A trademark is a recognizable sign which identifies products or services of a particular source from those of others. It can be a word, phrase, symbol, or design that distinguishes the products or services of one business from those of another. It one of the three basic forms of intellectual properties.
Trademarks can be a valuable asset for businesses, as they can be used to protect the company’s brand and reputation. In addition to this, trademarks can also be a source of income for businesses. Trademark commercialization facilitates business operations and access to export markets. Commercialization can be in form of licensing and/or assignment.
- Licensing: In trademark licensing, the proprietor of a trademark, otherwise known as the licensor, grants permission, on an exclusive or non-exclusive basis, to a third party, the licensee, to use that trademark on mutually agreed terms and conditions. For example, if you own the trademark for a popular clothing brand, you can license the use of your trademark to a manufacturer who will produce and sell clothing items bearing your trademark. In return, you will receive a licensing fee/royalty for each item sold.
An exclusive license means that only a particular licensee can use the trademark, and no further licenses for the good or service could be granted to other parties in relation to the same territory. A non-exclusive license is a license under which the licensor may allow more than one party to use the same trademark in the same territory, and in relation to the same goods or services.
Because the license transfers some of the goodwill (the consumer perception of the brand) associated with the mark, the TM owner must maintain quality control over the IP asset.
Without such control, the agreement is called a “naked license” and it may be argued that the owner has abandoned trademark rights. Therefore, all provisions for the licensing of trademarks should provide some means of regulating the nature and quality of the licensee’s goods or services associated with the mark experience.
While franchises such as KFC, Mc Donalds, MINISO etc. are the best-known examples of commercial agreements reinforced by trademark licenses, various other commercial agreements also contain, or may contain, detailed provisions related to the use of TM. These include agency, distribution and manufacturing contracts. Such trademark license agreements can cover:
- The licensing of trademarks, designs, artwork as well as fictional characters and real personalities is broadly referred to as merchandising. Allowing manufacturers of ordinary consumer goods such as plates, mugs, towels, caps, clothes, to name a few, to physically apply to their products, known as creative trademarks, can add value and appeal to an otherwise commonplace object. Merchandising via creative trademarks is also a means of distinguishing oneself in the marketplace. An example of a company that utilizes merchandising is MINISO.
- Brand extension. This option enables a trademark business owner to team up with another company which may be provided with the right to apply the trademark on a new product, and expand the customer perception of a company’s presence in new markets.
- Co-branding. When two or more reputed trademarks are joined together in one product. This creates fresh appeal to the clientele, or helps to break into a new market, which can be a good strategy, including for sharing costs.
- Component or ingredient branding. A product may license the right to use the trademark of an ingredient in the packaging, advertising or on the host product itself, as this may influence consumers’ perception of the product. The reputation of the trademark of the ingredient lends value and appeal to the host product.
- Sponsorship: A trademark owner may enter into sponsorship agreements with other businesses or organizations. For example, if you own the trademark for a sports team, you can enter into a sponsorship agreement with a company that will provide financial support in exchange for the use of your trademark on their products or services. This can include advertising on team jerseys, signage at the stadium, or other promotional materials.
The business benefits of a trademark license can include:
- additional revenue streams;
- territorial expansion;
- access to another’s manufacturing, distribution, sales or marketing capacity;
- new channels of distribution or market segments;
- strategic partnerships where the trademark adds value to new businesses; and,
- converting a trademark infringer into a new business partner by offering a license.
- Trademark Assignment:
A trademark assignment is the transfer of ownership of a trademark from one party to another. This can occur for a variety of reasons, such as when a company is sold or merges with another company, or when the owner of a trademark decides to sell its trademark to another party.
For example, a company that produces and sells a popular brand of sports equipment, such as tennis rackets, wants to expand its product line and start producing and selling golf clubs as well. The company may acquire the rights to a well-established and reputable brand of golf clubs through a trademark assignment agreement with the current owner of the golf club brand. In this scenario, the current owner of the golf club brand would transfer ownership of the trademark to the sports equipment company in exchange for a one-time payment or ongoing royalties. This would allow the sports equipment company to use the golf club brand on its new line of golf clubs, while the previous owner would no longer have the rights to use the brand.
It’s important to note that trademark assignments must be in writing and must be recorded with the relevant Intellectual Property office to be legally binding. Additionally, the assignment must be done for the entire trademark and not just a part of it.
In conclusion, there are many ways to monetize your trademark. From licensing and franchising to assignment, the opportunities are endless. It is important to seek the services of an Intellectual Property expert in order to understand the legal and financial aspects of each method before diving in. Additionally, it’s crucial to protect your trademark by registering it, maintaining it and consistently enforcing it. With careful planning and execution, you can turn your trademark into a profitable asset for your business.