Trade-mark Licensing: It’s a Control Issue

The trade-mark Moto Mirror is registered in Canada for use with truck and automobile mirrors. However, the owner of the mark did not actually manufacture the mirrors. In a series of licensing agreements, the owner of the mark authorized other companies to make and sell the mirrors under the Moto Mirror brand.  This is common enough, and is permitted under Canadian trade-mark law, as long as the owner maintains the required degree of control over the “character or quality of the trade-marked wares”.  So what degree of control is required?

In Tucumcari Aero, Inc. v. Cassels, Brock & Blackwell LLP (March 9, 2010), the Federal Court of Canada reviewed this question.  The Court has reinforced the concept that indirect control will satisfy the requirement, and indicated that: “What is required is that the registrant be able to control product quality through the exercise of its contractual rights vis-à-vis the intermediary which, in turn, is entitled to control product quality under contract with the sub-licensee. So long as there is a continuity of quality control that can be effectively maintained by the registrant under the chain of contracts no special conditions or language are required.”

Lessons for business?

  • When licensing trade-marks, make sure you get legal advice to ensure your license agreements are properly drafted;
  • The court was clear that “no special conditions or language are required” as long as it is clear that the owner controls product quality through the chain of contracts.

Calgary – 08:00 MT


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