Have you ever felt worried about trademark plagiarism by irresponsible people? Yes, this is only natural. But did you know that the government has actually anticipated this by licensing the trademark? This has been stated in Article 1 number 5 of Law No. 20 of 2016 concerning Trademarks and Geographical Indications (MIG Law), where the trademark owner has the right to use the trademark itself or give permission to other parties to use it. Usually, the granting of permission (license) is intended so that the empowerment of a brand can provide optimal benefits for the brand owner. So, what are the methods or provisions regarding the trademark license? What are the benefits? Check out the full explanation in the following article.
What is a Brand License?
In general, a license is the granting of permission to produce a certain product or service, where the product or service has previously been patented by the one who created it the first time. A license is also often interpreted as a form of granting permission to utilize intellectual property rights, which intends that the licensee can conduct business activities or produce certain products using the intellectual property rights licensed. Therefore, a trademark license is a legal agreement that gives permission to another party (licensor) to use the trademark owned by the trademark owner (licensor) under certain conditions. In the context of brand licensing, the brand owner is the party that owns the exclusive rights to a particular trademark, which can be a name, logo, slogan, or symbol used to identify their products or services. A brand license allows the brand owner to grant permission to another party (usually another company or individual) to use that trademark in relation to a particular product or service.
Types of Brand Licenses
Although the MIG Law does not further regulate the types of licenses that can be used in an effort to optimize profits, the DJKI in its module entitled “Advanced Intellectual Property Module for Trademarks and Geographical Indications” explains that there are five types of licenses on brands that are commonly used by business actors:
Franchise
Franchise is the form that is most easily found and familiar in everyday life. It is further regulated in the Regulation of the Minister of Trade No. 71 of 2019 concerning Franchising. Through the franchise scheme, franchisees can not only use the brand in their business but also related business systems that have proven successful. Example: McDonald and Alfamart.
Merchandising
Merchandising is a license to use designs, copyrighted works such as fictional characters and images of a person that will be included in goods or services alongside the brand used. Through this license, a brand’s production can add appeal and uniqueness in society. Example: Campina Spongebob Edition ice cream and Vans Marvel Edition shoes.
Brand Extension
Brand extension is a form of license between two or more companies aimed at obtaining permission to use the brand of one of these companies. Brand extension licenses are intended to expand the range of types of brand products, without having to produce them. Example: Reebok with Giorgino Armani (Reebok Emporio Armani Shoes) and Oreo with Supreme (Oreo Supreme).
Component Branding
Component branding is a license that results in a product that has other products in it. The use of the brand can be displayed in packaging, advertising, or on the main product itself to influence consumer perceptions of the product. It is expected that through the reputation of the brand that is used as a component (contained in it), it can provide more value and attractiveness to the main brand. Example: Asus with Intel and BMW with Louis Vuitton.
Co-Branding
Co-branding is a license where two or more reputable brands, although not necessarily of the same level, can join together on a single product, creating a new appeal for the same customers to enter a new market. Example: Apple and Nike (iWatch) and Walls and Oreo (cookies and cream ice cream).
What are the Advantages of Brand Licenses?
As a brand owner who is always careful to protect his brand, then what exactly are the advantages of brand licensing? Here are some of them:
Expanding Market Reach
As in the case of franchising, for example, the more parties you work with, the more people will recognize your brand. For example Indomaret, which you can find even just a few meters difference between each outlet. Because it is increasingly close to the reach of the community, Indomaret is now one of the main destinations for someone who wants to buy daily necessities.
Being a Means of Innovation
As is the case with co-branding schemes, you can even involve competitors in this collaboration to create a brand or simply a new nickname for your new product innovation.
Complementary to Product Shortages
If you refer to the component branding scheme, you can work with other manufacturers to further enhance your product. For example, what Asus and Intel did. So in fact, giving partial use of the brand is not a bad thing. Especially now that the government is getting stronger to protect the brand license agreement between the owner and the licensee later.
Remember, there needs to be a Brand License Agreement!
As mentioned earlier, brand licenses can only be run based on a brand license agreement. This is as legality between the two parties and a medium to involve the government or the Directorate General of IP in overseeing the use of your brand. So, what needs to be written in the trademark license agreement? Actually, there are no fixed provisions related to this. But to make the agreement safer and more complete, here are the points that should at least be in the brand license agreement:
Date of Agreement Signing
At the beginning of the agreement, always try to write the date when the agreement was made. This is important to determine the validity of the agreement with the brand protection period. The date on the license agreement will also determine whether the agreement is valid or not, because you cannot grant a license if your brand has expired.
Names and Addresses of Parties
Actually, you can use one draft agreement for several different parties. However, try to always double-check the names and addresses of your potential brand licensees.
License Terms
To what extent will you grant the right to use the brand? Depending on your needs and potential problems, you can limit the use of the brand. Whether or not you will grant a specific license is up to you.
Time Period
How long will you grant the right to use your brand? The term needs to match the term limit of your brand protection as well. Remember, you cannot grant a license for a brand that has already expired.
Region
Limiting the use of the trademark rights to a certain area is also important, so that you can license to others with different areas. Once made, the brand license agreement must also be registered with the Directorate General of IP of the Ministry of Law and Human Rights. This is to help them provide protection to your brand.
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If previously the Directorate General of IP only involved you, now there are other parties as licensees who need to be considered as well and of course the potential for disputes becomes even higher. This is where the role of the Directorate General of IP as a supervisor is increasingly necessary.
KH Contact
That’s the explanation about brand licenses, from understanding, types, to benefits. Well, for KH pals who currently have a business and plan to give the use of your trademark rights to other parties, don’t miss to make a trademark license agreement! This is important because it can prevent unauthorized use or damage to the trademark by other parties. In addition, the brand owner can also usually receive royalties from the licensee in exchange for permission to use the brand. After that, KH Buddy can record the trademark license agreement to the Directorate General of IP with a Legal Contract. We can help you to record the trademark license agreement with a competent and officially registered IPR consultant, so it is guaranteed to be legal and safe. For service information, visit the KH Services page – Trademark License Agreement Recording. Or if you have other Intellectual Property needs, you can consult for free at Ask KH or send a direct message (DM) to Instagram @Kontrakhukum.
