Trademark license agreements play a crucial role in leveraging intellectual property for business growth while protecting the rights of trademark owners. By granting usage rights to third parties under specific conditions, these agreements help maintain the trademark's integrity and reputation, thereby boosting market competitiveness.
This article will guide you in understanding the key clauses to protect your brand in trademark license agreements.
Trademark License Agreements: Definition and Importance
The State recognizes the importance of license agreements as part of its policy in fostering an effective intellectual and industrial property system.1 These agreements are crucial for maintaining the integrity of the trademark, as they establish clear guidelines for its usage, including quality control and territory restrictions. Properly drafted Trademark license agreements not only protect the trademark owner’s rights but also help licensees avoid legal disputes, ensuring mutual benefits and fostering business growth.
Accordingly, the Intellectual Property Code (IP Code)2 allows the licensing of trademarks, specifically Section 150 of the IP Code provides the guidelines of license contracts concerning the registration of a mark, or an application therefor. The information below will provide further guidance on the key l clauses to include in your license contract.
License Contract and Key Clauses under the IP Code
Before one can enforce trademark rights, the owner must first comply with the legal requirements to acquire a trademark:
1. Interpretation of the agreement
Since the provisions of the IP Code abide by the rules on reciprocity,3 and the Philippines is a member-State4 of the World Intellectual Property Organization, it follows that the mandates provided by the WIPO apply to the Philippines’ trademark law. As such, the agreement on licensing contracts should be interpreted in a way that balances the interests of both the licensor (the trademark owner) and the licensee (the party granted rights to use the trademark).5
2. Rights and obligations
License contract agreements should lay out the rights and obligations of the licensor and licensee. For example, Section 150 of the IP Code provides that the license contract shall provide for effective control by the licensor of the quality of the goods or services of the licensee in connection with which the mark is used.
Sections 89 and 90 provide for the rights of the licensor and the licensee, respectively.6 Therefore, the rights of both the licensor and licensee must be provided in every license contract.
3. Enforcement of termination
Most license agreements stipulate that if the licensee continues to sell products or offer services associated with the trademarks after termination, the licensor is entitled to immediate legal action. Typically, adding this clause to the agreement allows the licensor to seek an injunction against the former licensee without needing to demonstrate irreparable harm or meet any other requirements for an injunction.
Conclusion
A well-crafted trademark license agreement protects intellectual property and fosters business growth. By aligning the provisions of the agreement contract with the IP Code and following best practices, both licensors and licensees can maximize the benefits of trademarks while safeguarding their rights.
To learn more about trademark licensing agreements, book a consultation with a trademark attorney. You may also email us at admin@pinollaw.com.
1 An Act Prescribing the Intellectual Property Code and Establishing the Intellectual Property Office, Providing for its Powers and Functions, and for other Purposes, Republic Act No. 8293, §2(January 1, 1998) [hereinafter Intellectual Property Code of the Philippines].
2 Intellectual Property Intellectual Property Code of the Philippines, §150
3 Intellectual Property Code of the Philippines, §3.
4 Member States
5 IP Assignment and Licensing
6 Intellectual Property Code of the Philippines, §§89-90.
