What You Don’t Know About “Naked Licensing” Can Hurt You!

Ok, ok this is a legal blog, so I am actually talking about naked trademark licensing issues here — a few nuggets for every software or SAAS executive to think about for their software or SAAS partner agreement, SAAS OEM agreement, etc.

"Naked Licensing" is in essence a legal defense to a trademark infringement claim, and you absolutely should be aware of it as the consequences of not knowing can be really grave (aka a big deal).

Ok did you get that part about 'abandonment of the trademark.'

Now that I got your attention, here are 3 things to remember to help avoid this.

1) Don't Let Anyone Use Your Trademarks Without a License Agreement. Hopefully I said that clearly enough, but that is the best way to avoid this bad outcome. The trademark license agreement should (at a minimum) expressly state that any use of your trademarks are subject to your trademark guidelines (i.e. supervise their use of your mark), and make sure you take steps to ensure that your trademarks are used in an appropriate manner with the associated goods or services. You can embed this language in any software or SAAS partner agreement.

2) Remember What is At Risk Here! Think about it, you develop your trademark (maybe your company name or logo) and people associate your business with that name or logo. However, if you don't take certain protective measures when allowing third-parties to use your trademarks you could abandon the mark ( = you lose it).

3) Don't Scare Me With This. Does it Really Happen? Absolutely. Here is a case from November 2010. Long story short, the owner of the trademark rights to "Freecycle" (see above) let other affiliated groups (are you seeing a connection to your business?) use their trademark without a written trademark license agreement, without exerting control over the mark and associated services, and simply said in an email " . . . just don't use it for commercial purposes." That was it. The court found that there was no written contractual control over the mark and no actual control, so the result was that the Freecycle mark has been abandoned (because of naked licensing). What that means is they could not stop a Freecycle affiliate from using the mark in any way they wanted. It does not get any more real, relevant and recent than this folks!

So every software or SAAS company out there should sit up and take notice of this issue, as I know you have trademarks (you need to review your processes for allowing partners, resellers, etc. to use your trademarks). You can easily avoid this outcome, if you understand naked licensing and take measures to avoid it (even if it is not as sexy as it sounds)!

Here is a copy of the court opinion (if you want to read the nitty gritty details).

Resources: Example of Really Good Trademark Guidelines.

Microsoft Trademark Guidelines.

Symantec Trademark Guidelines.

Legal Disclaimer: This does not constitute legal advice, as it is for educational and informational purposes only.

Google Recently Changed Its Trademark Use Policy for Software Reseller Sites. Did You See It?

Whether you resell your technology using a software reseller or SAAS reseller agreement, take a read. Until recently, if you were a reseller or an informational website you could not use the trademarks of the manufacturers you represent in the ad text of your Google ads. This kind of made sense, as it is not your trademarks. However, Google did a little more thinking about the issue, and revised their Trademark Policy  (probably as a result of the fair use doctrine).

There are still a few rules though (summary below), before anyone can take advantage of this new policy:

1. you have to be either a:

• reseller,
• informational site,
• maker or reseller of components parts, or
• seller of compatible components or parts related to the trademark.

2. the product or service from resellers must be on the:

• ad's landing page, and
• clearly available for purchase

So if you are an ISV don't be surprised if your resellers show up in Google ads with your trademarks; and if you are a reseller or informational site you may be able to use the trademarks of the manufacturers you represent in your Google ads. Remember to talk to your trademark lawyer with any questions though.