License of a Trademark in China

2016-08-26
BORSAM IP
BORSAM IP  ————————————————
License of a Trademark in China

     
This article introduces the procedure of licensing a trademark in China. The holder of a trademark has an exclusive right to use that trademark after being approved and registered. The License of a trademark refers to the trademark right holder authorizing another person to use the trademark through legal procedures, commonly through a license contract. Please be noted that to license a trademark just means that the licensee has the right to use the trademark within the terms of the license contract; the licensor is still the trademark right holder.

According to the China Trademark Law, the license of a registered trademark covers the following three categories:

1) License for sole use refers to the trademark right holder licensing the registered trademark to the only licensee for use in a way agreed by both parties within the terms of the license contract. Under this condition, the licensee must not use the registered trademark outside of the stipulated terms, nor license any other party to use the trademark

2) Exclusive License refers to the trademark right holder licensing the trademark exclusively to one licensee for use. Under this condition, the trademark right holder can use the trademark by itself but can’t license any other third party to use the registered trademark 

3) General License. Under this condition, the trademark right holder not only can use the registered trademark for itself, but also can license any other third party to use.

What is the trademark license contract?

The trademark license contract refers to the trademark right holder to contract with another person to authorize that person to use the registered trademark and obtain fees from the licensee. Please be advised that the subject matter of the license contract is for the use of the trademark, not for the ownership.

Validity of the trademark license contract.

Article 40 of the Chinese Trademark Law stipulates that a trademark registrant may authorize another person to use its registered trademark by a trademark license contract. The trademark license contract shall be submitted to the Trademark Office for recording. However according to the provisions of the Interpretation of Application of Laws, during the Hearing of the Trademark Civil Dispute issued by the Supreme Court, the validity of the trademark license contract will not be affected if the contract is not submitted for recording except that the parties involved have a separate agreement. A license contract that has not been recorded at the Trademark Office shall not be used as a defense against a bona fide third party. That is to say, in the absence of special circumstance, once the license contract is signed, the licensee obtains the right to use a registered trademark. Meanwhile, the licensee may file a lawsuit individually or with the licensor when any other party infringes the trademark.

What is the significance of recording the trademark license contract?

Whether or not the license contract is recorded does not affect the validity of the license contract providing there is no separate agreement between any of the involved parties. So what is the significance of recording the license contract? In practice, the creation of the recording system is to better protect the legal right of licensor and licensee, especially to protect the right of the licensee. As we mentioned above, a trademark license contract not recorded at the Trademark Office cannot not be used as a defense against a bona fide third party. That is to say, when the trademark is assigned to a third party by the trademark right holder or the trademark right holder pledges the trademark to a third party or the trademark is seized by a court, the third party or the new trademark right holder is not obliged to recognise the former license contract if the license contract was not submitted for recording at the Trademark Office. Under this condition, the legal rights of the licensee can’t be protected. However, if a record is filed, the recorded license contract can be used as a defense against the claims of the third party.

5. How long will it take for filing a record of trademark license contract?

It will generally take three to six months to complete the process of recording the trademark license contract.

6. What documentation is required for filing a record of trademark license contract?

To file a record of trademark contract, you need to provide us with the following materials:

1) An executed Power of Attorney;

2) A copy of the passport or other identification certificate, for an individual applicant /Copy of Certificate of Incorporation for an incorporated body. Please be advised that both the licensor and licensee need to provide the above identity documents;

3) A copy of the Certificate of Trademark Registration; and

4) The original trademark license contract or the notarized copy of the contract.