What is trademark licensing? Trademark licensing is the use of a registered mark by the registered user or any person, having consent from the registered proprietor, other than the registered proprietor or registered user having connection in the course of trade in relation to the goods or services.
Legal history of trademarklicensing: One of the drastic turnarounds caused by the introduction of the new Trade Marks Act, 1999, repealing the old Trade Marks Act, 1958 was broadening the definition of the phrase ‘permitted use’. In the new Act, the use of a registered Trade Mark is now permitted not only by the registered user, but also by a third person who is permitted to use the captioned registered Trade Mark with the consent of the registered user. This in turn ensured trademark licensing in India.
Advantages of licensing: It is a win-win Trade mark licensing Licensing gives the situation for both the helps companies or licensee opportunity proprietor of the body corporate to to generate more Trade Mark who has improve business revenue with less already established operations and investment. himself in the market presence business arena (the and reputation. licenser) and for the person who might be just a start-up company (licensee).
Flaws in trademark licensing: But the main flaw in licensing would be that the licensee may end up exploiting the Trade Mark more successfully and effectively than the licensor and may receive better returns. It would be a huge backlash on the licensor if he ends up losing his customers too. Also, there is a huge risk of unauthorized usage of the Trade Mark once it is licensed.
Principles involved in trademarklicensing: Principle of ‘source identification’: This means that it is not permissible for trademark owner, to allow by way of licensing to use his trademarks in relation to goods not connected with him. Principle of ‘quality control’: The real purpose of trademark licensing is that of distinguishing the goods and services of the owner from that those of the competitors, which in turn ensures the quality of brand being preserved. Principle of ‘connection in course of trade’: This in practise is the enunciation of the principle of quality control by the courts, just widening of its scope.