Key Elements of an Intercompany Trademark License Agreement

In corporate structures, it's typical for one company, repeatedly the parent or an intellectual property (IP) holding company, to own trademarks and other IP assets. To allow sister companies to use these trademarks, the owning company (licensor) grants a license to the sister company (licensee), permitting the use of the trademark under specified conditions. This arrangement is formalized through an Intercompany Trademark License Agreement.

1. Grant of License: This section clearly defines the scope of the license, specifying the exact trademark being licensed, the permitted uses (e.g., marketing, sales, distribution), and any territorial or temporal limitations.
2. Quality Control Provisions: To maintain the trademark's integrity and the brand's reputation, the licensor must retain the right to monitor and control the quality of goods or services offered under the trademark. This ensures consistency across all entities using the mark.
3. Duration and Termination: This clause specifies the term of the agreement and outlines the conditions under which either party can terminate the license.
4. Consideration: Details any financial arrangements, such as royalty payments or lump-sum fees, associated with the license.
5. Intellectual Property Rights: Clarifies that the licensor retains ownership of the trademark and any goodwill generated through its use by the licensee.
6. Dispute Resolution: Outlines mechanisms for resolving any disputes that may arise under the agreement.