A trademark is a word, logo, symbol, design or other element that is used with goods or services to identify the source of those goods or services to consumers and to distinguish those goods or services from the goods or services of other sources.  Character names, names of musical groups, college and professional sports team names and mascots and marks used for products ranging from cars and tractors to cellphones and computer games can all be trademarks. 

Trademark owners frequently license their trademarks, either to generate brand recognition and publicity for the primary goods or services represented by those marks or to generate additional revenue, or both.  For example, a tractor manufacturer may license its trademarks for use on wall hangings and calendars and a rock band may license its trademarks for use on t-shirts and caps.  In each case the licensed product is outside of the scope of the goods or services for which the trademark owner normally uses the mark, but use of the mark on these unrelated products helps promote the trademark owner’s brand and also will usually result in some royalty income.

In many respects, a trademark license is the same as a license for any other type of property.  The licensor authorizes the licensee to use the trademark on products to be sold in certain channels of distribution in a defined territory, and the licensee pays a royalty to the trademark owner based on the net amounts charged or received from sales.  However, there are some considerations which are unique to trademark licensing, and the licensor and licensee should review these considerations before entering into a trademark license agreement:

Licensors and licensees should address the above considerations before entering into a trademark license.  In some cases the licensor and licensee may need to change the parties to the license agreement, conduct trademark searches before committing to an agreement, or revise the proposed terms of the agreement.