TRADEMARKS AND LICENSING
Introduction
Trademarks are images that companies use to identify a product, service, or brand. Companies retain intellectual property in the creation of images that represent the company in commercial venues. A license is a privilege to use the intellectual property of another person or company in a meaningful way. Licenses can be permanent, temporary, or representative of another type of property interest.
In this topic, you will be learning about:
· Trademarks
· Functions
· Acquisition and usage
· General licensing considerations
· Unfair competition and intellectual property licensing
· Licensing provisions
Learning Materials
Trademarks
A trademark is a mark or a sign that will be distinctive, and will identify a good or service that is connected with a company or an individual.Historically, artisans would include a mark or “sign” on their works to denote that they produced the item. Eventually, these “signs” or “marks” evolved into what is now legally known as a trademark. Today, to be a protected mark, a trademark should be registered.The system is helpful in leading consumers to be able to identify authentic products and services, and by the same token, companies can use trademarks to build reputations and foster good will.Trademarks come in a wide variety of types. A trademark can be any of the following: a picture, word, symbol, or letter. It may also be a phrase or a combination of pictures and words.|

A trademark can be multi-dimensional. It may also include a way that makes a product distinctive, such as packaging and/or shape. Around the world, certain non-visible marks and indications (such as smell, sound, and taste) may be protected.
Five Types of TrademarksTrademarks are used by merchants and others to identify themselves and their products. There are five kinds of trademarks (15 U.S. Code § 1127):

A TRUE TRADEMARK
-Any word, name, symbol, or device, or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others.

A TRADE NAME
-The name of the manufacturer.

A SERVICE MARK
-A mark used in the sale or advertising of services to identify the services of one person and distinguish them from the services of another.

COLLECTIVE MARKS
· Marks used by members of an association, collective, or cooperative organization to identify their products or services to their members. A collective mark is used to show that the specific product meets a certain quality standard as set by the association, or it may be an indication that the producer is a member of that association.
· For example, an association might represent doctors, dentists, attorneys, or engineers, and if a collective mark is used, it shows that the group is affiliated with the association.

A CERTIFICATION MARK
· A mark used exclusively by a licensee or franchisee, to indicate that a product meets certain standard. The same mark can be used for more than one of these purposes.
· Certification marks may apply if a product meets a certain standard, even if the producer is not affiliated with a particular group. For example, some certification marks may be “Certified Organic” or “Gluten Free,” or labels on plastics regarding environmental impact.
Acquiring a TrademarkFor owners, the function of a trademark is to give the owner the right to put a product protected by the mark into circulation for the first time. For consumers, a trademark designates the origin or source of a product or service, indicates a particular standard of quality, represents the goodwill of the manufacturer, and protects the consumer from confusion.
Trademarks are acquired in two ways: by use and by registration. In a few countries, registration is not available, and a trademark is acquired by the person who first puts it to use.
In either case, a person claiming a trademark must show that it does not infringe on any other mark and that it is distinctive. Distinctive means that the mark is unique enough that it will distinguish the goods or services with which it is connected from other similar goods.
Like with copyrights, trademarks afford the owner the exclusive right to own and use the trademark for the owner’s commercial benefit. The owner of the trademark can use the trademark to identify services or goods, or the owner of the trademark has the right to request payment for use of the trademark.
However, unlike copyrights, trademark protection does not expire. As long as trademark renewal fees are paid and the registered trademark is renewed, the holder of the trademark will continue to enjoy perpetual exclusive use. Trademarks never enter into “the public domain.”
Trademark ProtectionMost courts will enforce trademark protection and will grant damages to those who infringe on the use of registered trademarks. The registration and use of trademarks as intellectual property serves to reward creativity and initiative in giving the owner of the trademark the ability to be recognized and receive compensation for the trademark use.
Also, the existence of trademarks discourages counterfeit products that may be made with inferior product design or service quality. The bottom line is that trademark protection contributes towards fair trade, because manufacturers are then able to mark and market their products as genuine around the world.
Application for Trademark ProtectionAny application for intellectual property trademark must be filed in the appropriate office that reserves protection of trademark. This office may be on a national or regional level. The trademark must be clearly described, stated, or reproduced, and it must also describe the particular goods or services that would use the trademark.
For the registration to be accepted, the trademark must be distinctive. It cannot be a common sign that is regularly used and connected with a multitude of products. It should not be confused with another mark or sign that has already been granted trademark protection.
Consumers must be able to identify certain products with the trademark, and it must be clearly distinguishable from other trademarks. A trademark must not be misleading or confusing to consumers. It should not be deceptive, or lead consumers to violate public order or morality.
Before trademark protection is granted, the appropriate office will conduct a search of all previously granted trademarks to detect similarity or commonality. If the office finds that there is already a similar trademark in existence, or that the proposed trademark is too common, the application will be rejected. Also, companies and individuals can bring private lawsuits to protect trademarks.
Global TrademarksGlobally, every nation has a mechanism for protecting intellectual property, including trademarks. Each country has a way of registering trademarks and an office, or access to a regional office, for such registration.
Enforcement of trademark property right is up to the individual country. An international system is also administered by the WIPO.
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) requires that members of the World Trade Organization protect trademarks for terms of at least 7 years. Also, it provides for trademarks to be renewable indefinitely.
To renew a trademark, many countries require a trademark holder to present proof that the trademark was in use during the previous term. Additionally, after a trademark is registered, many countries allow third parties to bring actions to cancel a trademark after a specified number of years if it is not being used. The TRIPS Agreement sets this period at no less than three years.
License
A license is a nonexclusive revocable privilege that allows a licensee to use a licensor's property. A franchise is a specialized license that requires a franchisee to work the property under the supervision and control of a franchisor.
Licenses (including franchise licenses) of intellectual property are subject to two conflicting sets of legal rules: On one hand are the statutory rules creating intellectual property monopolies, on the other are unfair competition laws.
In balancing these two rules, most countries hold that the creation of intellectual property rights is a special exception to a country's general laws prohibiting monopolies. In other words, the rights held by patent, trademark, and copyright owners are narrowly construed and limited to the strict confines of the grant.
Licensing Arrangements
Licensing arrangements must, therefore, be limited to the rights contained in the grant. Any attempt to go beyond the scope of the grant is a "misuse" of the grant and is either ineffective or illegal.
Nonstatutory grants do not qualify for the special exceptions granted to patents, trademarks, and copyrights. As such, any licensing of these rights has to comply with the appropriate unfair competition laws.
In developing and nonmarket countries, the unfair competition rules are commonly found in transfer of technology codes. In the developed free market countries, they are found in unfair competition legislation, such as the United States Sherman Antitrust Act or the European Union's European Community Treaty.
These rules declare illegal any agreement or arrangement that adversely affects competition within the national state (or, in the case of the European Union [EU], within the common market) or any conduct that tends to monopolize trade.
In the developed countries, licensing arrangements that only technically violate an unfair competition statute may be exempted from the obligation to comply either by administrative or judicial action.
The EU Commission, for example, may do so either through block grants (that apply to a particular category of agreements) or on a case-by-case basis when the overall effect of a license "contributes to improving the production or distribution of goods, or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit" (European Commission, n.d.).
The U.S. courts arrive at the same end by applying a rule of reason. Thus, the courts will consider what overall impact a particular agreement will have on competition before declaring it invalid—the exception being certain agreements, such as horizontal price fixing, which the courts regard as illegal per se.
As a general rule, licenses granting statutory intellectual rights will be treated in most countries as enforceable exceptions to unfair competition laws. Licenses granting nonstatutory rights must comply with these laws. This is only a general rule because its application varies from country to country, depending on the particular clause involved.
1 Why are trademarks protected? (Choose 2)
Identifies corporate products ****|
Companies want to confuse customers|
Unique logos, graphics ****|
To steal customers|
2 What is an example of unfair competition legislation in the U.S.? SHERMAN ANTITRUST ACT
3 In the United States, courts will consider what overall impact a particular agreement will have on COMPETITION before declaring it invalid.
4 What are the different types of trademarks? (Choose 2)
Color|
Word ****|
Tune in the public domain|
Picture ****|
5 Is horizontal price fixing illegal? YES

Summary
Trademarks are a form of intellectual property that creates property ownership in images, logos, or graphics. As with other forms of intellectual property, protection of trademarks encourages competition and creativity, and helps businesses create branding strategies. Licenses create property rights by agreement, and through these agreements allow companies or individuals to use the intellectual property owned by third parties.
Key Terms
Trademark
a mark or a sign that will be distinctive, and will identify a good or service that is connected with a company or an individual
Distinctive
the mark is unique enough that it will distinguish the goods or services with which it is connected from other similar goods.
License
a nonexclusive revocable privilege that allows a licensee to use a licensor's property
Franchise
a specialized license that requires a franchisee to work the property under the supervision and control of a franchisor.