Bolstering a Licensee’s Rights in Contract
When a trademark, patent, copyright, or other right is the subject of a nonexclusive license, we often think about what sort of restrictions the property right owner should place on the licensee. However, there may be very good reasons for the licensee to place reciprocal restrictions on the licensor.
These two commercials illustrate one issue that potential licensees should think about with respect to other “competing” nonexclusive licensees. The first, for Sensa. And the second, for Dole.
The two products advertised in these commercials are not identical, but they are closely related. A diet sprinkle mix (?) and a smoothie drink are close enough that there could be some confusion among commercial viewers. While trademark infringement isn’t the issue here, there is probably a devaluing of each commercial provider’s brand and message. Trademark licenses should consider possible future exploitation of the property right by competing licensees, and how that exploitation could affect their use. Would a clause in one of the licensee’s agreements limiting the licensor’s ability to let competitors – or players in a similar industry – use the property be valuable to the licensee? Perhaps the licensor could have extracted a higher premium if it had restricted its ability to grant non-exclusive licenses.