Trademark License Agreement

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What is

Trademark License Agreement

 

Trademarks as per the Trademark Act of 1999 are specific symbols, signs, colors, marks etc, which are capable of being represented graphically and which are capable of distinguishing the goods or services of one person from those of others. In a highly competitive demand driven market, it is quiet important that a business person is able to distinguish his or her products and services from the other similar products and services, that’s where  business develop their trademark. One most common example of a type trademark is a brand name, which becomes synonymous to the product they deal in or the sector in which it works, like Microsoft or Android is synonymous to operating systems or Uber to mobile taxis.

One way to regulate the use and allow authorization of use of trade mark is through a trademark license agreement. A trademark license agreement is an instrument granting limited rights to the licensee in relation to the use of the trademark. Trademark license agreements become important where businesses allow a person to represent them or sell their products, as the trademark is required to aid in the business but at the same time the scope of use by the licensee is to be limited to work in the best interests of the business.

FAQs

1. How many types of users of trademark are recognized under the Trade Marks Act of 1999?

Under the Trade Marks Act the users of the trademark are required to fall within the following category:

  • Registered Proprietor: person who has ownership rights over the trademark.
  • Registered User: Person who registered under the Trade Marks Act 1999.
  • Permitted User: Person who is not registered under the Trade Marks Act 1999, but are permitted to use the Trade Mark.

2. What are the implications of getting a trademark license agreement registered with the registrar of trademarks?

The following implications arise on registration of a trademark license agreement:

  • The licensee shall be considered a registered user
  • The licensee shall be allowed to prosecute against infringement of trademark.
  • The use of a trade mark by the licensee shall be deemed to be used by the proprietor.

3. What is the importance of a trademark license agreement?

Under the Trade Marks Act section 49 mandates that at the time of registration as a registered user, the proprietor of the trademark and the registered user are required to provide an agreement (often a trademark license agreement) in writing to the registrar of trademarks, entered into between the registered proprietor and the proposed registered user with respect to the permitted use of the trade mark. 

Further for a person who does not wish to be a registered user, shall, to fall within the category of a permitted user under section 2(1)(r)(ii) use the trademark with consent of such registered proprietor in a written agreement (often a trademark license agreement). 

4. What is the penalty of using a trademark without a trademark license agreement?

A person who uses a registered trademark without entering into a trademark license agreement may be liable for falsely using a trademark and maybe punished under section 103 of the Trade Marks Act, with imprisonment for a term which shall not be less than six months but which may extend to three years and with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees.