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

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.

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