When to record trade mark licences

01 April 2010

With a significantly higher level of regulation over trade mark licences introduced by the 2007 trade mark law, we might have expected to see an increase in the number of licence recordals, but that is not apparent from the number of licences published in the official journal.

In 2006, the year before the new trade mark law was introduced, only 10 licences were published. In 2008, once the new law was in place, we saw only seven licences published. In 2009, again only seven licence publications appeared in the official journal.

Although the new trade mark law does not make licence recordal mandatory, it does introduce a number of risks for those who do not record their licences. The provision that would motivate the parties to a licence to record it with the Ministry provides that the licence will not be effective in relation to others unless it is recorded. "Others" here probably means third parties (although there may be some room for alternative translations/interpretations). Non-recordal of a licence may therefore become an issue in any context in which either party might wish to rely on the licence in a dealing or conflict with a third party.

From the point of view of the licensee, the recordal of the licence might provide some security against a transfer of the ownership of the mark. There is a reasonable argument that the assignee will take ownership subject to the licence if the licence has been recorded. Otherwise, without notice or bad faith, the assignee may not be obliged to permit the licensee's use to continue.

For the owner licensor, the rights granted by registration may be put at risk by non-recordal. The controlled use of a mark by a licensee would normally accrue to the benefit of the owner of the mark. However, if that use has been pursuant to an unrecorded licence, a third-party challenger to the mark (perhaps an infringer seeking a counter-claim) may argue that he has no obligation to acknowledge the existence of an unrecorded licence because, according to the law, the licence is not effective in relation to third parties unless it has been recorded.

Recording a licence only when a challenge or other issue arises may not have the desired retrospective effect. In addition, penalty fees apply for recordals later than 90 days from the date of the contract.