How Does Trademark Licensing Work Modern Marks Business Consultants

How Does Trademark Licensing Work


Trademark licensing is a legal process where the owner of a trademark (licensor) permits another party (licensee) to use their trademark for a product or service. This is usually determined by a specific period and geographic area. The Canadian Trademarks Act governs these licensing procedures. A trademark license agreement outlines terms of use, including duration, geographic location of use, quality control measures, and licensing fees. Trademarks can be licensed to generate royalty payments, extend brand reach, and increase brand recognition. However, the trademark’s reputation and value need to be protected. Licensing is gained through agreement with the trademark owner and should be reviewed by legal counsel. Before giving a license, the owner should consider the licensee’s reputation. Franchising is deemed a type of trademark licensing.

Understanding the Basics of Trademark Licensing

Trademark licensing is a legal procedure whereby the owner of a specific trademark (the licensor) grants permission to another party (the licensee) to use the trademark in connection with a product or service. This is generally done for a specified period and in a specific geographic area. In Canada, the principles of Trademark licensing are guided by the Canadian Trademarks Act. The act governs all matters on trademarks, including registration, protection, and licensing, thus ensuring the process is streamlined and legally anchored.

A trademark licensing agreement is a contract that outlines the terms and conditions under which the licensee can use the licensor’s trademark. It typically includes details such as the duration of the agreement, the geographical areas where the trademark can be used, quality control measures for the licensee’s goods or services, and financial arrangements such as license fees or royalty payments. The licensor retains ownership of the trademark, and the licensee is often required to maintain the quality and reputation associated with the trademark.

Can a Trademark be Licensed?

Yes, a trademark can be licensed in Canada. Licensing a trademark has several advantages. It allows the trademark owner to generate revenue through royalty payments, extend the reach of a brand into new markets or industries, and help build brand recognition. However, it’s essential to ensure that the trademark licensing agreement includes provisions to protect the value and reputation of the trademark.

In turn, for the licensee, it can allow access to a recognized brand that can help boost their business, product, or service. For instance, if a licensee is given the right to use a well-known clothing brand’s trademark, they could potentially sell their products under the recognized brand name, increasing sales and brand visibility.

How to Get a Trademark License to Sell Your Service or Product?

Acquiring a trademark license to sell your product or service involves negotiating an agreement with the trademark owner. The first step is usually to identify the trademark owner and approach them with a proposal. In this proposal, it’s essential to outline how you intend to use their trademark, the proposed terms of the agreement, and how this arrangement could benefit both parties.

The process will likely involve negotiation and possibly revisions to the proposal before a final agreement is reached. Once an agreement is made, both parties should have the agreement reviewed by legal counsel to ensure all terms are transparent, fair, and legally enforceable. It’s important to note that any trademark use without the owner’s permission can lead to legal action.

How to License Your Trademark?

Licensing your trademark involves creating a legal agreement that permits another party to use your trademark in exchange for payment. This agreement, known as a trademark licensing agreement, should clearly define the terms and conditions of use. Some key terms include the scope of use (where and for how long the trademark can be used), quality control measures, and payment terms.

Before licensing your trademark, you should carefully consider who you want to license it to. The licensee should be trustworthy and capable of maintaining the quality associated with your trademark. Maintaining an active role in monitoring how your trademark is used to protect its value and reputation is also essential.

Is Franchising a Type of Trademark Licensing?

Yes, franchising is indeed a type of trademark licensing. In franchising, a franchisor (the trademark owner) grants a franchisee (the licensee) the right to use the franchisor’s trademark, business model, and operating system within a specific geographic area for a specified period. This enables the franchisee to conduct business under the franchisor’s brand name.

The franchise agreement, similar to a trademark licensing agreement, sets out the terms and conditions under which the franchisee can operate. This includes how and where the franchisee can use the franchisor’s trademark, the quality standards to be maintained, and the fees or royalties paid to the franchisor. In this way, franchising is an excellent example of trademark licensing.


Q: What is trademark licensing?
A: Trademark licensing is a legal procedure in which a trademark owner (the licensor) grants someone else (the licensee) permission to use the trademark about a specific product or service, generally within a particular timeframe and region.

Q: Can trademarks be licensed in Canada?
A: Yes, trademarks can be licensed in Canada under the guidance of the Canadian Trademarks Act.

Q: How can you gain a trademark license to sell a product or service?
A: To gain a trademark license, you must negotiate an agreement with the trademark owner, outlining the proposed terms of usage and benefits to both parties.

Q: What is the benefit of licensing a trademark of your own?
A: Licensing a trademark can generate revenue through royalty payments, extend its reach into new markets, and help increase brand recognition.

Q: Is franchising considered a type of trademark licensing?
A: Yes, franchising is a type of trademark licensing where a franchisee is given the right to operate under the franchise’s trademark and business model.