trademark-license-agreement

# Trademark License Agreement

Drafts a defensible Trademark License Agreement that protects mark ownership and goodwill while establishing enforceable commercial terms for licensee use.

## Prerequisites

1. **Party details** — full legal names, entity types, jurisdictions of organization, principal places of business
2. **Licensed marks** — mark names, registration numbers, jurisdictions (registered or common law), visual representations for Exhibit A
3. **License scope** — exclusive or non-exclusive; field of use; licensed products/services (specific categories, not broad descriptions)
4. **Territory** — countries, states, or distribution channels; treatment of online/passive internet sales
5. **Financial terms** — upfront fees, royalty rate (% of Net Sales or per-unit), minimum guarantees, payment frequency
6. **Term** — initial duration, auto-renewal mechanics, notice period for non-renewal
7. **Quality control requirements** — approval process, sample submission timelines, applicable standards

## Output Structure

### 1. Header & Recitals
- Title: **TRADEMARK LICENSE AGREEMENT**
- Effective date, full party identification, defined terms ("Licensor," "Licensee")
- Recitals: licensor's mark ownership; licensee's desire for authorized use

### 2. Grant of License

| Element | Requirement |
|---|---|
| Exclusivity | State exclusive or non-exclusive; exclusive = licensor cannot grant others in territory |
| Transferability | Non-transferable and non-sublicensable unless expressly permitted |
| Field of use | Tied to licensed products/services; no open-ended descriptions |
| Permitted uses | Enumerate: advertising, packaging, digital media |
| Rights reserved | All rights not expressly granted reserved to licensor |

### 3. Licensed Marks (Exhibit A)
- Reference Exhibit A for visual representations, registration numbers, jurisdictions
- Specify required symbols (®, ™, ℠) per mark
- Address combination use with licensee's or third-party marks; state prominence requirements

### 4. Licensed Products & Services
- Specific product categories or service descriptions; avoid broad class-level language
- Approval process for expanding scope during term
- Pre-launch sample/prototype submission requirement

### 5. Territory
- Define by country, state, province, or distribution channel
- International: address online sales and passive internet reach beyond territory

### 6. Quality Control
- All goods/services bearing marks must meet licensor-specified standards
- **Approval workflow**: licensee submits samples → licensor has **15 business days** to approve/reject → silence = deemed approved
- Licensor right to inspect facilities on reasonable notice
- Immediate discontinuation right upon quality failure
- Short cure period or immediate termination for QC violations (distinguish from standard 30-day cure)

### 7. Ownership & Goodwill
- Licensee acknowledges licensor's sole ownership of all right, title, and interest, including goodwill
- All use inures to licensor's benefit
- Licensee prohibited from challenging mark validity during and after term
- Required trademark notices and source indicators

### 8. Royalties & Payment

| Term | Specification |
|---|---|
| Net Sales | Gross revenue minus returns, allowances, taxes, shipping |
| Royalty rate | [% of Net Sales] or [per-unit amount] |
| Payment schedule | Quarterly, within **30 days** after quarter end |
| Minimum guarantee | State whether failure = material breach |
| Late payment | Interest rate on overdue amounts |
| Currency | Payment currency; allocate FX risk for international deals |

### 9. Reporting & Audit Rights
- **Quarterly reports**: units sold, gross sales, deductions, net sales, royalties due
- Audit right on **30 days' notice**, business hours, **once per year**
- Unlimited audits if prior audit revealed underpayment > **5%**
- Licensee bears audit cost if underpayment exceeds threshold
- Record retention: **3–5 years**

### 10. Term & Renewal
- Initial term (e.g., 3 or 5 years)
- Auto-renewal unless notice given (e.g., 90 days pre-expiration)
- Option: adjusted royalty rates or expanded territory on renewal

### 11. Termination

| Trigger | Cure Period |
|---|---|
| Material breach (general) | 30 days written notice |
| Quality control violation | Shorter period or immediate at licensor's election |
| Mark challenge by licensee | Immediate |
| Bankruptcy/insolvency | Immediate |
| Failure to meet minimums | Per agreement |
| Convenience | 90–180 days notice |

**Post-termination obligations:**
- Immediate cessation of all mark use (products, packaging, web, social media)
- **Sell-off period**: 60–90 days for existing inventory; royalties continue
- Written certification of destruction of remaining materials
- Transfer of domain names and social media accounts incorporating marks
- Survival: accrued royalties, confidentiality, post-term use restrictions

### 12. Standard Provisions
- **Indemnification**: licensee indemnifies licensor for claims from licensee's use or licensed products
- **Representations**: both parties — authority to contract; licensor — mark ownership; licensee — quality compliance
- **Liability cap**: mutual, appropriate to transaction value
- **Dispute resolution**: governing law, jurisdiction, litigation or ADR
- **Assignment**: licensee may not assign without consent; licensor assignment permitted
- **Notices**: method, addresses, deemed receipt timing
- **Boilerplate**: entire agreement, written amendment, severability, waiver, force majeure, counterparts, e-signatures

### 13. Exhibits
- **Exhibit A**: Licensed marks — visual representations, registration numbers, jurisdictions
- **Exhibit B** (if applicable): Quality control standards and guidelines

### 14. Signature Block
- Authorized representative: name, title, date
- Entity-appropriate authority (officer for corp, manager/member for LLC, general partner for LP)
- Counterparts and electronic signature clause

## Guidelines

- **Quality control is validity-preserving**: naked licenses (no QC) can result in mark abandonment — ensure QC provisions are substantive, not pro forma
- **Exclusivity precision**: distinguish exclusive license (no other licensees) from sole license (licensor retains own use rights)
- **Field of use and territory**: define narrowly to avoid scope disputes
- **Goodwill inurement**: mandatory — all use must accrue to licensor
- **Minimum royalties**: tie to breach mechanics if commercially significant
- **International deals**: confirm mark registrations in each territory; unregistered marks may lack protection
- For **registered marks**, verify current USPTO or foreign registry status before drafting [VERIFY registrations with client]
- **Anti-challenge clause**: review enforceability in applicable jurisdiction [VERIFY]