Trademark licensing is the process wherein a trademark owner permits a third party to utilize the registered trademark within business operations without transferring ownership. This arrangement enables individuals or entities to use the mark for specified goods or services as outlined in the license agreement. The trademark proprietor retains control by imposing restrictions and conditions on the usage of the mark. This article delves into the concept of trademark licensing and highlights its advantages, particularly in the context of the UAE.
As per the UAE Trademark law, the trademark owner may grant licenses to one or more individuals to use the mark for all or a part of the goods or services for which the mark is registered.,
Different Ways of Licensing Trademarks
- Franchising Agreements
Franchising and trademarks share a close relationship, as franchising involves granting franchisees the authorization to use the franchisor’s trademarks. In this arrangement, the franchisor, typically the owner of the brand, permits third-party franchisees to leverage the brand. As a franchisor, you guide franchisees on the permissible usage of your trademarks. The essence of franchising lies in licensing intellectual property rights, notably trademarks, offering a favorable approach to launch a business under a renowned brand. Franchisees typically pay an initial fee and ongoing royalties to the franchisor, who, in return, may furnish various services, including comprehensive business methodologies, along with trademarks and logos.
- Merchandising License Agreement
A merchandise licensing agreement delineates the terms wherein the proprietor of intellectual property, such as a trademark, service mark, or copyright, grants the licensee the authority to distribute, advertise, and sell the property in various mediums including film, television programs, video games, and others.
- Brand Extension
Brand extension is a marketing strategy involving the introduction of a new product under an established brand name that is already recognized in a different product category. This method leverages existing brand recognition, facilitating the new product’s entry into the market. Even though consumers may not be familiar with the latest product, they are likely acquainted with the brand, enhancing the prospects of successful market integration.
- Co-branding
Combining two or more renowned trademarks, regardless of their relative status, in a single product can create fresh appeal for the same target audience or facilitate entry into a new market. Collaborating brands stand to benefit more collectively than they would by promoting themselves independently.
- Component or ingredient branding
Ingredient branding is a marketing strategy where a component or ingredient within a product or service is given its distinct identity. Incorporating the trademark of this ingredient on packaging, promotional materials, or even on the main product itself can incentivize customers to purchase it.
Benefit of a Trademark Licensing for Business
- Additional source of income
- Helps in the Expansion of business
- Helps in business collaboration
- Brand recognition in the market
- Reduce the workload of the licensor