I had given this presentation at Symbiosis Law School sometime in 2015 covering the basic tenets of trademark licensing, covering issues like exclusive, non exclusive grants, sub-licensing etc.

1. Basic Trademark
Licensing Agreements
(Withforeignparties…)
Ronojoy Basu, Advocate
Abhay Nevagi & Associates

2. What is Trademark Licensing?
• In trademark licensing, a trademark owner (Licensor) grants
permission to another (Licensee) to use that trademark on
mutually agreed terms.
• Quality control – The essence of trademark licensing; the
Licensor mostly retains control over the nature and quality of
the goods/service sold in association with the trademark.

3. Some examples of Trademark
Licensing
• Franchising
• Merchandising
• Brand extension
• Co-branding

4. Why enter into Trademark
Licensing Agreements?
• Revenue Stream/Monetization of IP
• Territorial expansion
• Benefit from other’s manufacturing, distributing, sales
capacity
• Product/service expansion

5. Agreement Drafting Checklist
Title
Definitions
Exclusive or Non-exclusive?
Quality Approval
Sub-licensing
Territory
Term
Consideration
 Relationship of Parties
 Termination
 Confidential Information
 Intellectual Property
 Non -Solicitation
 Arbitration
 Indemnity
 Adherence to Laws

6. Hypothesis
Party A, an American perfume brand wants to appoint Party B,
an Indian wholesaler to market and sell A’s perfume under A’s
trademark in India for 3 years. A enters into a Trademark License
Agreement with B, thereby granting B the permission to use the
said trademark to market and sell the said perfumes.
Party A – Licensor
Party B - Licensee

7. Title
(Some examples…)
• TRADEMARK LICENSE AGREEMENT
• TRADEMARK & SCIENTIFIC KNOW-HOW LICENSE AGREEMENT

8. Definitions
Examples –
a. Party - A and B shall both be referred to individually as ‘Licensor‘ and ‘Licensee’
respectively and collectively as ‘Parties’
b. Agreement – This Licensing agreement dated _______ between both Parties
shall be hereinafter referred to as Agreement
c. Confidential Information - (You may define confidential information here or later
in the agreement body)
d. Licensed mark – Licensed Mark shall mean and include….(Describe the
trademark here that is to be licensed to the Licensee)
e. Licensed Goods/Services - Licensed Goods/Services shall mean and
include…(describe goods/services)
f. Territory – This Agreement shall be valid in …(define territory)

9. Grant Clause I
Exclusive – “The Licensor hereby grants to the Licensee, for the term of
this Agreement, exclusive license to use the Licensed Mark solely and
exclusively in connection with the Licensed Goods/Services in the
defined Territory. During the term of this Agreement, Licensee shall use
the Licensed Mark only to the extent permitted under this Agreement.“
• Licensor will not License the said Mark to any other party
• Licensor should mention whether he himself will retain the right to
use the Licensed mark or not

10. Grant Clause II
Non-Exclusive – “The Licensor hereby grants to the Licensee, for
the term of this agreement, a non-exclusive license to use the
License Mark in connection with the Licensed Goods/Services in
the defined Territory. Licensee shall use the Licensed Mark only
to the extent permitted under this Agreement”
• Licensor retains the right to License said Mark to other parties
• Licensor will not mention to who else the Mark shall be
licensed to

11. Sub-Licensing
• First determine whether Licensor would be okay with Licensee
sub-licensing the said Mark to another party for say,
advertising/promotion?
“Licensor hereby agrees to grant Licensee the right to sub-license
the said Mark to any third party upon prior discussion with and
approval of Licensor. The Licensee shall be responsible for all
legal processes that may be necessary to appoint said sub-
licensee”

12. Quality Approval
“Licensee agrees to send the Licensor, from time to time,
pictures, samples etc. displaying the use of the Licensed Mark to
seek Licensor’s approval of the same.”
• In most License agreements, the Licensor retains control over
quality as it is the Licensor’s brand image that is at stake.

13. Territory
• Parties might want to add an extra clause in the agreement
stating in more clear terms the exact territory in which the
Agreement shall be applicable
“The Licensor and Licensee hereby agree that the Licensed
Goods shall be marketed and sold within the geographical
territory of India only. The Licensee shall market, sell the said
Licensed Goods outside the said Territory upon prior permission
from Licensor.”

14. Term (Duration)
“The Licensor and Licensee agree that the Term of the
Agreement shall be 3 years, effective from _______ (date of
execution) following which the Agreement shall expire, unless
terminated beforehand by either Party. After expiry, the
Agreement may be renewed upon mutual agreement by and
between both Parties.”

15. Consideration (Payment terms)
“In consideration for the License granted, the Licensee shall pay to Licensor,
during the term of this Agreement, a Royalty amount of __________. The
currency of the said Royalty shall be ___________ .”
• Determine currency of Royalty. Licensee may insist on paying in INR at the
current exchange rate.
• Royalty may be calculated as mutually decided by the Parties, for E.g. –
agreed percentage of Net Sales of Licensed Goods.
• Royalty may be paid in lump sum or in parts, as mutually decided by the
Parties.
• There could also be a Guaranteed Minimum Royalty, as mutually decided by
the Parties.

16. Relationship of Parties
“Both Parties hereby agree that they are entering into this
Agreement on a principal to principal basis, this Agreement does
not create any joint venture, partnership or any other kind of
special relationship between the Parties, other than a
contractual relationship”
• This clause stops either party from raising claims they may not
be entitled to which may be outside the scope of the
agreement

17. Termination (Exit Clause)
“This Agreement may be terminated by either party owing to the
breach of the Agreement by giving the other party, a ___
month’s/day’s prior written notice. Breach of this Agreement shall
comprise;
• Non payment of timely Royalty by Licensee
• Licensor not providing information, data required by Licensee to
perform obligations under Agreement
• Licensee not seeking prior permission of Licensor before selling
Licensed goods outside the Territory etc.

18. Post Expiry/Termination
“Post expiry/termination, each Party agrees upon returning to
the other, any and all Confidential Information in the possession
of the other Party. Licensee shall pay all Royalty remaining
unpaid at the time of expiry/termination to the Licensor within
_____ days of expiry/termination of the Agreement. Licensee
shall have no right to use the Licensed Mark after
expiry/termination of the Agreement.

19. Confidential Information
“During the course of the Agreement, either party shall be
entitled to use Confidential Information of the other party but
shall not be entitled to reveal such information to any third party
even after expiry/termination of this Agreement. Post
expiry/termination, each Party agrees upon returning to the
other, any and all Confidential Information in the possession of
the other Party. Confidential Information shall mean and include;
Manufacturing data, Technical Literature, Pricing, Customer List,
Marketing Strategies, Working Methods, Trade Secrets etc.”

20. Non - Solicitation
“During the course of this Agreement and after
expiry/termination of this Agreement, nether Party shall directly
or indirectly solicit the employees of the other Party. Solicitation
in any form may result in termination of the Agreement by the
affected Party”
• This is of importance in the current scenario wherein
‘employee poaching’ is on the rise.

21. Arbitration
“In the event of any disputes or disagreements between the
Parties, an attempt shall first be made to resolve them mutually,
failing which WIPO Arbitration Rules shall be followed by both
Parties to resolve the matter at hand.”
• Place of Arbitration (Parties often prefer Singapore, cause its
cheap there!)
• Time of Arbitration, Language and cost shall be mutually
decided by Parties

22. Indemnity (Compensation)
“In the event a Party suffers losses, monetary or otherwise,
owing to the negligence or omission of the other Party, the latter
shall indemnify the former.”
E.g. – If a Trademark infringement suit is filed against Party B,
Party A shall become a party to the suit, pay for costs of
defending the suit and compensate B for the loss of goodwill,
reputation etc.

23. Adherence to Laws
“Both Parties agree that they have adhered to all applicable laws
and have obtained all clearances required to enter into this
Agreement”
E.g. – Requisite trademark registrations, adherence to labour
laws etc.
• Foreign Parties almost always insist on adherence to
applicable laws before entering into agreements.

24. ~ THANK YOU ~