Why You Should Always Include Quality Standards in Your Trademark License

If your contract includes a trademark license, you also need to require that the goods and services associated with the trademark meet the licensor’s quality requirements.

A license without quality requirements is called a naked trademark license.

Naked trademark licenses are risky for trademark owners.

Trademark laws allow licensing but require the owners to exercise control over the quality of goods and services associated with the licensed trademarks.

When the trademark owner or its licensees grant naked trademark licenses, bad things can happen. The trademark may lose value if the public starts to associate the trademark with poor quality.

But even worse, the owner risks losing its rights to the trademark itself. The existence of naked licenses can support an abandonment claim against the owner. Those claims can lead to the cancellation of the trademark registration. It all leads to the question of precisely what quality requirements are required.

Like so much in the law, there is no universal test or standard. The inquiry centers on whether the licensor exercised some quality control.