Trademark License Agreement

---
name: trademark-license-agreement
description: Drafts a U.S. Trademark License Agreement governing a licensor's grant of rights to a licensee for authorized use of registered or common law marks. Covers exclusivity, field of use, territory, quality control, royalties, audit rights, and termination. Use when drafting IP licensing deals, brand licensing arrangements, co-branding agreements, or any transaction requiring controlled trademark use by a third party.
tags:
  - agreement
  - drafting
  - transactional
---

# Trademark License Agreement

Drafts a defensible Trademark License Agreement that protects mark ownership and goodwill while establishing enforceable commercial terms for licensee use.

## Prerequisites

1. **Party details** — full legal names, entity types, jurisdictions of organization, principal places of business
2. **Licensed marks** — mark names, registration numbers, jurisdictions (registered or common law), visual representations for Exhibit A
3. **License scope** — exclusive or non-exclusive; field of use; licensed products/services (specific categories, not broad descriptions)
4. **Territory** — countries, states, or distribution channels; treatment of online/passive internet sales
5. **Financial terms** — upfront fees, royalty rate (% of Net Sales or per-unit), minimum guarantees, payment frequency
6. **Term** — initial duration, auto-renewal mechanics, notice period for non-renewal
7. **Quality control requirements** — approval process, sample submission timelines, applicable standards

## Output Structure

### 1. Header & Recitals
- Title: **TRADEMARK LICENSE AGREEMENT**
- Effective date, full party identification, defined terms ("Licensor," "Licensee")
- Recitals: licensor's mark ownership; licensee's desire for authorized use

### 2. Grant of License

| Element | Requirement |
|---|---|
| Exclusivity | State exclusive or non-exclusive; exclusive = licensor cannot grant others in territory |
| Transferability | Non-transferable and non-sublicensable unless expressly permitted |
| Field of use | Tied to licensed products/services; no open-ended descriptions |
| Permitted uses | Enumerate: advertising, packaging, digital media |
| Rights reserved | All rights not expressly granted reserved to licensor |

### 3. Licensed Marks (Exhibit A)
- Reference Exhibit A for visual representations, registration numbers, jurisdictions
- Specify required symbols (®, ™, ℠) per mark
- Address combination use with licensee's or third-party marks; state prominence requirements

### 4. Licensed Products & Services
- Specific product categories or service descriptions; avoid broad class-level language
- Approval process for expanding scope during term
- Pre-launch sample/prototype submission requirement

### 5. Territory
- Define by country, state, province, or distribution channel
- International: address online sales and passive internet reach beyond territory

### 6. Quality Control
- All goods/services bearing marks must meet licensor-specified standards
- **Approval workflow**: licensee submits samples → licensor has **15 business days** to approve/reject → silence = deemed approved
- Licensor right to inspect facilities on reasonable notice
- Immediate discontinuation right upon quality failure
- Short cure period or immediate termination for QC violations (distinguish from standard 30-day cure)

### 7. Ownership & Goodwill
- Licensee acknowledges licensor's sole ownership of all right, title, and interest, including goodwill
- All use inures to licensor's benefit
- Licensee prohibited from challenging mark validity during and after term
- Required trademark notices and source indicators

### 8. Royalties & Payment

| Term | Specification |
|---|---|
| Net Sales | Gross revenue minus returns, allowances, taxes, shipping |
| Royalty rate | [% of Net Sales] or [per-unit amount] |
| Payment schedule | Quarterly, within **30 days** after quarter end |
| Minimum guarantee | State whether failure = material breach |
| Late payment | Interest rate on overdue amounts |
| Currency | Payment currency; allocate FX risk for international deals |

### 9. Reporting & Audit Rights
- **Quarterly reports**: units sold, gross sales, deductions, net sales, royalties due
- Audit right on **30 days' notice**, business hours, **once per year**
- Unlimited audits if prior audit revealed underpayment > **5%**
- Licensee bears audit cost if underpayment exceeds threshold
- Record retention: **3–5 years**

### 10. Term & Renewal
- Initial term (e.g., 3 or 5 years)
- Auto-renewal unless notice given (e.g., 90 days pre-expiration)
- Option: adjusted royalty rates or expanded territory on renewal

### 11. Termination

| Trigger | Cure Period |
|---|---|
| Material breach (general) | 30 days written notice |
| Quality control violation | Shorter period or immediate at licensor's election |
| Mark challenge by licensee | Immediate |
| Bankruptcy/insolvency | Immediate |
| Failure to meet minimums | Per agreement |
| Convenience | 90–180 days notice |

**Post-termination obligations:**
- Immediate cessation of all mark use (products, packaging, web, social media)
- **Sell-off period**: 60–90 days for existing inventory; royalties continue
- Written certification of destruction of remaining materials
- Transfer of domain names and social media accounts incorporating marks
- Survival: accrued royalties, confidentiality, post-term use restrictions

### 12. Standard Provisions
- **Indemnification**: licensee indemnifies licensor for claims from licensee's use or licensed products
- **Representations**: both parties — authority to contract; licensor — mark ownership; licensee — quality compliance
- **Liability cap**: mutual, appropriate to transaction value
- **Dispute resolution**: governing law, jurisdiction, litigation or ADR
- **Assignment**: licensee may not assign without consent; licensor assignment permitted
- **Notices**: method, addresses, deemed receipt timing
- **Boilerplate**: entire agreement, written amendment, severability, waiver, force majeure, counterparts, e-signatures

### 13. Exhibits
- **Exhibit A**: Licensed marks — visual representations, registration numbers, jurisdictions
- **Exhibit B** (if applicable): Quality control standards and guidelines

### 14. Signature Block
- Authorized representative: name, title, date
- Entity-appropriate authority (officer for corp, manager/member for LLC, general partner for LP)
- Counterparts and electronic signature clause

## Guidelines

- **Quality control is validity-preserving**: naked licenses (no QC) can result in mark abandonment — ensure QC provisions are substantive, not pro forma
- **Exclusivity precision**: distinguish exclusive license (no other licensees) from sole license (licensor retains own use rights)
- **Field of use and territory**: define narrowly to avoid scope disputes
- **Goodwill inurement**: mandatory — all use must accrue to licensor
- **Minimum royalties**: tie to breach mechanics if commercially significant
- **International deals**: confirm mark registrations in each territory; unregistered marks may lack protection
- For **registered marks**, verify current USPTO or foreign registry status before drafting [VERIFY registrations with client]
- **Anti-challenge clause**: review enforceability in applicable jurisdiction [VERIFY]