Most trade mark licenses include provisions for control over the use of trade marks by a licensee. However, it is often questionable how frequently these control mechanisms are exercised.
At the present time, the mere theoretical possibility of control over use of a trade mark in a licence agreement is considered sufficient for the use by a licensee to be ‘authorised’ by the trade mark owner/licensor. This is important because in circumstances where only the licensee is using a mark, should the trade mark owner or its licensee ever want to rely on the registered rights against third parties, the registration would always be vulnerable to: 1.) removal for non-use; or 2.) a claim that the registered owner is not the true owner of the trade mark.
However, late last year the Full Federal Court heard an appeal of this case. The hearing is currently adjourned with judgment reserved. The final decision is expected to be released shortly.
The expectation is that the current position will be overturned. If this occurs, it will become imperative that licensing regimes not only include strong contractual provisions which emphasise the control being exercised by the licensor/ trade mark owner, but also, that these control mechanisms are being exercised in practice.
Licensors and licensees alike should watch this space.
If you would like more information about ensuring a strong trade mark licensing regime which will not impact the validity of your registered rights, or trade mark protection more generally, please contact our Trade Marks Team.