Quality Control

Trademark- The Bare Facts About the "Naked License"

Trademark owners often want to capitalize from the brand recognition and goodwill they’ve worked long and hard to establish for their brands.  Owners typically enter into license agreements with third parties which permits that party to use the owner’s mark on specific goods and services.  Many owners are unaware that, once you negotiate and grant the license, a mark owner must pay attention to quality control to ensure that the third party is delivering the same high quality product or service the public expects from the owner’s brand and mark.  Be advised that lack of quality control monitoring may result in what is known as a “naked license,” which may ultimately jeopardize the owner’s rights in its own mark.  Owner must, unfortunately, also be careful not to exercise “too much” control, which may unintentionally create a “de facto franchise” between the parties.