How To Slice Through Trademark Challenges: Key Takeaways For Proper Trademark Licensing

Licensing trademarks in Canada can be beneficial to a trademark owner when done properly, including providing a potentially powerful source of revenue. However, without careful drafting and management of the license, things can go wrong and impact the owner's trademark rights, as we previously noted in an IP Update on the Milano Pizza Ltd v 6034799 Canada Inc, 2023 FCA 85 decision ("Milano Pizza").

More specifically, pursuant to subsection 50(1) of the Trademarks Act (the "Actˮ), use of a licensed trademark by a licensee will be deemed use by the trademark owner provided that the trademark owner exercises direct or indirect control over the character or quality of the licensee's goods and services associated with the licensed trademark. Accordingly, proper licensing may significantly enhance the rights in a trademark and enable trademark owners to capitalize on the goodwill that has been built in its trademark by a licensee.