Category Archives: Trademark and copyright

Naked Licenses Can Strip Your Trademark Bare

Tim the Troll had a brilliant idea. He was doing well by charging tolls to cross a bridge he sat under. Travelers expected they would have to pay a premium when Tim put up his “Troll Bridge” sign. Tim successfully registered the trademark “Troll Bridge.” He then licensed “Troll Bridge” to anyone who wanted to pay the license fee. Tim did not care what the licensees did with the name, so long as Tim got his payments on time. The gold flowed into Tim’s pockets.

The good times soon ended, unfortunately. Billy Goats Gruff, Ltd., started offering travelers its “Troll Bridge Protection” service. Tim sued Billy Goats Gruff for trademark infringement. Billy Goats Gruff’s defenses included an argument that Tim the Troll lost his exclusive rights to “Troll Bridge” because he issued naked licenses. The court agreed and Tim lost his exclusive rights to “Troll Bridge.” The loss ended Tim’s lucrative licensing deals.

A naked license is easy to create. All it takes is a trademark owner allowing someone to use the mark with little to no control over how that person uses the mark. A trademark owner can avoid a naked license by: (1) having a written license agreement; (2) include quality and use controls in the agreement; and (3) enforcing those controls.

The owner also should avoid naked licenses when allowing a related company to use the mark. For example, a company that allows a subsidiary to use the trademark should have a written licensing agreement with quality and use controls that are enforced.

A trademark owner owes the duty to protect the trademark. A court will not protect a trademark when the owner gives out naked licenses or otherwise fails to protect the mark. Tim the Troll may have kept his exclusive rights to “Troll Bridge” had he heeded that warning.

Got a trademark? Do not strip its protections by giving naked licenses.

This post provides general information only. This post is not intended to create an attorney-client relationship or to be legal advice about your situation. Laws change and your situation may be different. You should consult with a licensed attorney for legal advice specific to your circumstances.

© 2015 Macy Law Firm, PC

Rated ® Blog

            Branding is big. It is so big that if you listen to some pundits, every business owner should eat heaping bowls of Brand Flakes every morning. Your mark, be it a trademark, service mark, or trade name, is a part of the branding process. Your mark can be the logo, name, or phrase that you want your customers or clients to associate with your goods or services. Even law firms, like the MACY-LOGO-color.png, use logos.

Be Unique – Just Like Everyone Else

            Creating the name or design is just the start. Before running with your creation, look around for anyone using the same thing or something similar. The search can include using Google and other search engines, running searches on online phone directories, a search with the state agency that registers entity names or state-level trade names or trademarks (often available online), and search trademark filings with the United States Patent & Trademark Office ( You can hire someone to do the search or you can do it yourself; be thorough either way. Getting sued or having your stuff seized for allegedly infringing on Company X’s mark would not be fun.

            Did you find someone else using the same or similar mark?  It may make sense to create something new.  What if you want to use your first design anyway?  That could be risky because lawsuits for infringing on an unregistered or registered mark can be costly – more so if you lose.  Your evaluation of the risk may include whether the other person’s mark no longer qualifies for legal protection.  That could happen if the other person abandoned his mark, the other person’s mark now is generic (“kerosene” is an example), or the other person has otherwise failed to protect his mark.  Those are hazards you should avoid with your own mark.

No Squatters Allowed

            Using a mark is necessary to build its strength.  You want customers and clients to have a positive association between your mark and your goods or services.  For example:

  • “I need to speak with a lawyer.” – MACY-LOGO-color.png !
  • “The lawyer needs to be high quality.” – MACY-LOGO-color.png !
  • “I want the lawyer to wash my windows.” – [crickets chirping]

         Use is necessary if you want to get a federal registration of the mark.  You can file to register the mark if you are not using it at the time, but you will have a six-month period to start using the mark.  You can get extensions, up to a total of three years, if necessary.  Eventually, though, you will have to use the mark in commerce to get the registration.  You also will have to use the mark to keep the registration.

          Whether and how the mark is used, and how customers perceive the mark, often are contested in lawsuits over unregistered and registered marks.  The law likely will offer little to no protection to an unused mark.

Why Register if the Law Can Protect Unregistered Marks

            The law may protect an unregistered mark to an extent.  Why should you register a mark?  There are benefits to registering a mark.  A state trademark registration may give you certain benefits within that state.  A federal registration offers benefits that can extend nationwide, and a non-exhaustive list of benefits include:

  • Putting the public on notice that you own the mark.
  • A presumption in your favor that you own the mark and have an exclusive right to use that mark with certain goods or services.
  • Access to filing a claim in federal court.

Protect the One You Love

            Registered or unregistered, protecting your mark is a necessity.  Protecting your mark involves monitoring the quality of the goods or services bearing the mark, not abandoning the mark, avoiding having the mark become generic, and watching for others who may infringe on your mark.

          The need to protect remains if you license the mark because an owner who licenses his mark still has to monitor how the licensee uses the mark.  A naked license is a good way to put a mark at risk.  A naked license has inadequate or no quality control provisions.  Get your mind out of the gutter.

           Choosing not to protect your mark puts at risk the time and money you spent on the mark. In other words, this could happen to your mark if you do not protect it: Trashing (r)

Wrap It Up – I Have To Get Back to Building My Brand

          A strong mark is an asset – just ask Coca-Cola. A strong mark can increase the value of your business. None of that will happen unless you are willing to devote the resources necessary to build and protect the mark.

This post provides general information only and is not intended to create an attorney-client relationship or to be legal advice about a specific situation. Laws change and your situation may be different. You should consult with a licensed attorney for legal advice specific to your circumstances.