Trademark licensing is one of widely used business transaction in trademark and licensing

industry. The law of trademark licensing is applied by the law of franchising. Franchising law generally includes licensing, antitrust, securities, taxation, and financing. The basic principles of trademark licensing are within the scope of the law of unfair competition.

Trademark licensing has become an important way of business transaction, linking small and large industries together, making a multi-billion dollar activity in the business community. Trademark licensing is also in the integral part of the franchising industry and an essential part of intellectual property business.

Due to the diversity and inherent character of trademark licensing, it is difficult to expose and quantify the extent of its transaction. Since trademark licensing is not limited to any single country, it becomes harder to get precise information and sources of trademark licensing in the IP business world. Considering this situation in trademark licensing, the more various and precise information sources are required to identify, or evaluate the particular product or services to the purchasing public and to provide an unique standard of quality.

This paper will discuss the basic principles of trademark licensing and focus on many ways of finding the sources of trademark licensing.

1. The function of trademark

The trademark generally has the following functions in the IP business;

o The Source Function

The recognition of a trademark as a special form of intellectual proprty right, based on the good will embodied in the mark, was generally linked with the notion that the mark served to indicate the source of the goods. The mark served to inform the purchase about the actual origin of the goods.

o The Identification Function

The beginning of the use of a trademark is initially to identify the source of the goods and identification function is one of inherent character in trademarks

o The Quality Function

Once it was recognized that a trademark could indicate the source of quality over the use of the marks with respect to the goods, that trademark could be relied on to indicate that goods are of a certain quality. The Qaulity function assures the consumer predictable quality with respect to the goods bearing the trademark.

o The Merchandising Function

With the rising of quality function in trademarks, trademark has produced the potential marketing effects upon the corresponding goods. The development of the merchandising function of trademarks has purred the necessity for trademark licensing and forced the question of how far trademark licensing may extend.

o The Advertising Function

With the growth of merchandising function in trademarks, the advertising and promotion function of trademarks has been engendered. The advertising of the trademark provides the consumer a direct impression about the product that he wants. Under this view, the advertising function reduces the marketing cost to the consumer and plays a major role in the licensing transaction.

2. Necessity for License

A license is a contractual agreement whereby a licensor permits another (licensee) to use his right under circumstances. Such a license is merely the grant of the right to use certain intellectual property (patent, trademark, copyright, trade secret or other). For both licensor and licensee to have successful significance, the exact terms and conditions of the grant must be specified in an agreement between two parties.

Trademark licensing is distinguished from other forms of intellectual property licensing (patent, know-how, copyright) by the requirement for quality control over the licensee's use of the mark. The commercial scope of trademark licensing is determined by the diversity of circumstances in which the licensing takes place, and the variety of issues to which it gives rise. The patent license is a permission by the inventor to a third party to exploit the invention for technological or commercial purposes. The motivation for entering into the patent license is generally variable. On the other hand, the motivation for trademark licensing is rather clear, wherein a trademark owner permits another to use his trademark under circumstances, but for the license, the other would be a trademark infringer.

3. Quality Control

The indispensable condition of a valid trademark license is that the licensor control the nature and quality of the goods or services sold under the trademark. Control by the licensor is necessary to insure that the licensee's products are of equal quality to the products previously associated with the licensor's trademark.

Quality assurance and protection of the public is a central purpose of trademark licensing. Without the requirement of quality control, the right of a trademark owner to license his mark separately from the business in connection with which it has been used would create the danger that products bearing the same trademark might be no longer signify a certain standard of quality and the public would be deceived and mislead. The penalty for failure to control quality is a harsh one. The license is deemed a "naked" license and the licensor's mark is deemed as "abandoned." The Lanham Act defines a mark as "abandoned";

(b) when any course of conduct of the registrant, including acts of omission as well as commission, causes the mark to lose its significance as an indication of origin.

Methods of Quality Control run the range from written contract, to oral contract, to no contract. In other words, quality control may be implemented through provisions agreed to in writing, through provisions agreed to orally, or through the actual exercise of control even though there is no written or oral contract. The written contract providing for quality control is called a trademark license agreement. Typical trademark license provisions, including quality control provisions, are as follows;

� Licensee's agreement to quality standards established by Licensor

‚ Licensee's acknowledgment of Licensor's right to control quality.

ƒ Licensor's right to inspect Licensee's premises to observe the manufacturing process.

„ Licensor's approval of Licensee's packaging, advertising, and manner of trademark use.

… Licensee's acknowledgment of validity of mark, ownership by Licensor, and agreement not to challenge ownership or validity.

† The definition of the products or services to be licensed, the geographical territory, the exclusive or nonexclusive nature of the grant, the royalty payments, and the applicable law.

1. Paper Sources

The search for paper sources of the trademark licensing is confined and conducted in the Intellectual Property Library at Franklin Pierce Law Center and the following paper sources are available in the IP Library at FPLC.

The Art & Strategy of Successful Trademark Licensing & Franchising, U.S. Trademark Association (USTA, 1993)

Trademark Licensing, Neil J. Wilkof

Franchising Adviser, William J. Keating (McGraw-Hill, Inc)

Trademark Valuation, Gordon V. Smith (John Wiley & Sons, Inc)

Franchising Realties & Remedies, Brown (Law Journal Seminars-Press)

Franchise & Distribution Law and Practice, Garner (Clark Boardman Callaghan)

Franchising, Gilman (Matthew Bender)

Trademark Protection and Practice, J. Gilson (Matthew Bender)

Trademarks and Unfair Competition, J McCarthy (Lawyers Coop/ Bancroft Whitney)

The Law and Business of Licensing, Bell & Simon, Licensing Executive Society, 1997

Trademark World, monthly except bi-monthly May/June and Nov/Dec (Armstrong International Limited )

The Trademark Reporter, bi-monthly (the International Trademark Association)

LER - Licensing Economic Review, (AUS Consultants)

Les Nouvelles, the Journal of the Licensing Executives Society (Licensing Executives Society)

The Licensing Journal, ten times per year (Aspen Law & Business)

Franchise Law Journal, Quarterly Journal of the Forum on Franchising (American Bar Association)

The Licensing Letter, 22 times per year (EPM Communications, Inc)

Managing Intellectual Property, 10 times per year (Economic Publications PLC, UK)

Licensing Law & Business Report, bi-monthly (West Group)

2. Electronic Sources

· Library : COMPNY

· File : EDGARP (Electronic Data Gathering Analysis and Retrieval)

· Description : SEC filings are received by the EDGARP system including 10-Ks, 10-Qs,

· Type of Filing

· Library : FEDSEC

· File : MEGA

· Database : Business & Industry information

· Files : M&A Filings (Dialog) (M&A-D)

DIALOG

· Database Name : Business & Industry

· File No : 9, CD-ROM

· DataStar : BIDB

· Coverage : July 1994 to date

· Update : Daily

· Data Type : Bibliographic, Full text

· Provider : Responsive Database Services, Inc., ; Beachwood, OH, U.S.A.

· Contents :

· Database Name : Business Wire

· File No : 610

· Coverage : 1986 to date

· Update : Continuous

· Data Type : Full text

· Provider : Business Wire, San Francisco, CA, U.S.A.

· Contents :

The websites on the internet are valuable sources for information regarding what trademarks are available for licensing and what company has licensed trademarks currently. The search engines used for an appropriate web sites are as follows; Yahoo, Alta- Vista, Infoseek, Lycos, and Excite

Web sites :

http://www.biz-lib.com/ZBCILS.html

Discover merchandising and trademark licensing opportunity in more than 39 countries. This site provides information from global trends to regional licensing activity within property types and product categories and analyses global licensing strategies for all property types, including trademarks.

http://iptrader.com/index.html

The information on the Intellectual Property Exchange; buy, sell and trade intellectual property exchange.

http://infonews.com/franchise/online.html

The Franchise annual report, including various franchising opportunities classified by franchisor and business.

http://www.ggmark.com

This site explores all about trademarks; Trademark Topics, Trademark links, Search report, and Federal & State Trademark Law.