Below is an excerpt from John McKeown’s February 2016 Monthly IP Bulletin.
Happy end of January!
I would like to continue the discussion concerning developing
effective brand management policies.
Frequently licencing is an important component of brand
management. For example, in some cases it may be preferable to
extend a brand by entering into licence agreements. The licensee
can be responsible for production, distribution, sales and
marketing, while the brand owner must ensure that the product,
design, distribution and marketing appropriately communicates the
brand image to potential customers.
The Trade-marks Act allows for the licencing of
trademarks so long as the owner has, under the licence, direct or
indirect control of the character or quality of the goods or
services. If this requirement is not complied with the
distinctiveness and validity of the brand name may be
Typically a licence should preclude the licensee from using any
other marks apart from the licensed mark in association with the
licensed goods or services. Alternatively if co-branding is to
occur the licence should set out specific guidelines relating to
spatial separation, the presentation of the marks and trademark
Any brand owner who engages in licensing must control the
character or quality of the licensed goods or services. The licence
must set out the standards relating to the character or quality of
the goods or services that are being licensed.
The owner must also be in a position to show that such control
was exercised. Control is typically exercised by requiring, at a
a) the licensed goods or services conform to standards and/or
specifications relating to the character or quality of the goods or
services prescribed by the brand owner;
b) the licensee be subject to a right on the part of the brand
owner to inspect the production or method of delivery of the
licenced goods or services;
c) all advertisements or other public presentations containing
the licensed marks be subject to a requirement to obtain a written
pre-approval from the brand owner.
Retained records consisting of approved product samples as well
as approved product packaging and advertising and reports relating
to inspection and control will allow the brand owner to show that
it has in fact exercised control. If a brand owner grants many
trademark licences it should have a licencing/quality control
department to monitor and audit the character or quality of the
licensed goods or services and retain the appropriate
A trademark notice, in form prescribed by the trademark owner,
should be included in all public presentations of the licensed
mark. The brand owner should prescribe such notices and be in a
position to show they were used.
If there are a number of licences outstanding a system should be
in place to track the status of each licence including applicable
obligations and restrictions. Such information can be invaluable in
prosecuting and defending litigation.
It is useful to arrange for regular meetings with licensees to
help control the licensees activities and prevent default. This can
also assist in monitoring the marketplace.
The Federal Court made a sweeping statement in Justice Locke's decision released last Friday that submissions made to the CIPO during patent prosecution can re-emerge to haunt litigants and hit them where it hurts: the wallet.
Materials from a recent "refresher training" for examiners at the Canadian Intellectual Property Office (CIPO) highlight inconsistencies between CIPO's examination practices and Supreme Court precedent.
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