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Review, drafting, and negotiation of trademark license agreements. Trust our team of experienced trademark attorneys to guide and advise you on all matters related to trademark license agreements.

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Drafting Trademark License Agreements to Ensure Legal Compliance

A trademark realizes its economic value not only through its own use but also through licensing to third parties. Whether it involves merchandising, franchising, distribution partnerships, collaborations, or intra-group use of a trademark, the trademark license agreement is the tool you use to authorize and, at the same time, control the use of your trademark. It determines the revenue you generate, the extent of your control over the trademark, and whether you can terminate a licensing relationship if it is no longer viable. We support you in trademark law throughout the entire lifecycle of a licensing relationship, from conception through negotiation and ongoing monitoring to termination and settlement.

Who Is Affected by Trademark Licensing?

Trademark licensing agreements are no longer just a concern for large corporations. They are becoming relevant for companies that want to allow partners to use their trademark in additional product or service areas, for manufacturers with selective or exclusive distribution structures, for franchise systems, for licensors in merchandising and in sports and media marketing, as well as for corporate groups that need to establish a sound foundation for the use of an umbrella trademark by their subsidiaries. There is also a significant need for advice on the licensee side, because anyone investing in building a market under another party’s trademark needs planning certainty regarding the term, exclusivity, and the conditions for termination.

One aspect that is often underestimated concerns the circumstances of the trademark’s use. Under Section 26(2) of the German Trademark Act (MarkenG), the use of a trademark with the owner’s consent is deemed to be use by the owner. A properly structured licensing agreement thus also safeguards the trademark’s validity against an application for revocation on grounds of non-use under Section 49(1) of the German Trademark Act (MarkenG), if the trademark is in fact used only by partners or group companies.

Drafting the Trademark License Agreement

The trademark license agreement is regulated by law only in broad terms. Pursuant to Section 30(1) of the German Trademark Act (MarkenG) and Article 25(1) of the EU Trademark Regulation, trademark rights may be the subject of exclusive or non-exclusive licenses, either for all or only a portion of the protected goods and services, as well as for the entire territory of protection or parts thereof. The law leaves all other details to the terms of the contract. It is precisely here that the validity of a license is determined.

Section 30(2) of the German Trademark Act (MarkenG) deserves special attention. If a licensee violates contractual provisions regarding the term of the license, the permissible form of use, the type of licensed goods or services, the territory, or the quality of the goods and services, the trademark owner may assert not only contractual claims but also the rights arising from the trademark itself. For the EU trademark, Article 25(2) of the EU Trademark Regulation (UMV) applies mutatis mutandis. We therefore formulate the key limitations on use in such a way that they can be classified into these categories, as this significantly expands the scope of enforcement in the event of a dispute.

In particular, we design the following for you:

Subject Matter and Scope of the License:
We precisely define which intellectual property rights are being licensed, for which goods and services, in what form of use, and in which territory. This also includes determining whether variant forms of the mark, word-and-design combinations, domain names, or social media handles should be covered.
Exclusivity and Obligations of Use:
We determine whether an exclusive or a non-exclusive license is granted, whether the licensor reserves the right to use the trademark itself, and whether the licensee is subject to obligations regarding use and distribution that ensure the trademark’s continued existence.
Compensation Models and Billing:
We structure per-unit, revenue-based, or flat-rate licenses; minimum license fees; calculation bases; the handling of returns and discounts; as well as billing periods and payment terms.
Sublicenses and Group Use:
We establish whether and under what conditions sublicenses may be granted, and how use by affiliated companies is safeguarded.
Pursuit of Infringement Claims and Right to Sue:
Pursuant to Section 30(3) of the German Trademark Act (MarkenG), a licensee may bring an infringement action only with the owner’s consent; however, the holder of an exclusive license may bring an action even without consent under the conditions specified therein. Under Section 30(4) of the German Trademark Act (MarkenG), any licensee may join an infringement action brought by the owner to claim compensation for their own damages. We specify in the contract who will pursue infringement claims, who will bear the costs, and how proceeds will be distributed.
Liability, Warranty, and Indemnification:
We appropriately allocate the risks arising from product liability, advertising claims, and third-party claims regarding the licensed icon set among the parties.
Antitrust Limits:
Distribution-related license agreements are subject to the provisions of Article 101 of the TFEU and Section 1 of the German Act Against Restraints of Competition (GWB). We review territorial, customer, and price restrictions against the standards of the Vertical Block Exemption Regulation (EU) 2022/720, which is in effect until May 31, 2034.

Negotiation of Licensing Agreements

Licensing negotiations are rarely purely legal matters. They involve market strategy, investment planning on both sides, and the relationship of trust that must underpin a continuing obligation that often spans many years. We guide you from the initial letter of intent through the term sheet to the signing, work with you to develop a negotiation strategy with clear priorities and fallback positions, and, if you wish, take the lead in conducting the negotiations on your behalf.

In doing so, we ensure that economic commitments and legal mechanisms are aligned. Exclusivity without a minimum revenue requirement, a quality standard without the right to inspect, or a long term without a special right of termination are typical vulnerabilities that only become apparent years later. We also clarify at an early stage the provisions regarding applicable law, venue, and, if applicable, arbitration, which are decisive for the subsequent enforceability of cross-border licenses.

Quality Assurance and Monitoring of Brand Use

Quality assurance is at the heart of every trademark license agreement, because the trademark stands for a specific origin and a specific level of quality. If the owner loses control over the products offered under the trademark, there is a risk of loss of value, damage to the trademark’s reputation, and, in extreme cases, the trademark’s revocation, because its use, pursuant to Section 49(2)(2) of the German Trademark Act (MarkenG), may be likely to mislead the public regarding the nature, quality, or geographic origin of the goods.

In its decision in Copad v. Dior of April 23, 2009, (C-59/08), the European Court of Justice clarified that the quality of luxury goods is not based solely on their material characteristics but also on their prestige, and that any damage to this luxurious image can impair the quality of the goods themselves. A licensing clause that prohibits sales to discount retailers outside the selective distribution network may therefore constitute a quality provision under trademark law, the infringement of which gives rise to trademark claims and may preclude exhaustion.

We design quality assurance systems that are practical to implement and legally effective, in particular through approval and sample review procedures prior to the start of production, binding specifications and corporate design guidelines, guidelines on permissible distribution channels and forms of presentation, approval conditions for advertising materials and online presence, as well as graduated sanctions ranging from cease and desist letters to contractual penalties to extraordinary termination.

Ongoing Monitoring of the Licensing Relationship and License Audit

A license agreement is not a document to be filed away. In practice, financial losses usually do not arise at the time the agreement is signed, but rather during its implementation—for example, due to incompletely reported sales, incorrect calculation bases, unauthorized product lines, use beyond the licensed territory, or covert sublicensing. We’ll work with you to set up a monitoring system and ensure it’s enforced.

Reporting and Accounting Requirements:
We define the content, format, frequency, and supporting documentation for license statements in sufficient detail to ensure they are verifiable.
Contractual Inspection and Audit Rights:
We agree on rights to inspect and review books and records, establish notice periods, determine the frequency of audits, stipulate the engagement of an independent auditor bound by a duty of confidentiality, and set forth procedures for handling confidential information and personal data.
Cost Allocation and Additional Payments:
We link cost allocation to the audit results—for example, through a threshold rule under which the licensee bears the audit costs—and secure claims for additional payments, including interest.
Conducting and Supporting the License Audit:
We prepare for the audit, assert claims for information and financial reporting, evaluate the results from a legal perspective, and negotiate additional claims. On behalf of the licensee, we verify whether an announced audit is covered by the contract and limit it to the permissible extent.
Monitoring of trademark use in the marketplace:
We document unauthorized use, secure evidence, and take the necessary steps. In addition, we offer trademark monitoring in the trademark registries.

If the licensee commits an infringement of the provisions of Section 30(2) of the German Trademark Act (MarkenG), you may assert claims under trademark law in addition to your contractual claims. In this case, we will vigorously enforce your rights, just as we would with any other trademark infringement.

Termination, Termination Mechanisms, and Settlement

Terminating a licensing agreement is typically the most contentious part of the process. A trademark license agreement is a continuing contractual relationship that can be terminated for good cause. However, without clear contractual provisions, it remains unclear which breach of duty meets this threshold, whether a cease and desist letter must be issued first, and what applies after termination.

We handle the term, renewal mechanisms, and standard notice periods, as well as a list of grounds for extraordinary termination—such as quality violations, late payments, failure to meet minimum sales targets, unauthorized sublicensing, or a change in control at the licensee. Equally important is the settlement process: We agree on deadlines for selling off remaining inventory, the return or destruction of promotional materials and production assets, the transfer or deletion of domains and social media profiles, post-contractual injunctive relief obligations, and, if necessary, the removal of the license entry from the registry.

It should also be noted that, according to the case law of the Federal Court of Justice, the licensee may be entitled to a claim for compensation pursuant to § 89b of the German Commercial Code (HGB) upon termination of the license agreement. The Federal Court of Justice held in its decision in the JOOP! case of April 29, 2010 (I ZR 3/09) for trademark license agreements, but made it contingent on the licensee’s integration into the licensor’s sales organization and on the obligation to transfer the customer base. If the licensor is not itself active in the field of the goods being distributed, these conditions are generally not met. We will assess this risk for your specific situation and draft the agreement accordingly.

Protection in Legal Transactions and Insolvency Proceedings

Anyone who acquires or grants a license should also consider the possibility that ownership of the trademark might change or that one of the parties might become insolvent.

Pursuant to Section 30(5) of the German Trademark Act (MarkenG), a transfer of rights or the granting of an additional license does not affect licenses previously granted to third parties. Pursuant to Section 30(6) of the German Trademark Act (MarkenG), the grant of a license may be entered in the register of the German Patent and Trademark Office upon application by the trademark owner or the licensee, provided that the consent of the other party is demonstrated. In the case of the European Union trademark, registration also has independent significance, because under Article 27(1) of the EU Trademark Regulation (UMV), licenses generally do not take effect against third parties until they are registered, unless the third party was already aware of them. We will assess whether registration is advisable in your case and handle the application process.

Caution is advised in the event of insolvency. As reciprocal contracts that have not yet been fully performed, license agreements are generally subject to the insolvency administrator’s discretion under § 103 InsO, meaning that performance may be refused. There is no statutory provision that makes licenses insolvency-proof in a manner comparable to rent and lease agreements. We will outline the structuring options available to mitigate this risk and evaluate them in light of your specific situation.

Our expertise – your advantage

Our law firm has many years of experience in all areas of trademark law and in drafting, negotiating, and enforcing licensing agreements. We combine in-depth legal expertise with practical strategies, while always keeping your company’s business objectives in mind. You’ll benefit from:

Results-Oriented Approach:
Our goal is to safeguard your trademark as an asset, protect your licensing revenues, and achieve the best possible legal and financial outcome for you.
Legal Expertise:
Regular continuing education and active engagement within our professional network ensure that we are always up to date on the latest developments in trademark law and licensing law.
Experience in courts nationwide:
We have successfully represented our clients for many years in courts throughout Germany, including in disputes arising from licensing and distribution agreements.
Personalized Support:
We develop customized solutions tailored to your specific business needs as well as the unique characteristics of your industry and your sales model.
International Network:
We have a strong international network and are actively involved in international professional organizations, enabling us to assist you with cross-border licensing arrangements and multinational trademark portfolios.
Modern Software:
We use modern software from leading providers to reliably manage and monitor brand portfolios, deadlines, and licensing arrangements.