Tuesday, March 8, 2011

The trademark license contract: manual

The strength of a commercial network is based on its homogeneity and its ability to distinguish itself from its competitors. In this sense, the trademark is an essential tool for the success of that network. This distinctive emblem is indeed a double economic function: • Individualize the products and services it designates • Serve as a communication tool and marketing, especially when used as an ensign.
That is why, whether highly organized networks or more informal networks, it is frequently expected that members have a contractual right to use the mark in the headend, such as an ensign.
Franchise, the provision of one or more distinctive characteristics is even an essential and necessary contract.
In practice, this provision is formalized:
• In the contract of affiliation to the network (eg, franchise agreement, contract of commission-affiliation), which incorporates most often a "clause brand and teaching" or • More rarely, in ad hoc contract with the only question mark.
From a legal point of view, this provision amounted to a trademark license under the second paragraph of Article L 714-1 of the Code of Intellectual Property1. To be meaningful and relevant to the recipient, the trademark license must bear a sign of both a strong business perspective but also and above all legally valid. Moreover, although legal formalism that escaping the trademark license contract shall be in writing and be specific about the obligations of each party.
1 "The rights in a trademark may be all or part of a grant of exclusive license or non-exclusive and a pledge." I. Definition
The trademark license is a contract whereby the owner of a trademark confers on a third party (the licensee) the right to affix the mark to its products and / or make commercial use, such as an sign.
The trademark license may be granted against payment or against payment of a lump sum or in return for royalties proportional, generally based on the turnover of the licensee.
The license may also be granted free of charge.
II. Form of License Agreement
In theory, the trademark license can be given orally, with no writing is necessary to materialize the agreement2 In practice, this principle must be qualified because the license must always be the subject of a registration with INPI to be effective against third parties. In fact, it is therefore essential to formalize the license by written contract.
Moreover, to avoid conflicts and disappointments, the parties will have the greatest interest to record on paper their respective obligations and the scope of the license.
In terms of network, as stated above, the provision of the mark may be filed: • Either a specific device directly integrated into the framework agreement of affiliation • Either a trademark license agreement only on the issue of the brand (as is the case in commercial networks called trademark license or affiliates that adhere to be able to use a mark or a brand recognition).
2 In this sense: Court of Appeal of Paris, 4th bedroom, 8 April 1998. III. Feature of the mark given license
The availability of a mark has meaning only if it is legally valid and commercially sound.
To be a valid legal point of view, the mark must be distinctive, ie: • Do not include any evidence to mislead the public about the characteristics of products or services it désigne3 • Do not simply describe the same products or services4.
Moreover, a mark is arbitrary when it is commercially strong, differs markedly from existing signs and not confined to the assembly of little or no distinctive terms. Even legally valid, a brand that did very little distinctiveness will be difficult to defend on the basis of counterfeiting.
3 A and the mark was deemed deceptive "Supermint", the latter used to designate products not containing mint. Court of Appeal of Paris, 4th bedroom, December 12, 1978. 4 is for example considered to be descriptive, the mark "Stallion" for a book about horses. TGI Paris, 3rd Chamber, 11 January 1989. IV. Essential elements of a trademark license contract Territorial exclusivity
Most often, it is integrated into a trademark license contract, territorial exclusivity, after which there is no holder of the trademark to use and operate it in the contract area. When the brand is strong and reputation, the existence of a contractual exclusivity justifies a higher financial contribution paid by the licensee.
In general, the licensee may sell itself or labeled products use the trademark outside the area reserved for it.
Any failure to do so would make him an infringer under the Code of Intellectual Property. Under these conditions, to avoid differences of interpretation, sources of conflict between the parties, it is imperative to ensure that the exclusivity clause is clear and precise, as was defining the territory. License or partial
The trademark license may only be partial, ie not only cover certain categories of products or services listed in the certificate of registration. In case of partial license, it is essential to list precisely in the contract, the scope of rights granted to the licensee. Duration
The license agreement may be concluded for a fixed term. In such cases it may be terminated at the end of the term or in case of serious misconduct of one of the signatories. The contracting parties may also decide to commit for an indefinite period.
This solution is more flexible since it allows to break the relationship at any time, subject to compliance with a notice period that the signatories have sufficient interest to provide contractually.
By cons, it is clear that the indefinite nature of the agreement would create legal uncertainty.
V. Pre-contractual information
Affiliation agreements often combine trademark license and exclusive obligation (including supply) at the expense of the participant. It is so in franchise agreements.
In such cases, the licensor (the headend) shall, pursuant to Article L 330-3 of the Commercial Code, to give to their partner at least 20 days before signing the contract, a document pre-contractual information allowing him to engage in knowingly.

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