Trademark License Agreements
Article 148 of the Industrial Property Code numbered 6769 ("IPC") regulates that industrial property rights can be subject to various legal transactions, such as transfer, seizure, and collateral. One of the permitted legal transactions is that industrial property rights, including trademark rights, can be subject to license agreement. Article 24 of the IPC clearly states that "The trademark right may be subject to a license for a part or all of the goods or services for which it is registered". Within this scope, the ‘right of use’ of the trademarks, except for guarantee marks, may be transferred to a third party.
The feature that distinguishes the license from the inheritance and transfer of the trademarks is that the essence of the right is transferred to a third party in the event of inheritance and transfer, while the licensee has only the right to use the trademark with the license[1].
Registered or unregistered trademarks may be the subject of the trademark license agreement. However, since the license agreement of an unregistered trademark cannot be registered, it cannot benefit from the protection provided by the registration of the license agreement. In addition, in accordance with the last paragraph of Article 148 of the IPC, it has been clearly decided that trademark applications can also be subject to a trademark license agreement.
Parties of the Trademark License Agreement
The parties to the license agreement are referred to as licensor and licensee. In practice, although the licensor is usually the owner of the trademark, there are also cases in which the licensee holds the title of licensor, if sub-licenses are allowed in the agreement. The obligation of the licensor within the scope of the license agreement is to ensure that the rights of the trademark are used by the licensee, and to take measures to guarantee the quality of the goods produced, or the service provided, by the licensee.
The licensee may be one or more real (personal license) or legal person(s) (business license). The obligation of the licensee within the scope of the trademark license agreement is to pay the fee to the licensor if a fee has been agreed to in the agreement. Pursuant to Article 29-ç of the IPC, the licensee cannot extend the rights granted with the agreement, or transfer these rights to third parties without permission. Otherwise, these actions of the licensee are considered to be an infringement of the trademark right.
Limitation of the License Agreement in terms of Class, Powers and Geography
Trademarks are registered on certain classes of goods and services according to the Nice classification. While the licensor may grant the license on all goods and services for which the trademark is registered, it is possible to limit the license in terms of class, and to grant the license only for certain goods and services. For example, the license may be granted for the classes of the goods, and classes of the services may not be included within the scope of the license agreement.
The point to be considered in partial license agreements is that if the trademark is used on goods and services other than the goods and services as agreed in the agreement, the granted license right will be extended without permission.
In addition, powers such as production, sales and distribution are transferred with a license agreement within the scope of the right of use. Accordingly, another possibility is that the trademark right owner may restrict the powers in the license agreement and grant licenses only for some powers.
The same license rights generally covers all of Turkey. However, if agreed to in the contract, the license may only be granted for certain geographical regions. In this case, the licensee will only have the right to use the trademark in the regions specified in the agreement.
Duration of License Agreement
It is accepted that the duration of the license agreement may be freely determined by the parties in accordance with the freedom of agreement. In the doctrine, it is argued that if the license agreement is concluded for an indefinite period of time, the upper limit of the agreement is the 10-year protection period of the trademark, which is calculated from the application of it[2]. However, there are also views that the duration of the license agreement is not limited to the duration of the trademark right, on the basis that the trademark protection may be renewed[3].
Payment of a Fee
In practice, trademark license agreements appear as contracts that impose obligations on both sides. Namely, with the trademark license agreement, the licensor owes the right to use the trademark to the licensee, while the licensee generally owes a fee in return. However, there are also trademark license agreements in which the licensee does not make a commitment to pay a fee. Such trademark license agreements are also called free licenses.
Form and Registration of License Agreement
Article 148/4 of the IPC regulates written forms of license agreements as validity conditions by saying that "Legal actions shall be subject to written form." In this context, execution of license agreements in the presence of a notary public provides convenience for evidence, but does not constitute an obligation. It is sufficient for license agreements to be in writing to be valid.
In addition, Article 148/5 of the IPC regulates that "Legal actions are registered and published in the Bulletin upon the request of one of the parties, payment of the fees and the fulfilment of the other conditions specified in the regulation." Accordingly, license agreements may be registered. However, registering license agreements is not a founding feature, but is only explanatory[4]. In other words, if the license agreements are not registered, the agreement continues to be valid. However, the rights arising from the legal transactions that are not registered cannot be claimed against the third parties in good faith.
Exclusive and Non-Exclusive (Simple) Licenses
License rights may be granted as exclusive and non-exclusive licenses. The importance of whether a license is exclusive, or not appear in determining the scope of the rights granted to the licensee, and determining whether persons, other than the licensee, may use the trademark.
Namely, an exclusive license is a type of license in which only the licensee may use the trademark, and the licensor cannot grant a license to a third party for the same trademark. Under this type of agreement, even the licensor cannot use the trademark unless he explicitly reserved his right to do so in the agreement.
Under non-exclusive license agreements, the licensor reserves both the right to use the trademark and the right to license third parties. According to the legislation, unless it is clearly agreed upon between the parties, it is accepted that the license granted is not exclusive.
Granting a Sub-license
According to Article 24/3 of the IPC, which states that ‘Unless otherwise agreed in the contract, licensors may not transfer their rights arising from the license to third parties or grant sub-licenses.’ In order to grant a sub-license, the parties must agree to it in the contract.
The limits of the original license agreement in terms of duration, class, powers and geographical region, constitute the upper limits of the sub-license agreement. In other words, exceeding the limits of the original license agreement, for example, granting a sub-license for a longer period of time, or for a different geographical area, will be deemed to be expanding the license agreement without permission. In this case, the licensor has the right to assert his rights arising from the registered trademark against the licensee.
Finally, it is accepted in the doctrine that the sub-license agreement will automatically terminate if the original license agreement becomes invalid or expires due to any reason[5].
Protection of License against Third Parties
Whether the license is exclusive or not is particularly important in terms of the right to sue. Namely, in accordance with the IPC, the exclusive licensee has the right to file lawsuits, which the licensor may file according to the IPC in the case of an infringement of the trademark, on his behalf. On the other hand, while filing a lawsuit is a legally recognized right for the licensee, but is not a duty, not filing a lawsuit does not make the licensee liable to the trademark owner[6].
Pursuant to Article 158/2 of the IPC, a non-exclusive licensee is obliged to request from the licensor to file a lawsuit in the event of an infringement of the trademark right, through a notification. If the licensor does not accept this request, or does not file a lawsuit within three months, the licensee may file a lawsuit on his behalf. However, in the event of a serious danger of damage, the licensee may request an injunction from the court before the three-month period has passed.
On the other hand, exclusive or non-exclusive license holders have no right of objection if there is an application for the same or similar trademark before the Turkish Patent and Trademark Office. This right belongs solely to the licensor[7].
Termination of License Agreement
License agreements, as a rule, will expire when the period of the agreement ends.
In addition, if the trademark right expires due to reasons, such as expiration and non-renewal of the trademark application, or the trademark owner surrenders the trademark right, the license agreement will be terminated together with the trademark right. This is because the trademark right on which the contract is based no longer exists. Therefore, pursuant to Article 28 of the IPC, it is regulated that the licensor cannot surrender his trademark right and cannot withdraw his trademark application without permission of the registered licensee.
In addition, without prejudice to the contractual provisions of the license agreement, it is also possible to terminate the license agreement with a just cause according to the general provisions of the Code of Obligations.
Conclusion
Trademark license agreement, which is frequently encountered in practice, is important because it allows a third party to use the trademark with the permission of the trademark owner. Trademark license agreements can be made exclusively or non-exclusively, and it is possible to restrict the geographical region, the trademark classes to which it will be applied and the , powers recognized. Trademark license agreements for which no fee is requested are also encountered in practice. It must be ensured that the written form requirement regarding the validity of trademark license agreements is met.
[1] Ceylan, Çiğdem: ‘Marka Lisans Sözleşmesi’, Ankara Barosu 26 Nisan Fikri Mülkiyet Günü Özel Sayısı, January 2017, V.19, No. 1, p. 65
[2] Çağlar, Hayrettin: Marka Hukuku Temel Esaslar, Ankara 2013, p.102.
[3] Arkan, Sabih: Marka Hukuku, Ankara 1998, p. 197.
[4] Tekinalp, Ünal: Fikri Mülkiyet Hukuku, İstanbul, 2005, p. 436.
[5] Özel, Çağlar: Marka Lisansı Sözleşmesi, Ankara, 2015, p. 53-54.
[6] Ceylan, p. 83.
[7] Özel, p. 53-54.
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