Trademark License Agreement Between Related Companies
It is therefore advisable to have a simple written license agreement between the owner of the parent company`s trademark and its subsidiary, or any other closely related company, which attests to the nature and extent of the control that the parent company has to guarantee the character or quality of the goods/services provided. Such an agreement should provide: (a) that the goods/services offered by the licensee comply with the standards, specifications or instructions approved by the parent company and (b) a right to periodic inspections of the licensee`s actual premises and/or models of the product sold in order to ensure compliance with such standards, specifications or instructions that the owner would actually exercise. Trademark protection may require complex legal analysis. Therefore, companies that have complex business structures, including the use of a trademark by a subsidiary or other closely related company, should seek the advice of experienced Canadian consultants who can design licensing agreements to properly reflect these structures and protect brand portfolios. It is therefore advisable to have a simple written license agreement between the owner of the parent company and its subsidiary or any other closely related company indicating the nature and extent of the control that the parent company has to ensure the character or quality of the goods or services delivered. Such an agreement should provide that, in order for a trade mark proprietor to be able to prevent the deletion of a trade mark or to assert his rights, there must be an oral or written licence agreement between the proprietor of the trade mark and the user of the trade mark. Joint ownership of the enterprise alone is not sufficient. However, while there is evidence of a licensing agreement that a subsidiary has the right to use a trademark in Canada, federal courts, such as the Trademark Opposition Board in Sobeys Capital Inc. vs.
Edrnred, a limited company, 2012 TMOB 86, have consistently found that «the organizational structure itself.» does not permit the infer that the proprietor of the trade mark checks the character or quality of the goods and services used in respect of such a licence`. For more information on trademark licensing, please contact a member of our firm`s trademark group. Unlike many other legal systems, the use of a trademark by a subsidiary or other closely related company is not necessarily beneficial to the parent company because of the relationship between the two companies. On the contrary, it must be shown that the proprietor of the trade mark controls, directly or indirectly, the character or quality of the goods/services used in relation to the trade mark. In addition, the nature of the evidence sufficient to prove that the proprietor of the parent company`s trade mark has the necessary control is contradictory and depends to a large extent on the specific facts of each case. . . .