Licensing Trademark Rights in Canada
What is a trademark license?
A trademark license is an agreement in which a trademark owner (the “licensor”) permits someone else (“the “licensee”) to use the licensor’s trademark in connection with specific goods or services.
Why is a license important?
Trademarks serve as source identifiers. Unlicensed use of the same mark by different entities will erode the value of the trademark because the trademark will no longer function as a source identifier. Ultimately, this can result in a loss of trademark rights. Licensing is a way to preserve the distinctiveness of the trademark and prevent loss of rights.
When do you need a trademark license?
In Canada, whenever a mark is used by someone other than the owner of the mark (including by a related entity) the use must be properly licensed in accordance with Canada’s Trademarks Act. This will ensure that the use accrues to the benefit of the trademark owner.
What is in a license agreement?
The specific terms of a license can vary widely. However, in all cases it is essential that the trademark owner maintain control over the character and quality of the goods and services provided under the trademark. Typically, this requires the licensor to define the standards for the character and quality of the goods, and to monitor and enforce compliance with those standards. How exactly that occurs depends on the parties.
Do license agreements need to be in writing?
No, license agreements do not need to be in writing. However, it is advisable in some cases. A written agreement can help to avoid disputes as to the exact terms of the agreement. It can also make it easier to prove the existence of a license.
In absence of a written agreement, we recommend using a licensing notice such as the example below when displaying the trademark in Canada:
*ABC123 is a registered trademark of Trademark Owner Ltd. and is used under license by Other Company Ltd.
Displaying this type of notice is not mandatory. However, by doing so it creates the presumption under the Trademarks Act that the character or quality of the goods and services is under the control of the mark owner, unless proven otherwise.
If you have specific questions regarding licensing in Canada or other countries, please contact a member of our team at firstname.lastname@example.org, or 604.687.7432.