Brand merchandising and licensing is a multibillion- dollar
business.1 Given the money at stake, it goes without
saying that it is important for both trademark owners and licensees
to have written agreements in place to protect their respective
interests. Traditionally, trademark license agreements cover issues
such as the extent of the license grant, the products/ services
covered by the license, term and termination rights, royalty
calculations and payments, product liability, indemnity, and
quality control.
Focusing specifically on quality control provisions, generally,
these provisions enable the trademark owner/licensor to
contractually control the quality of the products and services
provided by the licensee. With quality controls in place, courts
generally recognize a trademark owner/licensor and a licensee as
being sufficiently "related" with respect to the licensed
mark – meaning that the licensed trademark continues to
function as an indicator of a single
