A Trade Mark Licence Agreement is an agreement through which the owner of the trade mark (the licensor) gives approval to another person (the licensee) to use the trade mark. This licence allows the licensor to use the trade marks for particular purposes during a particular period of time.
Usually, a trade mark licence is expressed in a written contract specifying the scope of the licence.
Licensing can help a company expand into new markets effectively while lending the licensee an established name and reputation. The marketing efforts made by the licensee will in turn benefit the licensor's goods and goodwill.
Licensing of trade marks can also provide lucrative income for trade mark owners. Such income usually comes in the form of periodic payments known as "royalties".
A Trade Mark Licence Agreement helps parties to clarify important questions, like how the trade mark can be used, the duration and territory of the licence, and the responsibilities of both licensor and licensee.
When drafting a Trade Mark Licence Agreement, it is important to focus on a number of key clauses, in particular: