During the term of the contract, licensees can develop their own brands to their own advantage. However, where a licensee registers or uses a mark identical or similar to the licensed mark on similar or relevant goods or services, consumers may believe that the two marks are related. Where the licence agreement is terminated, such confusion and misrepresentation have a detrimental effect on the licensor`s trademark. To avoid this risk, licensors should include in the license agreement the following conditions: What precautions should we take for trademark licenses? Licensees should ensure the stability of the trademark in question during the license period under the following conditions or restrictions of the agreement: for Chinese companies that license foreign companies, a technology export certificate must be purchased under the Chinese Patent Law before registering their Chinese patent licensing agreements with SIPO. If the main terms of the technology import agreement change, the licensee must amend the technology import licence. Under article 43 of the Trademark Act, a licensor must control the quality of the goods on which a licensee uses his trademark. Quality control is not only the legal obligation of the licensor, it also serves to protect its rights and interests. The licensor must ensure that the licensee`s products meet established standards and do not undermine its brand value. Trademark licensors are required to control the quality of the licensee`s products that are the subject of the licensed trademark. The licence agreement should cover quality control/monitoring, the type of remedy available to the licensor if the licensee does not meet the quality standards. This is because you need to carry out your own quality control/monitoring in accordance with the agreement and take steps to control the quality.
Your quality control conditions and actual monitoring can serve as evidence in potential disputes regarding your liability for poor quality products that may have harmed a third party. Since the license transfers some of the goodwill related to the trademark (the perception of the mark by consumers), the trademark owner must maintain control over the quality of the trademark. In the absence of such control, the agreement is called a « bare license » and it can be argued that the owner has waived trademark rights. Therefore, all provisions relating to the licensing of trade marks should provide for certain means of regulating the nature and quality of the licensee`s goods or services related to the trade mark. Before signing a trademark licensing agreement, rightholders should ensure that they have a strong risk prevention strategy in place in order to benefit from it, either as licensors or as licensees….