CHAPTER 01. CHAPTER 01. OVERVIEW OF TRADEMARK LICENSE
1.2 Roles of license and trademark license
In general, the trademark license establishes roles for all the licensor, the licensee and society with consumer as well.
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Due to nature of trademark on representing for reputation of the proprietor, the proprietor often wishes to license his trademark for popularizing his goodwill.
Besides extending reputation, licensing a trademark also brings many advantages to the proprietor.
(a) Trademark license brings lots of economic benefits to the proprietor. By licensing, the proprietor while exploiting trademark himself can allow many others to use his trademark concurrently. Hence, the proprietor can obtain profit from both exploiting himself and from other licensees. In fact, the proprietor often licenses his trademark for obtaining more profits owning to financial agreements in the license.
It bases on nature that the more value trademark has, the higher license price it takes. Obviously, the proprietor’s goodwill and reputation always attach to a trademark, especially international well?recognized trademark58. In fact, some well?
known trademarks, i. e. Coca Cola, which has value of 77, 839 billion USD59, can bring to its proprietor big profits in trade. This is the most important role of trademark license playing on the proprietor.
56 Article 15(2) of the Regulation 207/2009 provided that: “Use of the Community trademark with the consent of the proprietor shall be deemed to constitute use by the proprietor”.
57 In Vietnamese IPL, Article 123(1) provides right of the proprietor in using his trademark, including using trademark himself (under Article 124(5)) and licensing it (under Chapter X?section 2).
58 Jim Keon, Chapter 5: Intellectual property rules for trademarks and geographical indications: important parts of the new world trade order, in Calos M. Correa, Abdulqawi A. Yusuf, Intellectual property and International trade: the TRIPs Agreement, 2nd Edition, Wolters Kluwer, 2008, page 151.
59 Information on Best global brand 2012, http://www.interbrand.com/en/best?global?brands/2012/Coca?
Cola, last visit on 11/7/2013.
Therefore, the licensing of a trademark can help the proprietor to exploit their trademark in a more flexible and effective way. Moreover, the more popular that trademark is used in practice, the more it can approach consumers, which can increase value of trademark as well as economic profits for the proprietor.
(b) Trademark license plays a role on extending the goodwill and reputation of proprietor, basing on the feature of trademark that is “in connection with the marketing of goods”60or services. Trademark is the representation of goodwill and reputation of its proprietor. Hence, the proprietor often desires to grant as many trademark licenses as possible for expanding its goodwill and reputation into
“different fields of use and geographical territories”61. As long as trademark is unchanged, it can remain identifying its proprietor; by this, the proprietor can extend goodwill in market through the large number of products or services bearing his trademark. Basing on the nature of “source identification” – individualization of trademark, the more products or services bearing trademark are put on market, the broader its proprietor’s reputation is.
(c)Trademark license helps the proprietor protect his goodwill and reputation. It defends the proprietor from other competitors who “would take advantages of the position and reputation of the trademark by selling goods improperly bearing that trademark”62. When an undertaking affirms its position on the market by goodwill and reputation, there will be many other competitors that want to do business by taking advantages of those reputations. If those competitors cannot use other’s trademark legally under a license, they may have to take those advantages unlawfully by manufacturing counterfeit products and affixing on a trademark that is similar to or the same as trademark of other’s, etc. In those circumstances, it will affect to reputation and goodwill of the proprietor, because counterfeit products often cannot satisfy consumers as the proprietor’s products do. Therefore, if the proprietor can grant license, other parties, who want to take advantages from
60 WIPO, Understanding industrial property, fn. 37 supra, page 12.
61 Xuan?Thao N. Nguyen, Robert W. Gomulkiewicz, Danielle Conway?Jones, Intellectual Property,
Software, and Information licensing: Law and Practice, fn. 22supra, page 325
62 Paul Craig & Gráinne de Búrca, EU law – text, cases, and materials, 3rd Edition, Oxford University Press, 2003, page1093.
goodwill and reputation of his trademark, can ask the proprietor for using trademark lawfully under a license. Moreover, by licensing, the proprietor can also ensure quality of products or services bearing his trademark, so he can protect his goodwill and reputation. Hence, licensing trademark creates more opportunities for undertaking to use other’s trademark legally; it thus can reduce practice of making counterfeit products much63. Thus, the proprietor can protect his trademark better.
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Besides the proprietor, trademark license also plays important roles for the licensee.
(a) Trademark license creates opportunities for the licensee to do business more advantageous. Many trademarks have strong goodwill and reputation and affirm their position in the market. For young undertakings, it is very significant to them if they can use other’s trademark, which consumers have already recognized, to make profits for their business, instead of wasting time on taking a very first step. It is an important manner for young undertakings to take opportunities to penetrate markets relating to their types of products or services.
(b) Trademark license is a good manner for licensees to use trademark of other entity. Trademark confers its proprietor the exclusive right to exploit it and “right to place the goods initially on the market”64. On that ground, the proprietor is protected against other competitors who want to make corrupt use of renowned belonging to marked products and sell products bearing that mark improperly65. It is the same to trademark for services. Hence, there is no opportunity for other parties to use other’s trademark without the licensing and transferring system; while there are third parties desiring to use trademark of other due to its goodwill, reputation and position on market, especially well?known trademark. However, negotiating on transferring a trademark is not easy66, licensing system is thus a better solution.
63 In fact, it often brings lots of profits to undertaking by making counterfeit products, it thus always exist in economy. Hence, licensing trademark cannot put an end to this phenomenon; but it can reduce some.
64 Paul Craig & Gráinne de Búrca, EU law – text, cases, and materials, 3rd Edition, fn. 62supra, page 1094.
65 Ibid.
66 Assigning trademark as some disadvantages as (i) if the proprietor can directly use his trademark effectively, he does not want to “sell” trademark to others as it removes his proprietorship and he cannot use trademark himself after transferring it; (ii) price for assigning a trademark with goodwill and reputation is often very high that young undertakings cannot afford in all circumstances.
Besides, based on exclusive rights of the proprietor, trademark licensing is the only way for local business to use trademark of foreigners67.
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(a) Trademark license helps consumers to have more opportunities to approach their favorite products or services, which have good quality, from reputable producer or provider. It establishes from distinguishability feature of trademark68. Satisfaction and belief of consumers putting on products or services bearing trademark create goodwill and reputation of the proprietor. Conversely, goodwill and reputation of the proprietor under trademark creates belief of consumers as well as orients consumers on making their choice on products or services. As long as consumers trust in a trademark, they often choose products or services bearing that mark. Hence, trademark license by helping increase number of products or services bearing trademark on market, it creates more opportunities to consumers on approaching to their favorite marked products or services. Besides, it also helps consumers to approach well?qualified products or services with a lower price than the importation price.
(b)Trademark license helps protect consumers from counterfeit products. As analyzed above69, trademark license helps reduce practice of making counterfeit products on market. Besides, as long as trademark can help consumers recognize genuine products or services, trademark license can create more opportunities to consumers to approach genuine products or services. It thus protects consumers from counterfeit and disqualified products or services. Reduction of counterfeit products manufacturing by licensing also helps to protect fair competition on market.
(c)Trademark license creates opportunities for national economic development, especially in developing countries, as well as solves social issues. The most important role that trademark license plays to society often manifests in relationship
67 WIPO, WIPO Intellectual Property Handbook: Policy, Law and Use, 2nd Edition, fn. 21 supra, page 94.
68 Trademark is crucial as it encourages the “market transparency” as well as allows its proprietor to “create a direct link with consumers” that help consumers to identify and memorize products or services they prefer (Bardehle Pagenberg Partnerschaft, Trademark protection in Europe, fn. 31 supra, page 5).
69 See section 1.2.1(c) supra.
between the licensor from developed country with the licensee from developing country70. In these circumstances, it is not merely a trademark license but a general greater contract containing agreements on licensing of patents, trademarks, know?
how and/or any other IPR and sometimes, technical assistance. In fact, those agreements are the “key factor”71 for economic development of developing countries where licensees come from. Under this aspect, license is one of the most common ways for helping developing countries to improve level of researching and utilizing industrial property. Those licenses encourage on transfer of technology that help developing countries to come in for advanced technology; besides, it also helps with solving the unemployment issue72 and using local raw material73 or any other national problems relating to technology. Particularly, when having licensed technology, developing countries can save time on doing research on the same technology, which has been already found out by others; and that time can be used for researching on improving and developing more on existed technology. On that ground, economy of developing countries can develop more as well as quality of social life can develop. Meanwhile, in many circumstances, technology transfer license without licensing related trademark could not be performed in practice as it can infringe the proprietor’s exclusive rights on those trademarks. Therefore, trademark license plays an important role in developing national economy and society.
(d) Trademark license helps countries to develop their national reputation in international market. As long as trademark license helps popularizing trademark into different territories, the more well?recognized trademark is licensed, the more reputation that country can obtains. In fact, when a country has lots of licensed
70 As there is no restriction imposed on licensor to consider about nationality of the licensee, in fact, trademark license can be agreed between the licensor from developed country and the licensee from developing country or vice versa. However, due to economic development and high?developed level in industrial property field, in fact, high?valued trademarks often originate from developed countries; the licensor thus often comes from the developed country as well.
71 WIPO, WIPO Intellectual Property Handbook: Policy, Law and Use, 2nd Edition, fn. 21 supra, page 94.
72 When those industrial properties are licensed, the licensee can step up their business activities more advantageously; it thus creates more opportunities for people to be employed.
73 WIPO, WIPO Intellectual Property Handbook: Policy, Law and Use, 2nd Edition, fn. 21 supra, page 94.
well?known trademark, it can affirm its reputation more in the international trade relationship.