Proprietors of EU trade marks often focus on the act of registration itself and give little thought to what comes next. Yet a registered mark is a proprietary asset that can be licensed to third parties in exchange for royalties or lump-sum payments, used to expand brand presence in new markets without direct investment in manufacturing or distribution, and deployed as the cornerstone of a franchise network. зареєстрованої ТМ.
The instrument for all of this is the trade mark licence agreement. But for that instrument to protect rather than prejudice, it must be properly structured — and the parties must understand what happens to their respective rights if something goes wrong.
What Is an EU Trade Mark Licence
An EU trade mark licence is an authorisation granted by the proprietor of a mark (the licensor) to another person (the licensee) to use that mark in relation to some or all of the goods or services for which it is registered, throughout the whole or part of the European Union. The legal framework governing EU trade mark licensing is set out in Articles 25 to 27 of Regulation (EU) 2017/1001 on the European Union trade mark (EUTMR).
It is important to understand that a licence does not constitute an assignment of rights. The proprietor of the mark remains the same; what changes is the scope of who may use the mark and on what terms.
Types of Licence: Exclusive, Non-Exclusive, Sole
Before executing any agreement, the parties must agree on the type of licence, since this determines the entire commercial logic of the arrangement.
An exclusive licence is granted to a single licensee and precludes the proprietor from using the mark independently within the scope covered by the agreement. This represents the broadest grant of rights available to a licensee and is accordingly the most valuable — and most expensive — option. The typical scenario is the engagement of a major investor or partner who requires a guarantee of exclusivity.
A non-exclusive licence permits the proprietor to grant equivalent rights to an unlimited number of licensees while retaining the right to use the mark itself. This is the type most commonly found at the heart of franchise models, where a brand is replicated across a network of independent operators.
A sole licence is an intermediate arrangement: it is granted to a single licensee, but the proprietor retains the right to use the mark in parallel. What the proprietor may not do is grant a further licence to any third party.
The choice between these types is a strategic decision that should be made before negotiations begin, guided by the proprietor's commercial objectives and the market position of the brand.
Essential Provisions of a Trade Mark Licence Agreement
Although the substantive law of individual EU Member States may treat oral licence agreements differently, written form is mandatory in practice for the purposes of recordal with EUIPO and for the avoidance of disputes: pursuant to Article 26(3) EUTMR, where the application for recordal is filed by the licensee, evidence of the licence signed by both parties must be submitted. Any EU trade mark licence agreement should contain at least the following elements:
Identification of the mark: the EUTM registration number, the full designation of the mark, and the class or classes of the Nice Classification in respect of which the licence is granted. Where the licence covers only part of the registered classes, this must be stated expressly.
Territorial scope: a licence may extend to all 27 Member States of the EU or be limited to specific countries. Article 25(1) EUTMR expressly provides for partial territorial coverage.
Duration and termination: open-ended licences can give rise to difficulties upon a change of proprietorship or a deterioration of the relationship between the parties. The agreement should specify the term, the procedure for renewal, and the grounds for termination.
Remuneration: (calculated as a percentage of turnover or profit), a lump-sum payment, or a hybrid remuneration model — each option has distinct tax and accounting implications. The amount of the licence fee is not regulated by law and is determined by mutual agreement of the parties.
Quality control: this is one of the most frequently overlooked yet critically important provisions. Where a licensee uses the mark in relation to goods or services of inferior quality, the reputation of the mark suffers directly. The proprietor should retain audit rights and establish minimum quality standards as a condition of the licence.
Sub-licensing: where the licensee is to have the right to grant sub-licences, this must be expressly provided for in the agreement. In the absence of such a provision, any purported sub-licence will be invalid.
Recordal of a Licence with EUIPO: More Than a Formality
The recordal of a licence agreement with EUIPO is a right, not an obligation, of the parties — Article 25(5) EUTMR. The consequences of failing to record, however, can be severe.
Article 27(1) EUTMR provides that legal acts in respect of an EU trade mark, including the grant of a licence, shall have effects vis-à-vis third parties in all Member States only after entry in the Register. Until recordal, the licence binds the parties inter se but does not protect the licensee against claims by new acquirers of rights in the mark.
A practical illustration: if the proprietor transfers the mark to a third party after the licence agreement has been concluded but before the licence has been recorded, the new proprietor will in most cases be entitled to disregard the licensee's rights — unless it can be shown that the new proprietor was aware of the licence at the time of acquisition. Precisely this situation was examined by the General Court of the EU in Case T-679/22 (Brandavid / Shaman Spirits / Global Drinks), in which the Court confirmed that recordal of a licence with EUIPO requires the consent of the currently registered proprietor, not merely of the former one.
Beyond protection against third parties, a recorded licence confers on the licensee the following entitlements: the right to receive notification from EUIPO of the impending expiry of the mark (Article 53(2) EUTMR); the right to be informed of the proprietor's intention to surrender the mark (Article 57(3) EUTMR); and the right to bring infringement proceedings where the proprietor fails to act — subject to the limitations applicable to exclusive and non-exclusive licensees respectively (Article 25(3) EUTMR).
The recordal procedure is conducted through the EUIPO online portal (User Area). Recordal submitted electronically is free of charge; a fee of EUR 200 applies only where the application is filed in paper form. An application for recordal may be filed by either party to the agreement. The detailed procedure is governed by Article 26 EUTMR.
What Happens Upon a Change of Proprietorship
A licence entered in the EUIPO Register runs with the mark upon its transfer: the new proprietor acquires the mark encumbered by the licence agreement and is bound by its terms. An unrecorded licence carries no such automatic protection.
For this reason, a search of the EUIPO Register is an indispensable first step in the preparation of any agreement for the transfer or licensing of an EU trade mark — much as a title search is conducted before the acquisition of real property.
Licence and Franchise: Where the Distinction Lies
A trade mark licence agreement and a franchise agreement (commercial concession) are not the same instrument, even though a trade mark licence is an essential component of any franchise. Franchising involves the transfer of a considerably broader package: trade name, house style, know-how, business processes, and operational standards. Where the objective is to replicate a business model under a single brand, a trade mark licence alone will not satisfy all the legal requirements.
Practical Steps for an EUTM Proprietor Considering Licensing
Before executing the first licence agreement, confirm that the EU trade mark registration is current and in force — check the status via eSearch plus on the EUIPO website. Determine the appropriate type of licence in light of your commercial objectives and negotiating position. Ensure that all material terms are addressed in the agreement, including quality control provisions and the sub-licensing position. Submit the application for recordal with EUIPO promptly after execution — do not wait until a dispute arises. Where the arrangement involves multiple jurisdictions or a complex structure of rights, engage an authorised representative before EUIPO to assist with the process.
Licensing a trade mark is an effective means of monetising intellectual property and scaling a business. But even a well-drafted agreement, if unrecorded with EUIPO, leaves the licensee exposed and the proprietor with only an illusory degree of control. If you are considering entering into an EU trade mark licence agreement, or wish to review an existing one contact the specialists at Patent Bureau Dr. Emil Benatov & Partners — we advise on and handle such transactions from initial consultation through to recordal with EUIPO.
