Document type: Article Practice area: Intellectual Property — Trademarks Jurisdiction: United States (federal and state) Last reviewed: 5 September 2026

The obligation nobody expects

A patent licensor may license and walk away. A copyright licensor may license and walk away. A trademark licensor who licenses and walks away can lose the mark.

This surprises clients, and it surprises lawyers who came to trademark work from other parts of intellectual property. The reason lies in what a trademark is. A patent is a right to exclude. A copyright is a bundle of rights in an expressive work. Both are property in a reasonably ordinary sense: they exist independently of what the owner does with them day to day, and the owner may sell, license, or sit on them.

A trademark is different. A trademark is a designation of source. Its legal existence depends on its continuing to communicate something true to consumers — that goods bearing this mark come from, or are controlled by, a single responsible source, and that they will be more or less the same as the last ones. When the mark stops communicating that, it stops being a mark. 15 U.S.C. § 1127 says so directly: a mark is deemed abandoned when any course of conduct of the owner, "including acts of omission as well as commission," causes the mark "to become the generic name for the goods or services on or in connection with which it is used or otherwise to lose its significance as a mark."

Licensing is the classic act of omission. If a brand owner lets a dozen companies put the mark on whatever they like, the mark tells consumers nothing about source or quality, and it has lost its significance. Courts call this naked licensing, and the remedy is forfeiture — not damages, not an injunction against the licensee, but the loss of the mark itself, against the world.

The good news is that this is entirely avoidable, and the practices that avoid it are ordinary commercial practices that a competent brand owner would want anyway. The bad news is that the practices have to be real. Contract language alone does not do it.

The statutory frame: related company use

The mechanism that makes licensing possible at all is 15 U.S.C. § 1055, which provides that where a registered mark or a mark sought to be registered is or may be used legitimately by related companies, such use inures to the benefit of the registrant — and that such use does not affect the validity of the mark, provided the mark is not used in such manner as to deceive the public.

"Related company" is defined in § 1127 as any person whose use of a mark is controlled by the owner of the mark with respect to the nature and quality of the goods or services on or in connection with which the mark is used.

Read those two provisions together and the entire law of trademark licensing appears in a sentence: a licensee's use counts as the licensor's use if, and only to the extent that, the licensor controls the nature and quality of the goods. Control is the price of licensing. It is also the thing that makes the licensed use benefit the licensor at all — the use that supports registration, the use that maintains the registration under § 1057 and § 1064, and the use that builds the goodwill the licensor owns.

Marchetti Provisions, and two licenses

Marchetti Provisions is a Providence company that has made a tomato-and-basil sauce since 1961 under the MARCHETTI mark. Rosalind Marchetti-Okonkwo runs it now, third generation, forty-one employees, a regional brand with fierce loyalty in New England and a small national mail-order business.

In 2019 Marchetti entered two license agreements.

The first was with Tidewater Foods, a Virginia co-packer, licensed to manufacture and sell MARCHETTI sauces in the mid-Atlantic. The agreement specified the recipe, required Tidewater to buy the basil from a designated supplier, set out fifteen pages of manufacturing and packaging specifications, gave Marchetti the right to inspect the plant on 48 hours' notice, required monthly retained samples, and required all packaging artwork to be approved in writing before use. Marchetti's operations manager visited Tidewater quarterly. Twice she rejected a production run.

The second was with Halyard & Vine, a housewares company that wanted to sell MARCHETTI-branded pasta bowls, aprons, and wooden spoons. The agreement was four pages. It said Halyard & Vine "shall maintain the high quality standards associated with the Licensed Mark." It said nothing about specifications, approvals, samples, or inspection. Marchetti-Okonkwo signed it on a Friday afternoon, collected a royalty check every quarter, and did not think about it again.

In 2025 a competitor, sued for infringement, raised naked licensing as a defense and pointed at the Halyard & Vine agreement. That is the case this article is about, and it is a case Marchetti nearly lost — not the housewares license, the entire mark.

What naked licensing looks like in the cases

The doctrine is best understood through two Ninth Circuit decisions that bracket it.

In Barcamerica International USA Trust v. Tyfield Importers, Inc., 289 F.3d 589 (9th Cir. 2002), the owner of the DA VINCI mark for wine had licensed it to a winery. The license contained no quality control provision at all in its first iteration, and a later version contained a provision the licensor did not enforce. The licensor's principal testified that he relied on the winery's reputation, that he did not know who its winemaker was, and that his own quality control consisted of occasionally drinking the wine. The court held the license naked and the mark abandoned. The opinion is worth reading for its tone: the court was not persuaded that a brand owner who genuinely liked the product had thereby controlled it.

In FreecycleSunnyvale v. FreecycleNetwork, 626 F.3d 509 (9th Cir. 2010), a nonprofit network licensed its marks to local member groups. There was no express contractual right of control, no actual exercise of control, and — the court held — no basis for the licensor to rely on the licensee's own quality control efforts, because the parties had no close working relationship and the licensor knew almost nothing about how the member group operated. Naked license; abandonment.

Set against these is the older and more forgiving tradition exemplified by Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358 (2d Cir. 1959), where the Second Circuit recognized the licensing-control requirement as a real one but declined to find abandonment where the licensor's inspection and control efforts, though modest, were genuine. Dawn Donut also supplies the memorable observation that the licensor's obligation is not to guarantee quality but to control it sufficiently that the public is not deceived.

The synthesis courts apply today recognizes three routes by which a licensor may establish adequate control:

  1. An express contractual right of control, actually exercised. This is the safe harbor and the one to aim for.
  2. Actual control in fact, even where the contract is silent — a licensor who in practice inspects, approves, and enforces may satisfy the requirement despite bad drafting.
  3. Justifiable reliance on the licensee's own quality control, where the parties have a close working relationship and the licensor has a reasonable basis to believe the licensee maintains standards. This route exists — it has saved licensors, particularly in family and long-term relationships — but it is narrow, fact-intensive, and unreliable. Do not plan around it.

Two further points make the doctrine less terrifying than it first appears.

The burden is on the challenger, and it is heavy. Naked licensing is an affirmative defense, and many courts require clear and convincing evidence, characterizing forfeiture of a mark as a drastic consequence not lightly imposed. A licensor with imperfect but genuine control practices usually wins.

The consequence is forfeiture, not a claim for damages. Nobody sues for naked licensing. It appears as a defense, raised by an infringer against whom the licensor has asserted the mark, or as a ground for cancellation under § 1064. This means the risk crystallizes at the worst possible moment: you discover that your licensing practices were inadequate on the day you most need the mark to be valid.

What quality control actually consists of

Courts do not require a particular program. They require control appropriate to the goods and services, actually exercised, sufficient to ensure the mark continues to signify a consistent source. In practice that means some combination of the following, scaled to the deal.

Written standards specific enough to enforce. "Maintain high quality" is not a standard; it is a wish. A real standard says what the product is made of, how it is made, how it is packaged, what it is called, and what it may not be. For a food product, that means a recipe, ingredient specifications, process parameters, and shelf-life requirements. For apparel, fabric composition, construction, colorfastness, and labeling. For services, a service manual, training requirements, and performance metrics.

Pre-production approval. Samples submitted and approved in writing before any commercial production. This is the single most important operational control and the one most often skipped.

Artwork and packaging approval. Every use of the mark approved before it is used, including advertising, packaging, websites, and social media. This protects both quality and the mark's integrity as a mark — proper form, proper notice, no genericizing usage.

Ongoing sampling. Periodic production samples pulled and tested, either by the licensor or by an agreed third-party laboratory.

Inspection rights, exercised. The right to inspect facilities on reasonable notice, and a record of actually doing it. An unexercised inspection right is evidence against you, because it shows you understood control was required and chose not to.

Complaint monitoring. A requirement that the licensee report consumer complaints, warranty claims, returns, and any regulatory contact, plus the licensor's own monitoring of reviews and social channels.

Records. This is the part that decides the case. Everything above is invisible in litigation unless it was written down. Approval emails, inspection reports, sample logs, rejected runs, corrective action notices — these are the exhibits. A licensor with a filing cabinet of approvals wins; a licensor with a good practice and no records is in a fight.

Marchetti's Tidewater file contained six years of quarterly inspection reports, 214 written artwork approvals, monthly sample logs, and two documented production rejections. It was never seriously challenged. Its Halyard & Vine file contained the four-page agreement and a stack of royalty checks.

Drafting the license: the provisions that carry weight

Scope. Which marks, which goods and services, which channels. Vagueness here is expensive. A license for "housewares" that the licensee reads to include small kitchen appliances is a dispute waiting to happen. Enumerate.

Territory. Defined precisely, with attention to online sales, which do not respect territories. If the licensee will sell online, say what that means for a territorial limit — geo-blocking, marketplace restrictions, or an acknowledgment that the territory is effectively worldwide.

Exclusivity. Exclusive, sole, or non-exclusive, defined in the agreement rather than assumed. An exclusive license should carry performance obligations — minimum royalties, minimum sales, or the right to convert to non-exclusive on failure. An exclusive licensee who does nothing is worse than no licensee.

Term and renewal. Shorter than you think. A three-year term with renewal on performance gives you an exit; a ten-year term with automatic renewal gives the licensee your brand.

Quality standards and approval process. The heart of the agreement, and the part that should be longest. Specifications by reference to a schedule that can be updated. An approval process with defined submission requirements, a response period, and a default rule if the licensor does not respond. Deemed-approval clauses are common and dangerous; if you accept one, make the period long enough that your organization can actually meet it.

Inspection and audit. Facility inspection rights. Books and records audit for royalty verification, with a cost-shifting provision on a material underpayment — the standard formulation is that the licensee pays audit costs if the audit finds an underpayment above a stated threshold, commonly five percent.

Sublicensing. Prohibited without consent, as a default. If permitted, the sublicensee must be bound to the same quality obligations and the licensor must have direct rights against it. A sublicensing chain with no flow-down of quality control is a naked license with extra steps.

Ownership and goodwill. An express acknowledgment that the licensor owns the mark, that all use inures to the licensor's benefit, and that the licensee acquires no rights in the mark. Include an obligation to assign any rights the licensee may acquire, and a prohibition on registering the mark or confusingly similar marks anywhere in the world. This last clause matters enormously in jurisdictions with first-to-file trademark systems, where a licensee or distributor registering the mark locally is a recurring and painful problem.

No challenge, and licensee estoppel. A licensee is generally estopped from contesting the licensor's ownership of the mark during the license. Express no-challenge covenants are common; their enforceability varies and is less certain post-termination. Include the clause; do not rely on it as your only protection.

Quality control cooperation. An affirmative obligation on the licensee to cooperate with inspections, submit samples, and provide information. This converts your control right into the licensee's duty, which matters when a licensee becomes uncooperative.

Termination. For breach with a cure period; for quality failures with a shorter cure period or none; for insolvency; for change of control; and, in many deals, for convenience with notice. Quality breaches should be separately addressed because a thirty-day cure period on a product safety issue is unacceptable.

Post-termination. The sell-off period — how long the licensee may sell existing inventory, typically 90 to 180 days, often conditioned on the licensee being current on royalties and not in breach. Disposal or destruction of remaining goods and materials. Return of specifications. Removal of the mark from the licensee's name, domains, and social accounts. Transfer of domains and handles that incorporate the mark. Certification of compliance.

Indemnity and insurance. The licensee indemnifies for product liability and for its own conduct; the licensor typically indemnifies for trademark infringement claims arising from the mark itself. Product liability insurance naming the licensor as an additional insured, at a level appropriate to the goods, with certificates delivered annually. This is not boilerplate — a licensor whose mark appears on a defective product will be sued, and the insurance is the answer.

Enforcement. Who may sue infringers, who controls the litigation, who pays, who recovers. An exclusive licensee may have standing questions; address them expressly rather than litigating them later.

Assignment in gross: the other way to lose a mark

A companion doctrine catches transfers rather than licenses. 15 U.S.C. § 1060 provides that a registered mark or a mark for which an application has been filed is assignable with the good will of the business in which the mark is used, or with that part of the good will connected with the use of and symbolized by the mark.

An assignment of a mark alone, divorced from the business or goodwill it symbolizes, is an assignment in gross, and it is invalid. The assignee acquires nothing, and the mark may be deemed abandoned. The rationale is the same as with naked licensing: a mark that changes hands without the business it identifies stops telling consumers the truth about source.

In practice, the question is usually whether the assignee continues a business substantially similar to the assignor's such that consumers are not deceived. Transferring the mark along with the recipes, customer lists, supplier relationships, and know-how is fine. Transferring the mark to a company that will use it on entirely different goods is not.

Two practical rules follow. First, recite the goodwill in the assignment, and transfer the associated assets in fact. Second, be careful with intra-corporate transfers, security interests, and holding-company structures. A mark held by an IP holding company and licensed to operating affiliates is a completely standard structure — and it works only if the holding company actually exercises quality control over the affiliates. The same doctrine applies within a corporate family, and the fact that the parties are affiliates is helpful evidence but not a substitute for control.

There is also a trap in § 1060 for intent-to-use applications: an application filed under § 1051(b) generally may not be assigned before the applicant files a verified statement of use, except to a successor to the applicant's ongoing and existing business to which the mark pertains. Assignments that violate this rule can void the resulting registration.

Bankruptcy: what happens when the licensor fails

For decades, trademark licensees lived with a genuine structural risk. Section 365(n) of the Bankruptcy Code gives licensees of "intellectual property" the right to elect to retain their rights when a debtor-licensor rejects the license — but the Code's definition of intellectual property in 11 U.S.C. § 101 omits trademarks. Trademark licensees were outside the protection, and several courts held that rejection terminated the license, leaving the licensee with a damages claim and no right to use the brand its entire business depended on.

Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. 370 (2019) resolved this. The Court held that a debtor's rejection of an executory contract under 11 U.S.C. § 365 constitutes a breach, not a rescission, and that breach does not terminate rights the contract previously granted. A trademark licensee may therefore continue to use the mark under the terms of the license after rejection.

This is a significant protection for licensees and a real consideration for licensors. Two consequences worth noting.

For licensees: the license survives rejection, but the licensor's affirmative obligations — quality control support, enforcement, maintenance of the registrations — do not get performed, and the licensee's remedy is a prepetition damages claim. Build for this. Contractual escrow of specifications, step-in rights, and the ability to maintain the registrations yourself are worth negotiating.

For licensors: the decision means that a license you would like to shed in a restructuring may follow you. And a licensee continuing to use the mark without any licensor quality control is precisely the fact pattern that produces a naked licensing problem for whoever ends up owning the mark. This is a real diligence issue in distressed acquisitions.

The franchise trap

Here is the risk that catches more ordinary businesses than naked licensing does, and that trademark lawyers frequently miss because it lives in a different body of law.

Under the FTC's Franchise Rule and the franchise statutes of roughly fifteen states, a franchise exists — regardless of what the parties call the arrangement — when three elements are present:

  1. The licensee is granted the right to use the licensor's trademark in offering goods or services;
  2. The licensor exerts or has authority to exert significant control over, or provides significant assistance to, the licensee's method of operation; and
  3. The licensee pays a required payment to the licensor.

Look at that list next to everything this article has just recommended. A trademark license with strong quality control provisions and a royalty has all three elements. The very practices that protect against naked licensing can convert a license into a franchise — triggering pre-sale disclosure obligations (the Franchise Disclosure Document), registration requirements in registration states, and, in many states, relationship laws restricting termination and non-renewal. The penalties for non-compliance include rescission and damages.

The line is drawn in the second element. Quality control over the licensed goods is different from control over the licensee's method of operation. Specifying the recipe, inspecting the plant, and approving the packaging is product quality control. Specifying the licensee's hours, requiring a designated site, mandating the licensee's marketing plan, providing an operations manual for the licensee's business, requiring particular equipment and training for the licensee's staff — that is control over the method of operation, and it is franchising.

Exemptions exist and are worth knowing: the FTC Rule's minimum-payment threshold, the fractional franchise exemption, the leased department exemption, and various state-specific exemptions including single trademark licensee provisions. They are narrow and technical.

The practical instruction is simple: any trademark license with a royalty should be reviewed by someone who knows franchise law before it is signed. Marchetti's Tidewater license was fine — it controlled the product, not Tidewater's business. A different version of that license, one that told Tidewater how to run its plant and required it to buy equipment from a designated vendor and follow a Marchetti operations manual, would have been a franchise, and Marchetti would have been selling franchises without a disclosure document.

How the Marchetti case came out

The competitor's naked licensing defense in 2025 was aimed at the Halyard & Vine agreement, and it was not frivolous. The agreement had no specifications, no approval process, no inspection right, and no sampling requirement. Marchetti had collected royalties for six years and had never once looked at a pasta bowl.

Three things saved the mark.

The burden. Naked licensing is an affirmative defense to be proved by the party asserting it, and the court applied a clear-and-convincing standard. Forfeiture of a mark that has been in continuous use since 1961 is a drastic remedy, and courts do not reach for it.

Actual control in fact, discovered late. In preparing the defense, Marchetti-Okonkwo's counsel found that her operations manager had in fact reviewed and approved every Halyard & Vine artwork submission by email — 31 of them over six years — and had twice asked for changes to the way the mark was rendered on an apron. Nobody had characterized this as quality control; it was just what she did. It became the centerpiece of the response, and it illustrates a point worth holding onto: the practices frequently exist and go undocumented as what they are. Ask what your people actually do before you concede that nobody was doing anything.

Severability of the challenged license. The court also accepted that the housewares license was collateral to the core food business, that the food licenses were tightly controlled, and that the mark had not lost its significance as a source designator for the goods that mattered. Courts vary on how far a single deficient license taints an otherwise well-run program, but the argument that the mark still functions as a mark is the argument that wins.

Marchetti kept the mark. It also spent roughly $340,000 defending a proposition that a two-hour drafting session in 2019 would have made unassailable. That is the honest economics of this doctrine: the risk of losing is modest, and the cost of having to argue about it is not.

Running the program: who does the work

A license program is an operating function, not a legal document, and the most common failure is that nobody owns it.

Assign an owner. Someone whose job includes reviewing submissions, tracking approvals, scheduling inspections, and escalating problems. In a small company this may be a quarter of one person's time. In a company with twenty licensees it is a full-time role. What it cannot be is "the general counsel will get to it."

Build a submission system. Email is where approvals go to die. A shared folder, a ticketing queue, or a simple licensing management system with a record of every submission, decision, date, and decision-maker. The system is the evidence.

Set service levels you can meet. If the agreement gives you ten business days to approve artwork and you routinely take five weeks, you have created a breach by the licensor and a strong argument that the approval right was illusory. Either resource the function or lengthen the period.

Calendar the recurring obligations. Annual insurance certificates. Quarterly royalty reports. Inspection schedules. Renewal and termination notice dates. Trademark registration maintenance in every jurisdiction where the licensed marks are registered.

Audit royalties, at least sometimes. Underreporting in licensing is common and is almost never malicious — it is usually a licensee's finance team applying the royalty base incorrectly to a product line nobody thought about. A royalty audit every three years on significant licensees, with the cost-shifting clause in place, pays for itself and changes reporting behavior in a way that no amount of correspondence does.

Review the portfolio annually. Which licensees are performing, which are dormant, which are damaging the brand. A licensee producing $8,000 a year in royalties and a steady stream of one-star reviews is a net negative that persists because terminating it feels like more work than tolerating it.

What the licensee should be negotiating

Most writing on trademark licensing takes the licensor's side. The licensee has legitimate interests and should press them.

Certainty of scope. The licensee is investing in a business built on someone else's asset. It needs clear scope, a term long enough to recover its investment, and renewal rights that are not purely discretionary.

Approval process discipline. Defined submission requirements, a fixed response period, deemed approval if the licensor does not respond, and a requirement that rejections state reasons and identify what would be acceptable. An open-ended approval right in the hands of a disorganized licensor can stop a product launch.

Limits on standards changes. Licensors often reserve the right to amend specifications. The licensee should require reasonable notice, a transition period, and — where a change makes existing inventory non-compliant — a mechanism for dealing with that inventory.

Warranties on the mark. That the licensor owns it, that it is registered where represented, that there is no pending challenge, and an indemnity for third-party infringement claims arising from use of the mark as authorized. This is the licensor risk the licensee cannot manage.

Maintenance obligations. An affirmative obligation on the licensor to maintain the registrations and to enforce against infringers, or at least to permit the licensee to do so if the licensor declines.

Insolvency protection. Post-Mission Product Holdings the license survives rejection, but the licensor's performance does not. Escrow of specifications, step-in rights to maintain registrations, and a right to set off against royalties are worth negotiating.

A real sell-off period. Ninety days is often not enough to clear seasonal inventory. Negotiate for the period the business actually needs, and resist conditioning it on being free of any breach, which gives the licensor a lever to strand your inventory.

Licensing across borders

A domestic license program does not transplant cleanly.

First-to-file systems. Much of the world grants rights to the first to file rather than the first to use. A licensee, distributor, or local partner who registers your mark in its own name is a recurring and expensive problem, and it is frequently not even bad faith — the local partner registers because local counsel told it to. Register your marks in the jurisdictions where you license, before you license there, and include an express covenant prohibiting the licensee from registering the mark or anything confusingly similar, with an obligation to assign anything it does register.

License recordation. Some jurisdictions require or permit recordation of trademark licenses, and in some, licensee use does not inure to the owner's benefit for use-requirement purposes unless the license is recorded. This matters directly to registration maintenance. Ask local counsel in every licensed jurisdiction; the answer varies and the consequences of getting it wrong are non-obvious.

Use requirements. Many jurisdictions cancel registrations for non-use after three or five years. Where the licensee is your only user in a country, the licensee's use is your use — but only if the relationship qualifies under local law. Track use and collect evidence of it, jurisdiction by jurisdiction.

Extraterritorial reach. Abitron Austria GmbH v. Hetronic International, Inc., 600 U.S. 412 (2023) held that the Lanham Act's infringement provisions, 15 U.S.C. § 1114 and § 1125(a), are not extraterritorial and reach only claims where the use in commerce giving rise to the claim is domestic. The practical effect for a brand owner is that foreign conduct by a rogue licensee or ex-licensee generally must be addressed under foreign law, in foreign courts, on foreign rights. That is an argument for registering broadly, for choosing licensees carefully, and for arbitration clauses with a seat and enforcement path you have actually thought about.

Quality control at a distance. Inspections across an ocean are expensive, and the honest answer for many programs is a designated third-party inspection service, agreed in the license, with reports delivered to both parties. It is cheaper than travel and it produces better records.

Adjacent licensing structures worth naming

Co-branding. Two marks on one product means two quality control obligations and a set of questions the parties rarely address: who approves the combined presentation, who handles consumer complaints, what happens to inventory when the arrangement ends, and who owns any new mark or design created for the collaboration. Address ownership of the combined lockup explicitly.

Character and entertainment licensing. Approval rights here extend beyond product quality to depiction and context, and the approval process is the deal. Style guides do most of the work; the license should incorporate them by reference and provide for their updating.

Endorsement and influencer arrangements. These involve a person's name, likeness, and right of publicity rather than a trademark, or often both. The quality control concern runs the other way — the endorser wants control over how they are portrayed — and there is a regulatory overlay: the FTC requires clear and conspicuous disclosure of material connections in endorsements. Build disclosure obligations and a compliance mechanism into the agreement.

University, museum, and nonprofit licensing. Institutions license marks with reputational stakes higher than commercial ones and with governance processes that are slower than commercial counterparties expect. Build realistic approval timelines and a named institutional decision-maker into the agreement.

Certification and collective marks. These are different creatures with their own rules. A certification mark owner must not itself produce the certified goods and must not discriminatorily refuse to certify goods meeting the standards; failure to control the certification standards is a ground for cancellation under § 1064. If your "license program" is really a certification program, it needs to be structured as one.

Enforcement, and the awkwardness of suing your own licensee

Two enforcement problems are specific to licensed brands.

The infringing ex-licensee. A licensee whose agreement has ended and who keeps selling is in an unusual position: it knows the product, it has the tooling, it has the customer relationships, and it once had permission. Courts treat continued use after termination as infringement, and often as a strong case for a preliminary injunction, because the confusion is close to inevitable — the goods really did come from an authorized source until recently. The licensor's leverage is highest if the agreement provides for injunctive relief without proof of irreparable harm as a stipulated matter, for the return or destruction of inventory and materials, and for the transfer of domains and social accounts. Include those provisions; the alternative is an emergency motion built on a four-page agreement.

The under-performing licensee you do not want to sue. More common and less discussed. A licensee is producing goods that embarrass the brand, or is not producing at all under an exclusive, and terminating means losing revenue and possibly a channel. The answer is structural rather than litigious: quality standards with defined consequences, minimum performance obligations with a conversion-to-non-exclusive remedy, and short terms. A three-year term makes the problem solve itself; a fifteen-year term makes it a lawsuit.

Remedies, briefly. Where you do sue, 15 U.S.C. § 1116 supplies injunctive relief and § 1117 the monetary remedies. On profits, Romag Fasteners, Inc. v. Fossil, Inc., 590 U.S. 212 (2020) held that willfulness is not an absolute precondition to a profits award under § 1125(a), though it remains highly relevant to the equitable assessment — a meaningful change for licensors facing a licensee that overran its scope without obvious bad faith.

Incontestability. A registration that has been in continuous use for five consecutive years after registration and has met the filing requirements may become incontestable, and under Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189 (1985) an incontestable registration cannot be challenged on the ground that the mark is merely descriptive. Incontestability does not immunize a mark against abandonment or naked licensing — those grounds survive under § 1064 and § 1115(b) — and it does not displace the statutory defenses, including the descriptive fair use defense the Court addressed in KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004), which held that a defendant asserting fair use need not negate all likelihood of confusion. The point for a licensing program is that maintaining registrations properly is part of protecting the license revenue, and it is the licensor's job.

The short version

If you remember four things from this article, make them these.

One: control is not optional. Section 1055 makes licensee use inure to your benefit only because you control the nature and quality of the goods. Give up the control and you give up the mark.

Two: contract language alone is not control. Barcamerica had a contract. What it lacked was anything actually happening. Conversely, actual control can save a badly drafted license — so find out what your people really do before you concede the point.

Three: the records are the case. Approval emails, inspection reports, sample logs, rejected runs. A licensor with the file wins on a motion; a licensor without it goes to trial on a question it should never have had to answer.

Four: the franchise question is the one people miss. A trademark license plus a payment plus significant control over the licensee's operations is a franchise, whatever the parties call it. Ask the question before signing, not after a state regulator does.

Everything else in trademark licensing is commercial negotiation. These four are the law.

Related documents

This article is general information, not legal advice, and does not create an attorney-client relationship.