Trademark Licensing in India

Trademark licensing is very common nowadays for brand owners to reach a large population. It also helps them in popularizing their brand. It comprises a procedure that needs to be followed.

Licensing of Trademarks is nothing new to the trademark field nowadays. Many brands around the globe prefer this practice as it benefits both parties, i.e., the licensor and the licensee. The licensor has benefitted by reaching out to large consumers, popularizing their mark, and generating revenue in terms of royalty. On the other hand, the licensee gets to exploit the mark commercially. Both the parties should not take licensing lightly and should conduct proper scrutiny.

What is Trademark Licensing?

“Licensing of TM” is not defined anywhere throughout the Trademarks Act, 1999.
A License, in general words, means “permission granted to someone for doing a particular act.” A Trademark License in layman’s language means “the permission granted only by the owner of the trademark to any third person.” Such a license is generally granted in return for consideration of a Royalty.

Who is responsible for granting the License? To whom is the Trademark License granted?

The registered trademark owner only has the right to grant a trademark license. An owner can grant a license as per their discretion to whom they wish to use the trademark. 

There are two types of licenses to a registered Trademark in India: - 

1. A simple license agreement:
2. for permissive use.
3. Registered User agreement:
4. Registered with the Registrar of Trade Marks. 
5. Certain rights are accrued to the licensee as per statute.

What are the essential elements of a Trademark License Agreement?

1. Mandatory clause asking for quality checks and controls on the goods and services for which license is granted;
2. territory for which the license is granted;
3. Period of license;
4. Consideration;
5. Clause of Termination;
6. Indemnification clause (for any event incurring loss);

What is the Process for Registration of a Trademark License?

A licensee is a ‘registered user’ as per section 49 of the Trademark Act, 1999. A joint application must be filed for registration with the Registrar via Form TM-U and must be filed within six months calculated from the date of the agreement. The official fee for registration is Rs. 4500 for each mark. The process goes like this: - 

1. Filing of TM-U consist of the following documents:
2. Authenticated copy of Licensing agreement;
3. Document or Correspondence, if it exists;
4. Affidavit;
5. Other documents and information as the Registry needed;
6. Drafting Affidavit comprising of the following things: 
7. Relationship between registered owner and proposed user;
8. Particulars mentioning the degree of control by the registered owner;
9. Goods or Services;
10. Conditions or Restrictions, if imposed;
11. Permitted time-period for the usage of the mark;
12. Filing of Application: Form-28 is filed online or offline to the Registrar.
13. Acceptance by Registrar: accepted either completely or conditionally.
14. Hearing in Conditional Acceptance: 
15. will receive a hearing notice along with the hearing date. 
16. The possibility of accepting a trademark can be entirely or conditionally or rejected by the Registrar after a hearing. 
17. Entry into the register: the proposed user kept on record as a registered user in Registrar’s register on acceptance of the trademark. 
18. Notification to other Registered users, if any, exists. The Registrar notifies every other registered user regarding the same. 
19. Entry in the Trademark Journal

What are the benefits of a TM License?

1. Monetary gains
2. Expansion of business of the trademark owner
3. Growth of trademark’s brand recognition
4. Increase in trademark’s Popularity
5. Distribution/Reduction of Workload

Under what conditions can a TM License be canceled?

1. Breach or violation of agreement terms;
2. Usage of marks other than stipulated purposes as per the agreement;
3. Usage of marks creates confusion in the minds of the general public;
4. Concealment of material facts by either party is crucial to the agreement;
5. Misrepresentation or fraud by either party.

The official fee charged for cancellation is Rs 4500 for each mark.

Conclusion

A person shall consider licensing of brand names an effective means of avoiding the misuse of the mark. It helps both the licensor and the licensee in developing their respective businesses. The brand image in the market is the same as the good quality of products or services that remain in circulation.