield if you don't have the right information at your fingertips. If you're selling products or services and want to protect the logo or name that identifies your product, you'll want to register for a trademark. You can't have a licensed mark that you give to other businesses or franchises until you get a trademark.

Trademark

The purpose of a trademark is to protect consumers from confusion when they're purchasing goods or services. You don't want someone buying a product that they think is yours because the logo is similar, only to discover it's of lesser quality. Confusion like this can hurt the customer and hurt your product's value. A trademark protects any mark that identifies your product or service. The mark can be a logo, a name, a phrase or something similar. If you use an original trademark in commerce, you'll automatically have rights to that mark in your region. However, registering your mark with the U.S. Patent and Trademark Office will give you greater protection, along with eligibility for more damages if you sue someone for infringement.

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Licensed Mark

A licensed mark is created when the trademark's owner gives someone else a temporary right to use the mark for a specific purpose. The contract for a licensed mark usually includes whether the license is exclusive or nonexclusive and will stipulate restrictions, such as geographic regions where the mark can be used and types of products that can be marketed under the mark. The contract will specify how long the license is for and situations in which the license can be ended early.

Naked Licensing

An important point of trademark law is that if the owner doesn't police the mark and take action against anyone who infringes on it, he may eventually be viewed as abandoning the mark and lose his rights to it. A naked license occurs when the owner doesn't police how a party is using the licensed mark and can result in a finding of abandonment. A trademark owner can avoid this by vigilantly reviewing the licensed owner's use of the mark and making sure he's using it within the confines of the contract.

Franchisee Concerns

A licensed mark agreement can sometimes be so similar to a franchise agreement that a court will find that the contract created a franchise relationship, resulting in added laws and regulations that must be followed. Franchise agreements involve the right to use a trademark, paying the owner royalties and other fees, and the owner significantly controlling and/or helping the licensee run his business. To avoid this, the contract should stipulate that the owner exerts only enough control to maintain his trademark rights and not over the entire business. The contract should stipulate that inventory won't be purchased above wholesale prices; if royalties are not to be paid, this should also be written out clearly. Because the rules are tricky, it may be helpful to have an online legal document service or attorney draft the licensing contract to ensure maximum protection and clarity.

Protect your brand. Register My Trademark Now
Trademark Acquisition Agreement

References

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A trademark is an emblem or phrase that uniquely identifies goods and services in the marketplace. Trademark rights attach immediately upon use of a mark to identify goods in commerce, but registration at the state and federal levels is a way to put the public on notice of a person's claim to rights in the mark. A painting may only be subject to trademark protection under limited circumstances.

Are All Trademark Names Legally Protected?

All trademark names generally qualify for trademark protection. Basic trademark protections automatically apply to a trademark once it's used in the marketplace, to identify and distinguish a company's specific goods or services. The first company to use a unique identifying mark on its goods in commercial trade secures trademark rights in the mark. Trademark names include a variety of original words, phrases, signs and symbols. However, generic names, surnames, regional names and merely descriptive names do not qualify as trademarks. The trademark owner may chose to register the trademark with state and federal trademark offices. The U.S. Patent and Trademark Office processes all federal trademark registration applications.

Expiration of Trademark Registration & Abandonment

A trademark is a combination of words or symbols that identifies and distinguishes a product or service of an individual or company. Commercial use automatically creates common-law trademark rights that last as long as the mark remains in commercial use. You can also register and maintain a trademark with your state or with the U.S. Patent and Trademark Office. Federal registration and maintenance is more expensive, but it provides a public record of the trademark claim and the ability to sue in federal court to protect your rights. You must periodically renew and monitor your claim to prevent expiration or abandonment.

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