Types of Trademark Licensing

  1. Sole licensing: Under a sole license, the trademark registrant licenses only one licensee to use the registered trademark in the agreed manner and within the agreed term and territory, and the trademark registrant agrees not to use the registered trademark at all. In other words, only the licensee will have the right to use the registered trademark, while neither the trademark registrant nor any third party may use the registered trademark within the agreed term and territory.
  2. Exclusive licensing: Under an exclusive license, the trademark registrant licenses only one licensee to use the registered trademark in the agreed manner and within the agreed term and territory; nevertheless, although the trademark registrant cannot license the registered trademark to a third party, it can use the registered trademark itself. In other words, under an exclusive license, both the licensor and the licensee can use the registered trademark, while third-party use is excluded.
  3. Non-exclusive licensing: Under a non-exclusive license, the trademark registrant licenses a party to use the registered trademark in the agreed manner and within the agreed term and territory, while the trademark registrant reserves the right to use the registered trademark on its own and/or to license the registered trademark to a third party. In other words, under a non-exclusive license, the licensor as well as several licensees can use the registered trademark at the same time.

Matters to be Noted in Concluding a Trademark Licensing Contract

1. Carefully select the licensee:

Before granting a license to use the trademark, the licensor should first conduct comprehensive inspection and testing of the licensee's legal personality, production capacity, management level and product quality. After signing the licensing contract, the licensor should pay close attention to the licensee's production and sales operations in order to prevent any damage to the trademark's reputation in respect of product quality and after-sales services.

2. Pay attention to the protection of trademark rights

The licensor should be obligated to ensure the certainty and stability of the licensed trademark rights in order to protect the licensee's right to use the trademark. To be more specific, the licensor should ensure that the registered trademark is within its term of validity, and it should actively maintain the validity of the licensed trademark rights.

In the event of trademark infringement involving a sole or an exclusive license, the licensee should file any lawsuit and the licensor should actively cooperate. If the infringement concerns a non-exclusive license, the licensor should file the lawsuit, and the licensee should timely inform the licensor of the facts, and provide the licensor with evidence of infringement.

3. Supervise the use of the trademark

Supervision of the licensee's use of the trademark should include the following:

  1.   The trademark that is actually used should be consistent with the registered trademark. The licensee's use of the registered trademark should be subject to the trademark's registration conditions, including the scope of goods or services approved for use; and the use should not exceed the scope of goods or services approved for use of the trademark. No arbitrary revision of the text or graphics of the registered trademark should be permitted. Meanwhile, the licensee should use the licensed trademark within the scope prescribed in the licensing contract.
  2.   The goods licensed for use of the trademark should indicate the name of the licensee and the place of production. In trademark licensing practice, some enterprises licensed to use certain trademarks affix not only the licensor's trademarks, but also the name of the licensor's factory and the place of production of the relevant goods. Such additions can easily cause confusion among consumers. Licensors should pay attention to the licensees' use of the trademarks, so as to prevent harm to the reputation of the enterprise or the goods.

华诚律师事务所（Watson&Band）

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.