Trademark License Agreement — Template

By Casey Scott McKay · 2026-01-15

A complete model trademark license agreement, ready to adapt, with every variable set out as a bracketed placeholder and every clause explained. The template runs from the grant and the reservation of rights through goodwill inurement under 15 U.S.C. § 1055, the quality-control machinery that keeps the registration alive, the royalty base and audit rights, indemnity and insurance, enforcement and recovery, and the termination, sell-off, and phase-out provisions that stop a holdover licensee. Clause-by-clause notes explain what each provision does, the authority behind it, and what to change when the facts change — a co-packer making one SKU, an exclusive territory distributor, an intercompany license between a holding company and its operating subsidiaries. Alternative language is supplied for the pro-licensor and pro-licensee versions, for registered versus common-law marks, for sole versus exclusive grants, and for the sublicensing and affiliate-use provisions that licensees always ask for. Execution mechanics cover signature and effective dates, USPTO and foreign recordation, and the compliance calendar that turns a signed contract into a defensible control record. The last section is the list of drafting failures that actually forfeit marks, which is shorter and more mundane than the case law suggests.

IP and Technology > Trademarks | Form | Published 15 January 2026 - Updated 20 January 2026 | Casey Scott McKay - marksy.us

Summary. This is a complete trademark license you can adapt and send: the model instrument with every variable bracketed, plus clause-by-clause notes explaining why each provision reads the way it does and what authority stands behind it. It covers the grant, exclusivity and territory, goodwill inurement under 15 U.S.C. § 1055, the quality-control provisions that keep the registration alive, royalties and audit, indemnity and insurance, enforcement, and the termination and sell-off terms that stop a holdover licensee. Alternative language is supplied for the aggressive and conciliatory versions, for registered versus common-law marks, and for intercompany and affiliate use. The final sections cover execution and recordation mechanics, the compliance calendar, and the drafting failures that actually forfeit marks.

Keywords: trademark license agreement · quality control clause · naked licensing · schedule of licensed marks · royalty base · minimum annual royalty · sublicense · goodwill inurement · related company use · section 1055 · licensee estoppel · sell-off period · holdover licensee · phase-out obligations · accidental franchise · ftc franchise rule · license recordation · exclusive license · indemnification and insurance · bankruptcy rejection

License a trademark to another party with quality-control provisions that protect the mark.

That sentence contains the whole design problem. A trademark license is the only intellectual property agreement that can destroy the asset it monetizes. A sloppy patent license leaves money on the table; a sloppy trademark license can forfeit the registration against the world, because a mark is a promise about source and consistency, and a licensor who stops keeping that promise has engaged in a "course of conduct" causing the mark to "lose its significance as a mark." 15 U.S.C. § 1127.

Template — not legal advice. Replace every [BRACKETED] field. Marksy is not a law firm; have important agreements reviewed by a licensed attorney before signing. A license that reads well and is never enforced is worse than no license at all — it puts your control failure in writing.

What this template is, when to use it, and when not to

This is a long-form, royalty-bearing trademark license for an arm's-length commercial relationship: one company lets another put its brand on goods or services the licensee makes, sells, or performs, in a defined territory, for a defined term, in exchange for money.

Use it when a brand owner is licensing a manufacturer or co-packer to produce branded goods; when a rights holder is licensing a territory distributor who will also advertise under the mark; when a character, design, or heritage brand is being licensed for merchandise; when a parent entity holds the marks and the operating subsidiaries need documented permission; or when a settlement resolves into an ongoing licensed relationship rather than a clean separation.

Do not use it where one of these fits better:

| The situation | The right instrument | Why | |---|---|---| | The owner is leaving the brand entirely | Assignment with goodwill — Trademark Assignment Agreement — Template | A license retains ownership and its control duty; a sale under 15 U.S.C. § 1060(a)(1) ends both | | One narrow, short use — a trade-show banner, a single ad, a photo caption | Permission-to-use letter | A two-page letter is proportionate; a 20-page license signals a relationship neither party wants | | Two owners of similar marks agreeing to stay out of each other's way | Trademark Coexistence Agreement — Template | Neither party's use inures to the other, and neither owes quality control | | The user is describing your product truthfully, not branding its own | No agreement — audit the use instead, via the fair use audit checklist | Nominative use needs no permission, and asking for it manufactures leverage against yourself | | Members or certified producers using a standard-bearing mark | Certification or collective mark program — see the certification and collective mark checklist | Certification marks are governed by 15 U.S.C. §§ 1054 and 1064(5), not by ordinary license doctrine | | You will control the licensee's method of operation and charge a fee to start | Franchise documents (FDD plus franchise agreement) | 16 C.F.R. § 436.1(h); mislabeling a franchise as a license does not make it one |

The last row is the one people get wrong. Lanham Act doctrine says control the licensee or lose the mark. Franchise law says control the licensee's method of operation, charge a fee, and you have sold a franchise. Under the FTC Franchise Rule, three elements must coexist: a trademark license or substantial association with the mark; significant control over or assistance with the licensee's method of operation; and a required payment. 16 C.F.R. § 436.1(h). Payments of less than $500 in the first six months are exempt. 16 C.F.R. § 436.8(a)(1). Several state statutes are broader. Control the goods and services; leave the licensee's staffing, hours, site selection, and marketing plan alone.

If the doctrine here is unfamiliar — what Barcamerica, FreecycleSunnyvale, and Eva's Bridal actually held, and where the circuits diverge — read Naked Licensing: How Sloppy Quality Control Kills a Trademark first. For the workflow that surrounds this paper, see How to Draft a Trademark License Agreement; for heavy negotiation of scope, royalty engineering, and bankruptcy, see Drafting a Trademark License That Survives.

Before you start

Gather these before you open the template. Every one of them is a blank you cannot fill from memory, and three of them routinely change the deal.

| What you need | Where it comes from | Why it matters | |---|---|---| | Exact legal names, entity types, states of formation, addresses | Secretary of state records, not the letterhead | A license signed by "Kestrel Ironworks" when the registrant is "Kestrel Ironworks, LLC" invites a standing fight | | Registration and serial numbers, classes, status, owner of record | USPTO records | If the owner of record is the founder and the licensor is the LLC, fix chain of title before you sign | | The identification of goods and services, verbatim | The registration certificate | The single most common defect: the registration does not cover the licensed goods | | Drawing pages and current logo files | Registration plus the brand team | The mark as registered and the mark as used are often different; both go in the schedules | | The licensee's actual product specification | The licensee | You cannot write quality standards for a product you have not seen | | Territory, channel, and term | The business people | "North America" and "Europe" are not territories; list countries | | Royalty rate, royalty base, minimums, and reporting period | The business people | The base is the negotiation; the rate is arithmetic | | Existing licenses, distribution agreements, and security interests | Client files and UCC search | An exclusive grant that conflicts with an existing one is a breach on day one | | Whether the licensee will sublicense or use affiliates | The licensee | Trademark licenses are personally non-assignable by default; silence favors the licensor but invites a fight | | Insurance limits and additional-insured requirements | Risk management | Certificates are due at signing, not at first shipment | | Foreign counsel contacts for any non-U.S. territory | Your network | Some jurisdictions require recordation for the license to be enforceable against third parties |

The running example. Kestrel Ironworks, LLC, a Providence cast-iron cookware maker, owns KESTREL and a bird design, Reg. No. [6,412,880], Class 21, for "cast iron cookware, namely, skillets and Dutch ovens." Harbourline Housewares, Inc., a Charlotte company, wants to make enameled Dutch ovens and matching kitchen textiles under KESTREL for five years, exclusively in the United States and Canada, at six percent of net sales with a $75,000 annual minimum. Diligence surfaces the usual problem: the registration covers cast iron cookware in Class 21 and says nothing about textiles in Class 24. Kestrel files an intent-to-use application for the textiles, and Harbourline's use will inure to Kestrel under 15 U.S.C. § 1055 once it begins — which is exactly why the license must exist before the first towel ships. On intent-to-use mechanics, see Intent-to-Use Applications; on getting the wording right, Drafting an Identification of Goods and Services.

The model agreement

Two bracket conventions. [ITEMS IN ALL CAPS] are facts to fill in. [Bracketed passages in ordinary sentence case] are optional provisions or alternatives — keep or cut them, guided by the notes that follow. A slash inside a bracket, like [exclusive / sole / non-exclusive], means choose one.

TRADEMARK LICENSE AGREEMENT

This TRADEMARK LICENSE AGREEMENT (this "Agreement"), dated as of [EXECUTION DATE] and effective as of [EFFECTIVE DATE] (the "Effective Date"), is entered into by and between [LICENSOR LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [ADDRESS] ("Licensor"), and [LICENSEE LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [ADDRESS] ("Licensee").

RECITALS

A. Licensor owns the trademarks identified on Schedule A (the "Licensed Marks"), together with the goodwill of the business symbolized by them, and the registrations and applications listed there.

B. Licensee wishes to use the Licensed Marks in connection with the products or services identified on Schedule B (the "Licensed Products"), and Licensor is willing to permit that use on the terms below, including the quality standards set out in Schedule C.

NOW, THEREFORE, in consideration of the mutual covenants below, the parties agree as follows:

1. Definitions. "Territory" means [LIST COUNTRIES; do not write "North America"]. "Channel" means [e.g., wholesale to specialty retailers and Licensee's own e-commerce site; excluding club stores, mass merchants, and third-party marketplaces]. "Net Sales" means gross invoiced amounts for Licensed Products sold by Licensee [and its permitted sublicensees], less only (a) documented returns actually credited, (b) trade discounts actually taken, and (c) sales, use, and value-added taxes separately stated on the invoice. No deduction is permitted for freight, insurance, warehousing, uncollectible accounts, cash discounts, advertising, or overhead. "Contract Year" means [the twelve-month period beginning on the Effective Date and each anniversary thereof].

2. Grant. Subject to this Agreement, Licensor grants Licensee a [exclusive / sole / non-exclusive], non-transferable, non-sublicensable [except as provided in Section 19], royalty-bearing license, during the Term and within the Territory and the Channel, to use the Licensed Marks solely on and in connection with the manufacture, promotion, distribution, and sale of the Licensed Products. No other right or license is granted, whether by implication, estoppel, or otherwise.

3. Reservation of Rights. Licensor reserves all rights not expressly granted, including the right to use and to license the Licensed Marks outside the Territory, outside the Channel, and for all products and services other than the Licensed Products. [For an exclusive grant: During the Term, Licensor shall not use, and shall not license any third party to use, the Licensed Marks on the Licensed Products within the Territory and the Channel.]

4. Ownership and Goodwill. Licensee acknowledges that Licensor owns the Licensed Marks and all goodwill associated with them. All use of the Licensed Marks by Licensee, and all goodwill arising from that use, inures solely to Licensor's benefit under 15 U.S.C. § 1055, and Licensee is a "related company" of Licensor within the meaning of 15 U.S.C. § 1127. Licensee shall not (a) register or apply to register the Licensed Marks or any confusingly similar mark, or any domain name, social handle, or app-store name incorporating them, in any jurisdiction; (b) contest Licensor's ownership or the validity of the Licensed Marks; or (c) take any action inconsistent with Licensor's ownership. Licensee assigns to Licensor all rights it may acquire in the Licensed Marks and in any derivative or composite mark, together with the associated goodwill, and shall execute any documents reasonably required to confirm or record that assignment.

5. Quality Standards. Licensed Products shall conform to the specifications, materials, workmanship, labeling, and packaging standards set out in Schedule C, and shall be at least equal in quality to [the reference samples initialed by the parties and retained by each / Licensor's own [PRODUCT] as offered on the Effective Date]. Licensee shall use the Licensed Marks only in the forms and manner shown in Exhibit 1 (the "Usage Guidelines"), which Licensor may update on [THIRTY (30)] days' written notice, provided that Licensee may exhaust existing compliant inventory and packaging.

6. Approvals. Before first commercial use, Licensee shall submit to Licensor for written approval: (a) a production sample of each Licensed Product; (b) all packaging, labels, hangtags, and inserts; and (c) all advertising, website pages, and social content bearing the Licensed Marks. Licensor shall approve or reject within [FIFTEEN (15)] business days; [failure to respond within that period constitutes approval / failure to respond within that period constitutes rejection]. Once a submission is approved, Licensee may continue to use materially identical materials without resubmission. Licensee shall submit any material change for approval before use.

7. Inspection and Samples. Licensee shall, at Licensor's request and no more than [TWICE] per Contract Year, provide [SIX (6)] production samples of each Licensed Product at no charge. Licensor [or its designee] may inspect any facility where Licensed Products are manufactured, finished, or warehoused, during normal business hours on [FIVE (5)] business days' notice. Licensee shall cause each contract manufacturer to grant the same access in writing. Licensee shall maintain, and provide on request, records of customer complaints, warranty claims, defect rates, recalls, and regulatory correspondence concerning Licensed Products for [THREE (3)] years.

8. Cure of Quality Failures. If Licensor notifies Licensee that a Licensed Product or use does not conform, Licensee shall submit a written corrective plan within [TEN (10)] business days and cure within [THIRTY (30)] days. Pending cure, Licensee shall suspend manufacture, shipment, and advertising of the non-conforming item on Licensor's written direction. Repeated failure of the same specification [three (3) times in any twelve-month period] is a material breach not subject to further cure.

9. Compliance with Law. Licensee shall manufacture, market, and sell the Licensed Products in compliance with all applicable laws, including product-safety, labeling, advertising, privacy, and import and export requirements, and shall hold all licenses and permits required for its operations.

10. Notices and Marking. Licensee shall display [®] adjacent to each registered Licensed Mark and [™] for unregistered marks, and shall include on packaging and on its website substantially the following: "[MARK] is a registered trademark of [LICENSOR], used under license." Licensee shall not use the Licensed Marks as a noun, in the plural, or in the possessive, and shall follow the Usage Guidelines.

11. Royalties and Reporting. Licensee shall pay Licensor a royalty of [SIX PERCENT (6%)] of Net Sales, plus a non-refundable, [non-recoupable / recoupable against royalties in the same Contract Year] signing fee of [$AMOUNT] due on the Effective Date. Minimum annual royalties are [$75,000] for Contract Year 1 and [$100,000] thereafter, payable [quarterly in advance / as a true-up within thirty (30) days after each Contract Year]. Within [THIRTY (30)] days after each [calendar quarter], Licensee shall deliver a statement, certified by an officer, showing units sold by SKU, gross invoiced amounts, each permitted deduction, and the royalty due, and shall pay the amount shown. Late amounts bear interest at [THE LESSER OF 1.5% PER MONTH OR THE MAXIMUM LAWFUL RATE].

12. Records and Audit. Licensee shall keep complete books relating to Licensed Products for [THREE (3)] years after each Contract Year. Licensor may audit those books on [TEN (10)] business days' notice, no more than once per Contract Year, through an independent accountant bound by confidentiality. If an audit shows an underpayment exceeding [FIVE PERCENT (5%)] for the audited period, Licensee shall pay the shortfall, interest, and the reasonable cost of the audit.

13. Representations and Warranties. Licensor represents that it owns the Licensed Marks, that the registrations on Schedule A are subsisting and, to Licensor's knowledge, valid, and that it has authority to grant this license. [Licensor further represents that, to its knowledge, use of the Licensed Marks on the Licensed Products in the Territory does not infringe any third party's rights.] Licensee represents that it has authority to enter this Agreement and that Licensed Products will conform to Schedule C. EXCEPT AS EXPRESSLY STATED, THE LICENSED MARKS ARE PROVIDED "AS IS," AND LICENSOR DISCLAIMS ALL OTHER WARRANTIES, INCLUDING MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.

14. Indemnification and Insurance. Licensee shall defend, indemnify, and hold harmless Licensor and its officers, directors, and employees from any claim arising out of the Licensed Products, including product liability, personal injury, recall, false advertising, and Licensee's breach or non-compliant use. [Licensor shall defend, indemnify, and hold harmless Licensee from any third-party claim that use of the Licensed Marks in the form supplied by Licensor, on the Licensed Products, in the Territory, infringes that party's trademark rights, excluding claims arising from Licensee's modifications, combinations, or non-conforming use.] Licensee shall maintain commercial general liability and product liability insurance of at least [$5,000,000] per occurrence, naming Licensor as an additional insured, and shall deliver a certificate on the Effective Date and on each renewal, with [THIRTY (30)] days' notice of cancellation.

15. Enforcement. Licensee shall promptly notify Licensor of any suspected infringement, counterfeiting, or dilution of the Licensed Marks. Licensor has the sole right, but no obligation, to bring or settle any action, and shall control it. Licensee shall cooperate at Licensor's expense and shall not initiate any proceeding involving the Licensed Marks without Licensor's prior written consent. [For an exclusive licensee: If Licensor has not taken action within sixty (60) days after notice of a material infringement within the Territory and the Channel, Licensee may proceed at its own expense in its own name, and any recovery shall be applied first to Licensee's costs, then to Licensor's costs, with the balance divided [PERCENT/PERCENT].]

16. Term. The initial term begins on the Effective Date and continues for [FIVE (5)] years (the "Initial Term"), and [renews automatically for successive [TWO (2)]-year terms unless either party gives notice of non-renewal at least [ONE HUNDRED EIGHTY (180)] days before the then-current term ends / may be renewed only by written agreement]. [Renewal is conditioned on Licensee having achieved Net Sales of at least [$AMOUNT] in the final Contract Year.]

17. Termination. Licensor may terminate immediately on written notice if Licensee (a) fails to pay any amount when due and does not cure within [TEN (10)] business days of notice; (b) breaches Section 4, 5, 6, 9, 14, or 19; (c) suffers a change of control; (d) ceases commercial sale of Licensed Products for [NINETY (90)] consecutive days; or (e) becomes insolvent, makes an assignment for the benefit of creditors, or has a receiver appointed. Either party may terminate for any other material breach not cured within [THIRTY (30)] days after written notice describing it.

18. Effect of Termination. On expiration or termination: (a) all rights granted revert to Licensor immediately; (b) Licensee shall cease all use of the Licensed Marks except as permitted in the sell-off period; (c) Licensee shall, within [TEN (10)] business days, remove the Licensed Marks from its website, social accounts, signage, packaging artwork, and marketing materials, and transfer or cancel any domain name or handle incorporating them; and (d) all accrued royalties and unpaid minimums become due. [Sell-off: If this Agreement expires or is terminated other than for a breach of Section 4, 5, 6, 9, or 14, Licensee may sell existing finished inventory, in the ordinary course, at prices no lower than [PERCENT] of its average price during the preceding twelve months, for [NINETY (90)] days after termination, subject to all quality, approval, reporting, and royalty obligations. Licensee shall deliver an inventory statement, certified by an officer, within [TEN (10)] business days after termination; only listed units may be sold. Licensor may purchase any remaining inventory at [documented manufacturing cost] within [THIRTY (30)] days after the sell-off period.] Licensee shall destroy or deliver to Licensor all remaining labels, packaging, dies, plates, molds, and artwork bearing the Licensed Marks and certify compliance in writing. Sections 4, 12, 13, 14, 18, 20, 21, 22, and 23 survive.

19. Assignment, Sublicensing, and Affiliates. Licensee shall not assign this Agreement or delegate any obligation, by operation of law or otherwise, without Licensor's prior written consent, and any purported assignment without consent is void. [Licensee may permit its wholly owned affiliates and its contract manufacturers listed on Schedule B to use the Licensed Marks solely to perform Licensee's obligations, provided that Licensee first delivers a written undertaking by each such party to comply with Sections 4 through 10, and Licensee remains fully liable for their acts and omissions.] Licensor may assign this Agreement to a successor to the Licensed Marks.

20. Bankruptcy. The parties intend that this Agreement is a license of intellectual property. If either party becomes a debtor under Title 11 of the United States Code, the non-debtor party retains all rights available under applicable law, including the rights recognized in Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. 370 (2019), and, to the extent this Agreement licenses copyrights or other rights within 11 U.S.C. § 101(35A), the elections available under 11 U.S.C. § 365(n).

21. Notices. All notices must be in writing and delivered by personal delivery, nationally recognized overnight courier, or certified mail, return receipt requested, to the addresses above, with a courtesy copy by email to [EMAIL]. Notice is effective on receipt.

22. Governing Law; Disputes. This Agreement is governed by the laws of [STATE], without regard to conflict-of-laws rules. [The parties consent to the exclusive jurisdiction of the state and federal courts located in [COUNTY, STATE] / Any dispute shall be finally resolved by binding arbitration under the [RULES] in [CITY], provided that either party may seek temporary or preliminary injunctive relief from any court of competent jurisdiction.] Licensee acknowledges that unauthorized use of the Licensed Marks would cause irreparable harm for which monetary damages are inadequate.

23. Miscellaneous. This Agreement, with its Schedules and Exhibit, is the entire agreement and supersedes all prior understandings. It may be amended only in a writing signed by both parties. No waiver is effective unless in writing, and no waiver is a waiver of any later breach. The parties are independent contractors; nothing creates a partnership, joint venture, franchise, agency, or employment relationship. If any provision is unenforceable, the remainder continues in effect. This Agreement may be executed in counterparts and by electronic signature.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

LICENSOR: [LICENSOR LEGAL NAME]

By: ______________________ Name: [NAME] Title: [TITLE] Date: __________

LICENSEE: [LICENSEE LEGAL NAME]

By: ______________________ Name: [NAME] Title: [TITLE] Date: __________

SCHEDULE A — LICENSED MARKS

| Mark (as registered) | Jurisdiction | Reg./App. No. | Reg. Date | Class(es) | Goods/Services (verbatim) | Status | |---|---|---|---|---|---|---| | [KESTREL] | US | [6,412,880] | [DATE] | [21] | [cast iron cookware, namely, skillets and Dutch ovens] | [Registered; §§ 8 & 15 filed] | | [KESTREL & bird design] | US | [APP. NO.] | [—] | [24] | [VERBATIM ID] | [Pending, § 1(b)] |

SCHEDULE B — LICENSED PRODUCTS, TERRITORY, CHANNEL, APPROVED MANUFACTURERS [Licensed Products: enameled cast iron Dutch ovens, 4-qt and 6-qt; cotton kitchen towels and oven mitts. Territory: United States, Canada. Channel: wholesale to specialty housewares retailers and Licensee's own e-commerce site. Approved manufacturers: [NAME, ADDRESS].]

SCHEDULE C — QUALITY STANDARDS [Materials and finish specification; dimensional tolerances; enamel adhesion and thermal-shock test methods and pass rates; textile fiber content and colorfastness standard; labeling and care-instruction requirements; applicable safety standards; defect rate ceiling; recall protocol and contacts.]

EXHIBIT 1 — TRADEMARK USAGE GUIDELINES [Approved logo files and lockups; minimum size and clear space; approved and prohibited color treatments; typography; prohibited modifications; co-branding rules; required attribution line; social media handle and hashtag rules.]

Clause-by-clause drafting notes

Sections 1–3 — definitions, grant, reservation. The grant is a set of four fences: marks, products, territory, channel. Every fence you leave out is a right you gave away. "North America" is not a territory — it is a future argument about Mexico; list countries. Channel restrictions have real teeth against gray-market leakage, which is why they matter well beyond royalty accounting; see Gray Market Goods. Note the three-way distinction the grant line encodes: an exclusive license excludes even the licensor; a sole license excludes other licensees but not the licensor; a non-exclusive license excludes nobody. Drafters conflate the first two constantly. If you mean sole, grant exclusivity and expressly reserve the licensor's own use in Section 3.

Section 4 — ownership and goodwill. This is the clause that makes the licensee a "related company," so that its use inures to the licensor rather than building rights for the licensee. 15 U.S.C. §§ 1055, 1127; TMEP § 1201.03. Without it, the licensee's use is evidence against you. The prohibition on registering confusingly similar marks and on grabbing domains and handles is not boilerplate — recovering a licensee-registered handle after a bad breakup is expensive, and the assignment-back language in the last sentence is what lets you skip that fight. The no-challenge covenant is enforceable in most settings under licensee estoppel, but it is not bulletproof: the Second Circuit recognized a public-interest exception in Idaho Potato Commission v. M&M Produce Farm & Sales, 335 F.3d 130 (2d Cir. 2003). Treat estoppel as a motion you will probably win, not as immunity.

Sections 5–8 — the quality-control machine. These four sections are the reason the document exists. The standard is control, not excellence: courts ask whether the licensor had the right and the practice of ensuring consistency, not whether the goods were good. Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 387 (5th Cir. 1977). A contractual right to inspect that is never exercised will not save you; the Ninth Circuit found abandonment where the licensor had a right of control but did nothing with it, Barcamerica International USA Trust v. Tyfield Importers, Inc., 289 F.3d 589 (9th Cir. 2002), and again where a license lacked express standards, actual control, and any justifiable reliance, FreecycleSunnyvale v. Freecycle Network, 626 F.3d 509 (9th Cir. 2010). Judge Easterbrook put the rule at its bluntest in Eva's Bridal Ltd. v. Halanick Enterprises, Inc., 639 F.3d 788 (7th Cir. 2011): a licensor who exercises no control over the licensee's operations has nothing to license. The narrow escape hatch is justifiable reliance on a licensee's own quality control where the parties have a close working relationship and quality has not declined. Taco Cabana International, Inc. v. Two Pesos, Inc., 932 F.2d 1113 (5th Cir. 1991), aff'd, 505 U.S. 763 (1992). Do not plan around it.

Trap — the deemed-approval default. [Failure to respond constitutes approval] is licensee-friendly and dangerous: silence becomes consent, and a busy licensor manufactures its own naked-licensing record. If you accept it, shorten the window and calendar it. Deemed rejection is the licensor's version and the licensee will fight it; a workable compromise is deemed rejection with an escalation to a named executive within five business days.

Schedule C is where most licenses fail in practice, because it is drafted last, by lawyers, from nothing. Get the licensee's existing specification sheet and edit it. A standard you cannot test is not a standard. The operational side — who inspects, how often, what gets logged, and what the file must contain if you are ever asked to prove control — is set out step by step in the Trademark License Quality Control Checklist.

Sections 9–10 — compliance and marking. Marking is cheap insurance against genericide and against a later argument that consumers never understood the mark as a source indicator. The prohibition on noun, plural, and possessive use comes straight from the style rules in Preventing Genericide. This is not housekeeping: licensees are the largest single source of generic usage in most portfolios, and if a mark ever does drift, the case is decided on primary-significance survey evidence built to the standards in Commissioning and Attacking a Trademark Survey. In regulated categories the compliance clause needs teeth and specificity; cannabis and hemp licensing carries a federal registrability problem that a license cannot solve, discussed in The Lawful Use Requirement.

Sections 11–12 — money. The rate is a number; the base is the negotiation. Every deduction the licensee proposes shrinks the base, and "net sales" without an exhaustive, closed list of deductions is an invitation. Watch for three specific asks: freight and insurance (deny — it is Licensee's cost of doing business), uncollectible accounts (deny, or cap), and "customer allowances" (define narrowly or you will fund the licensee's promotional calendar). The minimum annual royalty is the licensor's protection against a licensee who takes an exclusive to keep a competitor out and then sits on it; pair it with the sales threshold on renewal in Section 16 and the cessation trigger in Section 17(d).

Sections 13–14 — risk. The disclaimer in Section 13 matters because licensees ask for a warranty of non-infringement across a whole territory that no licensor can honestly give. Knowledge-qualified is the usual landing spot. On insurance, the additional-insured endorsement is the operative item — a certificate naming the licensor without the endorsement provides less than it appears to. Require the endorsement, not just the certificate.

Section 15 — enforcement. The default is licensor control, because the licensor owns the asset and will live with the precedent. Exclusive licensees push hard for a step-in right; the sixty-day trigger with a recovery waterfall is the standard compromise. Note the standing question in the background: courts generally allow an exclusive licensee with substantial rights to sue under 15 U.S.C. § 1114, while a bare non-exclusive licensee cannot. If enforcement is likely, read the Brand Enforcement Toolkit before you finalize this section.

Sections 16–18 — term, termination, and the exit that works. The sell-off period is the single most litigated part of a trademark license, because a licensee with unsold inventory and no sell-off right becomes a holdover, and a holdover is an infringer. Continued use after termination is infringement without qualification, and the case for preliminary relief is stronger than in an ordinary case: the Eleventh Circuit called consumer confusion from a terminated franchisee's continued use a matter of common sense, Burger King Corp. v. Mason, 710 F.2d 1480, 1492–93 (11th Cir. 1983), and the Second Circuit said the reasons for an injunction "are more compelling than in the ordinary case," Church of Scientology International v. Elmira Mission of the Church of Scientology, 794 F.2d 38, 44 (2d Cir. 1986). A licensee's claim that it was wrongfully terminated is not a defense to holdover infringement; the remedy is damages, not continued use. S&R Corp. v. Jiffy Lube International, Inc., 968 F.2d 371, 375 (3d Cir. 1992). The Trademark Modernization Act's rebuttable presumption of irreparable harm on a finding of infringement, 15 U.S.C. § 1116(a), makes that posture stronger still; see Preliminary Injunctions in Trademark Cases.

Three drafting details make the sell-off actually work: the certified inventory statement (no list, no sale), the price floor (which stops a dumping campaign that trashes the brand), and the exclusion of sell-off rights where termination was for a quality or compliance failure (you do not want defective goods liquidated under your mark). On the price floor, keep it modest and know the law: resale price maintenance is judged under the rule of reason federally, Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), but several states are harsher under their own statutes.

Section 19 — assignment and sublicensing. The default rule already favors the licensor: a trademark license is presumed personal and non-assignable without the licensor's consent, as Judge Posner explained in In re XMH Corp., 647 F.3d 690, 695 (7th Cir. 2011). Say it anyway, and say it about change of control too, or a competitor buys your licensee and inherits your brand. The affiliate and contract-manufacturer carve-out is the clause licensees genuinely need; the written undertaking is what keeps that carve-out from becoming a naked sublicense.

Section 20 — bankruptcy. Trademarks are excluded from the definition of "intellectual property" in 11 U.S.C. § 101(35A), so § 365(n) does not protect a trademark licensee. Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. 370 (2019), fills much of the gap by holding that a debtor-licensor's rejection is a breach, not a rescission — the licensee keeps whatever rights the contract gave it, but the licensor stops performing. The practical consequence for a licensee: if the licensor's quality control and approvals stop, your continued use may be an uncontrolled use. Licensees with real money at stake should negotiate an escrow of artwork and specifications, or a security interest in the marks. Ipso facto clauses like Section 17(e) are generally unenforceable against a debtor, but they still work for insolvency events outside bankruptcy.

Alternative and optional clauses

Pro-licensor hardening. Make approvals deemed-rejected; add a most-favored-nation clause on the licensee's own competing brands; add an audit right exercisable twice a year on any prior underpayment; require the licensee to sign a short-form license for recordation on demand; and add a liquidated-damages provision for post-termination use [$AMOUNT per day per SKU] alongside injunctive relief.

Pro-licensee softening. Deemed approval after fifteen business days; a cap on total indemnity at [two times royalties paid in the preceding twelve months] with product liability carved out of the cap; a licensor warranty that it will maintain the Schedule A registrations and file all Section 8 and 9 filings on time; a right to terminate if a registration is cancelled or the mark is enjoined in the Territory; and an eighteen-month sell-off if the licensor terminates for convenience.

Common-law marks only. Delete the registration columns from Schedule A and replace them with first-use dates, territory of use, and evidence of market penetration; replace [®] with [™] in Section 10; and add a licensor covenant to prosecute an application within [NINETY (90)] days, because the licensee's use will inure to the licensor and can support the filing under 15 U.S.C. § 1055. The proof problem behind that schedule is worked through in the Common-Law Priority Evidence Checklist.

Intercompany license. A holding company licensing operating subsidiaries needs the same Sections 4 through 8 and can drop Sections 11 through 15 almost entirely — but do not drop quality control on the theory that common ownership supplies it. Courts are more forgiving of related entities, and Taco Cabana helps, but "we own them" is not a defense stated in the statute. Keep a real, dated inspection record.

Trademark plus other rights. If artwork, characters, or software travel with the brand, add a copyright grant and a separate ownership clause — the work-made-for-hire and assignment issues are set out in Who Owns the Work. If a person's name, image, or likeness is involved, layer in a release; see the Name, Image, and Likeness Clearance Checklist.

Execution, recordation, and what to calendar

Sign electronically; counterparts are fine. Use a separate execution date and effective date if the licensee has already been manufacturing — an effective date that predates the first shipment cures a gap in the control record that would otherwise be handed to an adversary.

Recordation is optional in the United States and often worth doing anyway. The USPTO will record documents affecting title and other interests through the Assignment Recordation Branch, 37 C.F.R. § 3.11; TMEP § 503. Record a short-form license — parties, marks, registration numbers, term, and signature — not the full agreement, because recorded documents are public and your royalty rate is not something you want indexed. Recordation does not adjudicate anything; it creates a public record that a later buyer or lender will find. Many foreign jurisdictions are different: in some, an unrecorded license is unenforceable against third parties or does not count as use supporting the registration. Ask local counsel in every Territory country before closing, and see the International Trademark Toolkit.

Then calendar the following, in the docket system and not in someone's inbox:

| Item | When | |---|---| | Insurance certificate and additional-insured endorsement | Effective Date, then each policy renewal | | First-article approval and initialed reference samples | Before first commercial shipment | | Royalty statements and payments | 30 days after each quarter close | | Minimum royalty true-up | 30 days after each Contract Year | | Annual inspection or sample pull, with written report to file | Same month each Contract Year | | Usage Guidelines audit — website, packaging, social | Semiannually | | Section 8 and 9 filings on Schedule A registrations | Per the registration dates; see Section 8 & 9 Renewal Checklist | | Non-renewal notice deadline | 180 days before term end — set two reminders | | Sell-off period end and destruction certificate | 90 days after termination |

The specimen point deserves its own line. When the licensee's goods are the only goods bearing the mark, the licensee's packaging is your specimen of use for maintenance filings. Collect it every year, dated, and store it with the license file — see Docketing Deadlines and the Trademark Portfolio Management Toolkit.

Common mistakes

Licensing goods the registration does not cover. Kestrel's Class 21 registration says nothing about textiles. Check the identification verbatim against Schedule B, every time, and file for the gap.

Signing in the wrong name. The registrant of record and the signing entity must match, or you have a chain-of-title problem before the first royalty check. Run the Trademark Due Diligence Checklist on your own file.

Quality standards drafted by lawyers. A specification that cannot be measured cannot be enforced, and an unenforced specification is a naked license with extra steps.

A perfect license nobody performs. The document is evidence of the right to control. Inspection reports, approval emails, and complaint logs are evidence of actual control, and that is what the record needs.

No sell-off, or unlimited sell-off. The first creates a holdover infringer; the second lets the licensee stockpile and give itself a de facto extension.

Silence on domains and handles. Recovering @kestrelcookware from a former licensee is a UDRP proceeding you should never have needed; see UDRP vs. Federal Lawsuit.

Controlling the licensee's business instead of its goods. Specify the product; leave the licensee's operations alone, or you have sold a franchise without a disclosure document.