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What to Know About Trademark Licensing for Your Products

When you launch a physical product line, whether it’s beauty products, fashion, or something else, one of the first things you should do is trademark your brand. As trademark attorneys, we also recommend that you register your tagline, slogan, and logo. In some cases, specific products and even colors can be registered.

These steps above are the basics of protecting your product-based brand. However, as your business grows and as more retailers want to sell your products, it’s time to consider trademark licensing.

What Is Trademark Licensing?

Essentially, licensing your trademark to another entity allows that party to use your trademark and IP without owning it. For example, you could license a third party to produce and/or distribute your trademarked items in another country, or a retailer could advertise that they sell your trademarked products.

You’ve likely seen this when big-box retailers like Target announce they are “now selling” a specific brand. This trademarked name recognition drives people to Target to buy the products, and the trademark/brand owner sees more sales as a result.

It’s important to note that trademark licenses do not transfer ownership of your trademarks. Rather, it allows the licensee to use your trademarks in exchange for a clearly defined percentage of sales (i.e., royalties) or other fees.

Types of Trademark Licenses

There are different types of trademark licenses:

  • Exclusive License: This type of license grants the licensee exclusive rights to use the trademark for commercial purposes. The licensor does not have commercial rights but receives a sum of money when the agreement is signed. Exclusive licenses often limit the products and the locations where they may be sold.
  • Sole License: In a sole license agreement, both the licensee and the licensor may use the trademark(s). However, the licensor is prohibited from licensing the trademark to a third party.
  • Non-exclusive License: In this arrangement, multiple parties can use the licensed trademark. This can include the licensor and any licensees designated by the trademark owner (licensor).

A trademark lawyer can help you decide which type of trademark license is right for your beauty brand.

Who Can Create a Trademark License Agreement?

You can create a trademark license contract for your licensee to sign. It’s also possible for your potential licensee to draft the trademark license agreement. In either case, an intellectual property attorney can provide input on the agreement to make sure your trademarks and IP are protected.

What Do You Need to Consider Before Licensing Your Products?

There are many potential benefits of licensing your trademarks:

  • Growth: Your licensee can distribute your products in new markets.
  • Workload distribution: A licensing agreement creates a partnership between you and your licensee. This allows you to share responsibilities, especially those related to production and distribution, with another party. You no longer have to carry all the responsibility for your brand’s success.
  • Brand recognition: Licensing your trademark can increase brand recognition for both you and your licensee. It can also improve your reputation among consumers and encourage new customers to try your products.

When done well, trademark licensing can benefit both the licensor and the licensee. As the licensor, you can expand to new markets without massively increasing your workload. Your licensee profits from your IP and your brand’s reputation in the marketplace.

However, trademark licensing can also complicate your business and introduce possible risks. You are still responsible for the quality of your products. It’s your responsibility to monitor your licensee and make sure they are producing and distributing products that deserve to bear your trademark. Failing to monitor your trademark license can harm your reputation, attract imitators, and impact your profits.

Join the Watson & Young Protect Your IP Challenge™

Trademark licensing is just one facet of intellectual property law and protecting a product-based brand. If you want to make sure your brand is protected from competitors and imitators, it’s vital to understand the basics of trademarking, copyright protection, and contract law. If you’re ready to boost your business law knowledge, join us for our upcoming 3-day Protect Your IP Challenge™.

We’re hosting this challenge from February 20th to February 22nd to help business owners, especially those with fashion and beauty brands, gain a working knowledge of IP law essentials. Joining the challenge gives you access to daily lessons and course materials. If you want to learn even more, you can get VIP access. As a VIP, you’ll get to participate in exclusive Q&A sessions with the Watson & Young team. 

Protecting your beauty brand’s IP is essential. Get all the information you need by joining our Protect Your IP Challenge™.

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