Overview on Trademark Licensing in India

Trademark licensing is a method of transferring rights in which the trademark owner retains all actual ownership rights in the mark while granting third parties only "a limited stipulated rights" to use it.

Simply put, the trademark owner grants a third party permission to use the trademark (if it is registered) solely for commercial purposes in exchange for a royalty on sales of goods or services licensed under the trademark, without designating the person as a "registered user" or otherwise transferring ownership.

The Trade Marks Act of 1999 governs trademark licensing in India. The Act's legislative provisions governing trademark licensing in India refer to rules relating to registered users, even though the phrase "Licensing/licence" is not mentioned at all in the Act.

What are Trademarks?

According to Section 2(m) of the Indian Trademarks Law, a mark can be a logo, trademark, heading, label, ticket, name, signature, word, letter, or number, as well as the shape of a product, it's packaging, or a combination of colours.

According to Section 2(zb), a trademark is "a mark that can be represented graphically, and that can differentiate the goods or services of one person from those of others and may include shape of the goods, their packaging, and combination of colours:"

Therefore a mark can be anything that can be used to identify the goods or services of the applicant in question, such as a logo, a name, the shape of a good, or even a combination of things.

What is a trademark licence?

The Trademarks Act of 1999 does not define "Licensing of TM."

In general, a licence is the authorization granted to someone to perform an act.

A trademark licence is merely the consent given by the trademark's owner to a third party. This kind of licence is given in exchange for a royalty.

Who has the authority to issue TM Licences?

The trademark licence can only be given by the owner/holder of the registered trademark. It would be appropriate to mention here that transfers of both registered and unregistered property are permitted by Indian law. A licence or an assignment can both be used to transfer a trade mark.

A person other than the registered proprietor of a trademark may be registered as a registered user, according to statutory language in Section 48 of the TM Act. Consequently, the rules of this act may permit the use of a registered trademark, but only if both parties comply with the relevant requirements.

What Conditions Must Exist in a Trademark Licensing Agreement?

• The agreement must put in place quality checks and controls on the products and services it is being used to procure. This would stop anyone from damaging or destroying the reputation of the trademark. This essential provision must always be included in the contract.
• where the licence is being issued: the region.
• the licence's duration.
• Consideration in consideration of which it is granted.
• Termination provision
• Clause of indemnification (in case any loss occurs).

What advantages does a Trademark License offer?

The following are the advantages of a Trademark License:

Financial Gain

Since the TM is widely used for commercial gain and the owner is compensated with royalties, both parties stand to financially gain. By issuing the licence to the licensee, the licensor, who, for example, was unable to capitalise on his trademark owing to a lack of resources or visibility, is now able to use the licensee's resources and increase his revenues. The licensee also receives a portion of the revenue.

Growth of the TM owner's business 

The trademark owner's business grows, and its reach extends to new regions. The company is no longer restricted to a specific region; instead, the licensee(s) can leverage their distributor expertise to grow the company.

Expanding the brand recognition of a trademark

The TM becomes well-known in areas where it was previously unknown. The licensee is allowed to widely publicise using his resources.

Growth in Trademark Popularity

As the TM is recognised to more individuals and consumers, it gains popularity. By boosting sales, this increases revenue and facilitates the trademark's continued licensing.

Workload Redistribution/Reduction

In a sense, the Licensee joins the Licensor as a partner. The Licensor’s workload is minimised and he need not worry about the quality of the goods and services as the licensee is equally responsible for maintaining the quality of the things he generates using the trademark.

How can I get a Trademark Licence in India?

The registered owner or licensee and the registered user or licensee must each submit an application in writing on Form TM-U to the trademark registrar with the following materials: 

• A duly certified copy of the agreement or written licence agreement between the registered owner or licensee and the proposed registered user or licensee regarding the permitted use of the proposed trademark;
• An affidavit signed by the registered owner or licensee containing information about the relationship between the registered owner or licensee and the proposed registered user or licensee, the products or services for which registration is being considered, and any restrictions or conditions that may be proposed regarding the features of the products or services, to the location where registration is to take place.
• A signed power of attorney for representatives (if any).
• Further evidence or documentation as may be prescribed by the Trademark Registrar.

Once the Trademark Registrar is satisfied with the application and the supporting documentation, he or she registers the potential Licensee or Registered User with regard to the goods or services for which they are satisfied. The Trademark Registry entry must include the date the registered user's application was submitted. Within two months of the date of trademark registration, the records will be published in the Journal.

Other Licensees or registered users of the proposed Trademarks must receive notice from the Trademark Registrar in the manner recommended for the Registration of such Licensee (if any). Accordingly, the Trademark Registrar must take action at the applicant's request to make sure that the information provided for the application under the Section—aside from facts recorded in the Trademark Register—is kept secret from rivals or business rivals.

When is a TM License subject to cancellation?

For part or all of the products or services covered, a trademark or brand may be leased. The Act under Section 50 provides Cancellation/Variation of Registration. In accordance with the proposed provision, registration cancellation is preceded by notification and an opportunity for a hearing. Cancellation is possible in the following situations:

• If the provisions of the agreement are broken or violated;
• If the mark is used in a manner not permitted under the agreement;
• If the mark is utilised to trick consumers or the public into thinking something else;
• if any party withholds information that is important and necessary to the agreement;
• If one of the parties makes false statements or cheats.
• The TMO notifies the TM owner as well as any additional registered users who might be impacted by the cancellation of the TM License. The official cancellation cost is Rs. 4500 for each mark.

What distinguishes Trademark Licensing from Trademark Assignment?

Both trademark licensing and trademark assignment are ways to make money off the registered trademark (or service mark). The following will answer the question "what is the difference between licence and assignment of trademarks?" in order to clarify this topic. Yet, there are many significant differences between these two.

• A trademark licence is essentially a contract with a deadline that permits another person or business to use the relevant trademark and a variety of related rights, primarily in exchange for a recurring royalty payment from the licensee or authorised user. In contrast, a trademark assignment (as defined in Section 37 of the Indian Trademarks Act of 1999) involves giving another person or business permanent exclusive ownership of a registered trademark along with all associated legal rights.
• The assignment deed must be in writing, whereas a licence may not be subject to a written agreement.
• It is not required to keep a record of trademark licensing with the registrar. Nonetheless, in the event of a trademark assignment, this must be filed with the trademark registrar.
• Often, licensing is granted for a specific amount of time. Although trademark assignments are often permanent.
• Only specific rights are granted to the licensee when a trademark is licenced, and only under mutually agreed-upon terms and circumstances. The exclusive rights associated with a registered trademark are permanently transferred to the new owner in the case of a trademark assignment.

Why choose corpbiz for Trademark Licensing services?

No one can dispute the fact that trademark licencing has evolved into a common commercial practice that allows the owner of the rights to expand the reach of its brand through third-party use without transferring any legal ownership rights to such a third party with the fulfilment of certain conditions, such as "quality control" or other mandatory terms as defined in Licence Agreement that needs to be complied with as the trademark holder decides.

Having said that, the parties must be crystal clear about their expectations to prevent misunderstandings and ambiguity, which necessitates a carefully designed and structured agreement as well as consideration of local tax implications for royalty payments. Connect with our experts to get your Trademark License in India.

Here are some benefits of using Corpbiz for online trademark registration.

• The TM directory is thoroughly searched.
• We write the letter of consent so we can register the trademark on your behalf.
• Our specialists help you choose the classes you should apply for.
• With the Registrar, we fill out and apply.
• We update you frequently till the trademark registration procedure is finished.
• Throughout the online trademark registration process, you receive the best service, and all of your questions are addressed.