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LICENSING AGREEMENTS

Trap to Avoid: Using Licensee’s Brand to Define “Licensed Articles” in Your Exclusive

By Glenn S. Demby, Esq.

THE SITUATION

Film studio Nonexistent Cinema licenses the characters from its highly anticipated sci-fi movie XYZ Force to manufacturer Fictitious Toys for an exclusive line of action figures to be sold under Fictitious’s registered trademark, Pseudo Heroes®.

THE AGREEMENT

The licensing agreement grants Fictitious exclusive rights to use the XYZ Force licensed property for “Pseudo Heroes® figurines and action figures.”

THE QUESTION

What did Fictitious do wrong?

THE ANSWER

By accepting a license granted in terms of its own brand, Fictitious cut the legs out from under its exclusivity.

THE EXPLANATION

Fictitious already has the exclusive rights to produce Pseudo Heroes® products because it owns the brand. As a result, the wording of the grant provision leaves Nonexistent Cinema free to license the XYZ Force property to another company for a line of competitive action figures—the subsequent deal wouldn’t violate Fictitious’s “exclusivity” because the competing company wouldn’t be selling “Pseudo Heroes figurines and action figures.”

THE SOLUTION

The simplest solution for Fictitious is to remove the name “Pseudo Heroes®” so that the agreement defines “licensed article” as “figurines and action figures” without reference to the brand.

LICENSING AGREEMENTS is a new TLL feature to help licensing professionals avoid contracting pitfalls. The feature is published with the permission and based on the writings of James M. Kipling, a veteran licensing attorney in the Cincinnati offices of Dinsmore & Shohl LLP, contained in Mr. Kipling’s acclaimed Licensing 101 series which has been published continuously since 2002 in The Licensing Book. Mr. Kipling may be reached at (513) 977-8536, or Jim.Kipling@Dinsmore.com

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