Trademark Licensing: Why Trademarks are Important to Businesses

A trademark (or service mark) is a word, slogan, design or any combination used to identify and distinguish the goods or services of one party from those of others in the marketplace. For example, the bitten apple on Apple’s Macintosh computers helps consumers distinguish Apple’s computers from those of Dell’s. Likewise, the McDonald’s golden arches help diners distinguish McDonald’s restaurants from those of Burger King’s.

Trademarks and Business Licensing
Why are trademarks important to businesses? Since a trademark is a type of intellectual property, it can be licensed or assigned to others for a fee. A company can make a substantial amount of revenue by licensing their marks, especially if they own popular trademarks. If a shirt company wants to create shirts with the Duke logo, it must first obtain a license from Duke University.

Before licensing their marks, businesses must register their marks with the federal government. They must go through the registration process, which usually takes at least six months to receive a trademark registration certificate. Trademark registration has other benefits as well, including the ability to use the registered symbol (®).

Policing Trademarks

In order to continue licensing their marks, companies must police their marks to prevent their marks from becoming generic. Owners of generic marks lose their ability to enforce their trademark rights, including the right to restrict use.

For example, the terms escalator and aspirin were registered trademarks that lost their trademark registration status. Why? Because the trademarks’ owners did not police their marks, consumers eventually used escalator and aspirin to describe moving staircases and acetylsalicylic acid, respectively.

On the other hand, Xerox has vigorously policed its mark and has prevented it from becoming a generic term. This is in spite of the fact that many consumers use the term “Xerox” instead of “copy.”

If you have questions about trademarks in general, trademark licensing and generic trademarks, contact us here.

Trademark Licensing: Why Trademarks are Important to Businesses

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