CHAPTER 02. CHAPTER 02. TRADEMARK LICENSING AGREEMENT UNDER LIGHT
2.3 Form and registration of trademark license
One of important matters that are often considered when judging a contract is legal requirement on its form. In common sense, law often requires written form with agreements that have important content and/or worthy. Besides, trademark licensing agreement also has a specific procedure that is registration.
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In Directive 2008/95/EC, EU does not provide any obligation on parties to make a written trademark license. It results in principle that EU allows Member States to provide on this issue212. Regulation 207/2009 on CTM also does not require CTM license to be in written form213 but allows parties to freely decide on form of license. In case both parties find it trustworthy enough and unnecessary for a written agreement, they can make an oral license. Otherwise, if they find it important and necessary, they will make a written license regardless of whether law require or not.
As parties are two main entities of license, they are first parties that obtain all profits as well as suffer all damages relating to license. Therefore, parties need to concern carefully and make a best decision on this matter according to their consideration; thus under viewpoint of EU’s law, it does not need to provide such
212 For instance, Section 28(2) of UK Trade Marks Act 1994 provides that “A license is not effective unless it is in writing signed by or on behalf of the grantor”.
213 Though Regulation 207/2009 requires “an assignment of the Community trade mark shall be made in writing and shall require the signature of the parties to the contract, except when it is a result of a judgment;
otherwise it shall be void” in Article 17(3), it does not require the same on trademark license.
obligation. As long as law does not require, any issue relating to form does not affect to validity of trademark license.
Different from EU’s regulations, under light of Vietnamese IPL, trademark licensing agreement has to be in written form. Particularly, Article 141(2) provides that: “Licensing of industrial property objects must be established in the form of a written contract”. As a subject matter of industrial property rights, trademark license has to be compatible with this provision. Besides providing written form as mandatory form, this article also imposes requirement for considering form of trademark license as condition for its validity. This regulation of Vietnamese IPL is reasonable due to two reasons: (i) practice trademark in Vietnam is inexperienced;
hence, it is necessary for law to provide such cautious principle; (ii) content of a trademark license in particular and a IPR license in general is often not simple, especially in case it relates to technology transfer, it thus needs to be written clearly for purpose of reducing possibility of dispute; (iii) a trademark license in written form is more advantageous in matter relating to evidence in dispute settlement.
Therefore, in common sense, a trademark license should be in written.
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Besides form of trademark license, registration proceeding of trademark license is also often considered. In fact, laws often provides on procedure of registration for trademark license for purpose of creating effect of license on third parties.
This matter is not provided in Directive 2008/95/EC. It can be construed that EU entitles Member States right to regulate on the procedure of registering trademark license, or laws of all Member States are quite identical in this matter. It is not the same to Regulation 207/2009, which is the most basic ground for CTM that needs to provide clearly and sufficiently matter relating to CTM. By Article 22(5) of Regulation 207/2009, which provides: “On request of one of the parties the grant or transfer of a license in respect of a Community trade mark shall be entered in the Register and published”, EU entitles parties of license right to request on the registration for their CTM license. Under this provision, CTM license can be registered and published. In fact, it does not a compulsory procedure as provision
has regulated that it is performed “on request of one of the parties”. Hence, registration proceeding does not affect the validity of CTM license. Besides, this matter has been regulated in Introduction section of the Manual, which is
“Registration of licenses is not compulsory and does not affect their validity.
However, registration has particular advantages, in view of the provision of Article 23(1) CTMR” and in the Guidelines214 as well.
As long as it is not mandatory, the licensee can still obtains rights, in particular, rights that are conferred by the Regulation 207/2009 in Article 22(2), (3), (4), without their license to be registered. In case registration, the licensee besides those can also obtain advantages provided in Article 23(1) and Article 50(3) of Regulation 207/2009. Besides, Regulation 207/2009 with the Introduction section also affirms that registration is not condition for a CTM license to be valid.
Registration of trademark license can bring some advantages to parties. Those are provided to encourage parties to register their license so it can be published, other third parties thus can know clearly about other’s license easier. It is also sound foundation for appropriate authorities to settle any infringement on CTM license.
Those advantages can be seen under other provisions of Regulation 207/2009 as well as of the Guidelines and Manual of OHIM.
The first advantage of trademark license registration states in Article 23(1) of Regulation 207/2009. Accordingly, CTM license only has “effects visKàKvis third parties” if it is registered. As Article 22(5) Regulation 207/2009 provides that registration of CTM license depends on request of one party, any party of license thus would have fully right to ask for the registration of license if he finds it necessary. Otherwise, parties can skip this procedure and accept practice that their license will only have effect on them, as according to Article 23(1) Regulation 207/2009, license only has effect on third parties if it is registered. It is also defined
214 Introduction section of the Guidelines provides that: “In all other respects, the holder of a license concerning a Community trade mark which is not entered in the register may avail himself of the rights that the CTMR confers to licensees of CTMs, in particular, the rights referred to in Article 22(2), (3) and (4). Nor is the registration of the license a condition for the use of the trademark being considered to have been made with the consent of the proprietor pursuant to Article 15(3) CTMR, when the licensee has used the CTM under the license contract”.
clearly in the Manual as well as the Guidelines. Particularly, introduction of the Manual provides that:
(a) Vis – à – vis third parties who might have acquired, or have entered in the Register, rights in the trademark which are incompatible with the registered license, the licensee may avail itself of the rights conferred by this license only: (i) if the license was entered in the CTM Register, (…).
It is clear that registration of trademark license is for purpose of protecting parties of license by using license to oppose to any action that is incompatible with the registered license. Besides, it also helps third parties to take notice of other’s licenses, so they can evade from performing unintentionally any infringement to those licenses. Moreover, by this provision, the Manual also defines concept of
“third parties”. Accordingly, they are anyone that: (i) has obtained rights in trademark that are incompatible with others’ license; (ii) registers rights that are incompatible with others’ license. However, it has an exception: even though license has not been put into registration, third parties have already known about existence of license. It can be construed that in those circumstances, they already know about the license and still decide to do things that may be incompatible with the license. Thus, it is not necessary to protect them by legal spirit of trademark license registration proceeding any more, as main purpose of this procedure is for protecting third parties from committing infringement without intention when they do not know about that license.
The second advantages of registering trademark license states in Article 50(3) of Regulation 207/2009 and in Introduction of the Manual, which is:
In the event that a license for a CTM is entered in the Register, the surrender or partial surrender of that mark by its proprietor will only be entered in the Register if the proprietor establishes that it has informed the licensee of its intention to surrender. The holder of a license, which is registered has, therefore, the right to be informed in advance by the proprietor of the trademark of its intention to surrender the trademark.
This provision is for purpose of protecting the licensee as in practice, the proprietor may abuse surrender provision to cause damages to the licensees215. By this provision, if trademark license is registered, the licensee will have right to be informed about the licensor’s intention to surrender trademark. Hence, he would know that the licensed trademark would be surrendered; otherwise, under this provision, the proprietor cannot surrender his trademark as the Community does not allow him to register the surrender without inform to the licensee. Therefore, it is a good reason for parties to register their trademark license. For the proprietor, it helps him to perform right to surrender his trademark more advantageous. For the licensee, it helps him to save time and money from exploiting meaningless trademark, which was surrendered.
Similarly, under Vietnamese IPL216, registration procedure of trademark license is not compulsory; however, it makes trademark license have validity on third parties.
Article 148(2) of Vietnamese IPL provides:
For the industrial property rights established on the basis of registration according to the provisions of clause 3(a) of article 6 of this Law, an industrial property object license contract shall be valid as agreed upon by the parties involved but shall be legally effective as against a third party upon registration with the State administrative body for industrial property rights.
Accordingly, trademark license only has effect to third parties if it is registered.
This principle is similar to regulations of EU’s laws. However, there are two differences in practice of this principle. First, Vietnamese IPL does not define advantage of registering trademark license in relation to surrender proceeding;
215 For instance, A, who is the proprietor of CTM, grants to B a license. While B is exploiting trademark under this license, surrenders that trademark, which results in practice that trademark would lose its validity on the entire of Community. However, if B does not know about that surrender, he will waste his time and money on exploiting a nonsensical trademark.
216 Procedure for registration of trademark licensing agreement under Vietnamese law is provided in Article 149?150 of Vietnamese IPL, Article 26 of Decree No. 103/2006/ND?CP dated September 22, 2006 of the Government detailing and guiding the implementation of a number of articles of the Law on intellectual property regarding industrial property; Section 1 of Chapter 2 of Circular No. 01/2007/TT?BKHCN dated February 14, 2007 of the Ministry of Science and Technology guiding the implementation of the Government's Decree no. 103/2006/ ND?CP dated September 22, 2006, detailing and guiding the implementation of a number of articles of the Iaw on intellectual property regarding industrial property
hence, registration of trademark license does not have effect on practice of surrender of trademark. Second, Vietnamese IPL system does not provide any regulation indicating definition of “third parties” concept. In fact, there may be many understandings on concept of “third parties” of a trademark license. They may be parties relating to license while parties perform their license. For instance, material suppliers of a manufacturing trademark license; or any customer of products or services provided under trademark license can be concerned as “third party”. If third party is considered as any entity relating to the license directly or indirectly, even the consumers, it will result in reality that under any circumstances, parties need to register their license for purpose of making it have effect on customers on market. It thus may bring about prolix but unnecessary administrative formalities; and purpose of this principle will be not satisfied. Besides, it also results in practice that registration for trademark license seems to be mandatory.
Therefore, it needs to have a clear definition on concept of “third party” of a trademark license.
Besides, there is also a difference between registration procedure under Vietnamese and EU’s regulations. Particularly, Article 149(2) of Vietnamese IPL requires “the original or a valid copy of the contract” in application file for registration, which results in practice that trademark licensing agreement has to be in written for entering the registration procedure. However, registration procedure under EU’s regulations does not require the same. In fact, registration procedure of CTM license at OHIM merely requires parties to fill in a form217 available in OHIM; and contract is only needed in file in case request for registration was made by the licensee only218. Thus, under EU’s regulations, registration procedure does not result in practice of written form of CTM license.