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Let's Talk Trade Marks - Do You Really Own Your Brand?

By James Wan

Think about your brand for a moment. Let’s call it your “trade mark” because that’s what it is in the legal world. Now, what if I told you that it’s possible to own a trade mark but not control it? Sounds weird, right?

Let’s dive into it, and by the end, I hope you’ll understand why this matters. Specifically, we’ll chat about why sometimes the ‘owner’ might not use the trade mark themselves, what ‘control’ really means, whether you need a fancy license agreement, and most importantly, how this affects you as a trade mark owner.

Who Owns It, Who Uses It?

There are many reasons you might own a trade mark but not use it yourself. Imagine a big corporation with a separate company to hold its intellectual property. This holding company owns the trade marks but doesn’t use them. Instead, it licenses their use to other entities within the corporation.

Also, consider franchises or even an Australian company that licenses a trade mark from a foreign entity. In all these cases, the owner isn’t using the trade mark, which leaves it a bit exposed, like a house left empty while the owner’s on holiday.

Controlling Your Brand

But let’s get to the nitty-gritty, shall we?

According to our friend, the Trade Marks Act, you’re an authorised user of a trade mark if you’re using it “under the control of” the trade mark owner. Essentially, the owner needs to have enough control over how the trade mark is used, like a parent keeping an eye on a teenager’s first car. This control can be about quality or finances.

For instance, quality control could be like allowing the owner to inspect manufacturing sites, checking product samples before selling or having a final look at marketing materials. On the other hand, financial control could be about the owner’s control over the user’s trading activities and finances. This might look like the owner having a significant stake in the user company or sharing substantial resources for mutual benefit.

Is a Licence Agreement Really Necessary?

You might wonder, “Do I need a licence agreement?” The answer is more complex than yes or no.

The Trade Marks Act doesn’t require a license to be in an express or written form. However, it can be tricky to determine if there’s an implied license. Having a written agreement clearly outlining the permissions and limitations is a good idea.

But remember, just having a license agreement isn’t enough. It would be best if you also exercised control. Think of it like owning a gym membership - you will only get fit if you go.

The Licensor-Licensee Relationship

The effectiveness of control in a licence agreement depends greatly on the relationship between the licensor and licensee. Some relationships, like parent and subsidiary companies, may require less formal control due to their common purpose. But remember, if there’s no authority from the trade mark owner, no proper control mechanisms or unity of purpose, then use by the parent company won’t be considered use by the owner.

What Should You Include in a Licence Agreement?

If you’re drafting a licence agreement, consider asking yourself these questions:

  • How close is the relationship between the licensor and licensee?
  • Does the agreement include clear quality control provisions?
  • Should there be royalty payments involved?
  • Are the proposed control mechanisms realistic?
  • Would it be better to sell or assign the trade mark to the entity using it?
  • How will the market perceive the licensee’s use of the trade mark?

Key Takeaways

So what have we learned?

A trade mark is a valuable asset. You need to ensure it’s properly used and managed. This means you must regularly check up on your trade marks to ensure they’re safe from removal.

The key is to ensure a clear connection between the trade mark owner and the authorised user. Written evidence of control is generally the best practice.

If you have license agreements in place, review them to see if the controls are sufficient. If you need more clarification, feel free to seek help.

So, do you really own your brand? You do, as long as you keep your eyes on the wheel.