AJPark

This is the latest step in a relaxation of, what were once, strict compliance requirements aimed at controlling the connection between the ownership and use of trade marks.  The relaxation recognises the way trade marks are now used in business, and that the previous registration regime was little used and provided little value to trade mark owners, licensees or the general public.  However, the change also means that trade mark owners and licensees need to take care in drafting license agreements.

What this means
The main outcome of the change is that a trade mark licensee no longer needs to be ‘registered’ to be able to bring a trade mark enforcement action. Unless otherwise agreed, the licensee only needs to give the owner a two month opportunity to take the action itself before the licensee can take action in its own name as if it were the owner.

Trade mark owners who are concerned by the prospect of their licensees unilaterally taking action to enforce trade mark rights, will need to make sure their licence agreements include appropriate restrictions on licensees.  These could include a prohibition on taking action, an obligation to consult and coordinate with the owner in relation to the action or simply a longer notice period in which the owner first has the opportunity to take action itself.

Licensees, by contrast, may want to ensure no such restrictions are included in the licence.

Importantly, it is still the case that, to avoid a trade mark being revoked for non-use, the owner or licensee may need to prove ‘use’ of the trade mark by the owner or a licensee. Use by the licensee will only be relevant if the use was “authorised by, and subject to, the control of the owner”.  In other words, it is still essential that an owner maintains meaningful control over use of the trade mark.  This is likely to include restrictions on how the mark is used, the types of goods and services on which it is used, the quality of those goods and services as well as general provisions defining the term and the owner’s ability to terminate the licence. 

What’s still the same
The latest change has not denied licensees the ability to notify third party purchasers of a trade mark of the licensee’s interest.  Even before the latest amendment, recordal of a licensee was not considered to provide such notice to a good faith purchaser. Licensees should, instead, rely on the Personal Property Securities Act to record an interest as licensee in relation to a trade mark.

The formality requirements for recording a trade mark license differ around the world.  In some countries, such as Australia, recordal of a licence is not compulsory but is recommended in most circumstances. In China, the registration requirement is compulsory and the required formality requirements need to be complied with if the licensed rights are to be relied on in China and if the licensor wishes to extract royalties from China.  We recommend that you obtain advice on each jurisdiction in which you intend to licence any trade mark rights.

By comparison, the Patents Act 1952 still requires that a patent licensee must register its interest on the patents register.  However, this requirement is rarely complied with in practice.  The main consequence of non-compliance is that the licensee will need to meet an additional notification obligation before it is able to take action to enforce patent rights. Significantly, the ability to take action as a licensee is limited to exclusive licensees. 

The Designs Act 1953 includes a similar requirement that a design licensee must also register it interest.  The consequence of this is not clear given the Act is silent on whether licensees (registered or not) are able to enforce design rights.

In all cases, owners of intellectual property rights should be mindful that registration of a licence may not prevent licensees taking steps to enforce the owner’s registered intellectual property rights. Owners should ensure their licence agreements set out appropriate terms dealing with the defence and enforcement of those rights.