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Trademark Licenses Among Affiliates Keep the Brand Strong

Businesses that operate under one overall brand, yet use different corporate entities for each of their locations or divisions, should have intercompany trademark licenses where one entity owns the trademark and the other entities license the trademark from the owner. Under trademark law, if different entities use a similar trademark, then an owner will have a harder time stopping any would-be infringer, because the infringer would argue that it can be just another user. Setting up one entity as the owner and having all affiliates sign a written license will help negate this peril. From a corporate angle, to isolate liability within individual corporate entities, it is good evidence of distinct corporate existence if each entity has a separate license to use the trademark, rather than all seemingly operating as the same entity. If you do not have a license between entities and are confronted with a defense by an infringer that you have allowed the brand to become diluted because of its use by unrelated entities, you could try to argue that there is a “unity of control,” due to the corporate relationship of all of the entities, but having a license is safer.

 

Ned T. Himmelrich
410-576-4171 • nhimmelrich@gfrlaw.com

Editor's note: This article was updated November 8, 2021.