Trademark License Agreement Quality Control Provisions

An experienced trademark lawyer can probably give a useful overview of trademark licensing conditions. In limited cases, a party may rely on the licensee to control quality if the parties have a “special relationship”. Doeblers` Penn. Hybrids, 442 F.3d to 824. The question of whether or not there is a “special relationship” is a factual analysis. However, such a relationship exists when the licensor has delivered the vast majority of the items sold by the licensee and has done so for many years. There is also a “special relationship” when the licensor and licensee are the two closely managed family-owned and family-owned businesses. It was found that there was a “special relationship” where the licensor had a close working relationship with the licensee`s staff and the agreement provided for the termination of the licence when those employees were no longer related to the licensee. FreeCycle Sunnyvale, 626 F.3d at 518.

However, before a court discovers that a trademark owner/licensor had the right to rely on the licensee`s quality control procedures, it is at least necessary to indicate effective control of the licensor. One of the most important concepts is the determination of quality control to protect the goodwill of trademark rights; Licensors should reserve provisions for regular inspections of a licensee`s facilities, manufacturing products, finished products, company documents and inventory to ensure that the licensee complies with the licence agreement and complies with quality control standards. Often, provisions allowing access to the licensee`s premises include conditions for visiting the licensor. These conditions may include: (1) visits to the licensee`s premises, which should be limited to normal business hours; and (2) the licensee must be informed in advance, for example. B 24 hours in advance. The duration and right to terminate a trademark license agreement are also important because they give the licensor the opportunity to license the trademark for a short period of time in order to assess whether the business relationship is profitable enough to extend a new term. Similarly, the right to terminate the contract is important for the licensor, as it allows the licensor to immediately terminate the contract if the licensee abuses the trademark or violates other breaches of the contract. In this way, the trade mark proprietor can halt the erosion of good business or goodwill related to the mark if a licensee does not meet the quality standards that consumers expect with regard to the original supplier of the goods or services related to the mark. This document provides general context and instructions for licensors and potential licensees, as well as an example language that should be included in any global trademark licensing agreement.

For the licensed product, the licensing agreement should describe, without uncertainty, the product specifications for products bearing the licensor`s brand. The agreement should leave no room for ambiguity and all notions of art should be clearly defined. The product specifications determine exactly how the licensed products appear to the public and the trademark holder wants to ensure that the products are of the highest quality and benefit the reputation, image and goodwill of the trademark owner. . . .