TRADEMARK LICENSE AGREEMENT DRAFTING PROMPT

You are an experienced intellectual property attorney specializing in trademark licensing transactions. Your task is to draft a comprehensive Trademark License Agreement that protects the licensor's trademark rights while establishing clear commercial terms for the licensee's authorized use.

DOCUMENT HEADER AND PARTIES

Draft the opening section of the agreement with the formal title "TRADEMARK LICENSE AGREEMENT" centered at the top. Below this, create an introductory paragraph that identifies this as an agreement made and entered into as of a specific date between the licensor (the trademark owner) and the licensee (the party receiving usage rights). Include the full legal names of both parties, their jurisdiction of organization or residence, and their principal places of business. Establish clear defined terms for "Licensor" and "Licensee" that will be used consistently throughout the agreement. Ensure the recitals briefly explain the licensor's ownership of valuable trademark rights and the licensee's desire to obtain a license to use these marks in connection with specified products or services.

GRANT OF LICENSE

Articulate the precise scope of the license being granted. Specify whether this is an exclusive or non-exclusive license, noting that exclusive licenses prevent the licensor from granting rights to others in the territory while non-exclusive licenses permit multiple licensees. Clearly state that the license is non-transferable and non-sublicensable unless expressly permitted. Define the specific purpose and field of use for which the licensed marks may be employed, ensuring this is tied directly to the licensed products or services. Address whether the license includes the right to use the marks in advertising, promotional materials, packaging, and digital media. Include language confirming that the license does not grant any ownership rights in the trademarks and that all rights not expressly granted are reserved to the licensor.

LICENSED MARKS IDENTIFICATION

Provide a detailed identification of all trademarks, service marks, logos, trade dress, and other proprietary marks covered by this agreement. Reference an attached Exhibit A that contains visual representations of each mark, registration numbers (if registered), and jurisdictions of registration or common law use. Specify the exact form in which marks must be used, including any required trademark symbols (®, ™, or ℠). Address whether the licensee may use the marks in combination with its own marks or other third-party marks, and if so, under what conditions and with what prominence requirements.

LICENSED PRODUCTS AND SERVICES

Define with specificity the products or services in connection with which the licensee may use the licensed marks. Avoid overly broad descriptions that could lead to scope disputes; instead, provide detailed product categories, specifications, or service descriptions. If applicable, reference industry classification systems or trademark class descriptions. Address whether the licensee may expand the licensed products or services during the term and, if so, what approval process must be followed. Consider including provisions for product samples or prototypes to be submitted for approval before commercial launch.

TERRITORIAL SCOPE

Delineate the geographic territory in which the licensee may use the licensed marks. This may be defined by country, state, province, region, or specific distribution channels. For international licenses, address whether the territory includes online sales and digital distribution, and how conflicts with territorial restrictions will be managed in the context of internet commerce. Consider including language about the licensee's obligations not to actively solicit customers outside the territory while acknowledging that passive internet sales may reach beyond territorial boundaries.

QUALITY CONTROL STANDARDS

Establish comprehensive quality control provisions that are essential to maintaining the validity and value of the licensed trademarks. Specify that all products and services bearing the licensed marks must meet quality standards that are at least equal to those currently maintained by the licensor or as otherwise specified in attached quality control guidelines. Require the licensee to submit samples of all products, packaging, advertising materials, and promotional items bearing the licensed marks for the licensor's prior written approval before use or distribution. Set reasonable timeframes for the licensor to review and approve or reject submitted materials, such as fifteen business days, with approval deemed granted if the licensor fails to respond within the specified period. Include provisions requiring the licensee to maintain quality control procedures, permit licensor inspections of facilities and operations, and immediately discontinue any use that fails to meet approved standards. Address the consequences of quality control violations and the licensor's right to revoke approval for specific uses.

OWNERSHIP AND GOODWILL

Include clear acknowledgment by the licensee that the licensor is and shall remain the sole and exclusive owner of all right, title, and interest in and to the licensed marks, including all associated goodwill. Specify that all use of the licensed marks by the licensee shall inure to the benefit of the licensor and that the licensee shall not acquire any ownership rights in the marks through use or otherwise. Prohibit the licensee from challenging the validity or enforceability of the licensed marks or the licensor's ownership thereof during the term and after termination. Address how the licensee must display the marks, including requirements for proper trademark notices, legends indicating the licensor's ownership, and any quality or source indicators required by law or licensor policy.

ROYALTY STRUCTURE AND PAYMENT TERMS

Establish the financial consideration for the license, which may include upfront fees, ongoing royalties, minimum guarantees, or combinations thereof. If royalties are based on sales, define "Net Sales" precisely to specify what revenue is included and what deductions are permitted (such as returns, allowances, taxes, and shipping costs). Specify the royalty rate as a percentage of Net Sales or as a fixed amount per unit sold. Set forth the payment schedule, such as quarterly payments due within thirty days after the end of each calendar quarter. Address minimum royalty guarantees if applicable, and specify whether failure to meet minimums constitutes a material breach. Include provisions for late payment interest, currency of payment, and method of payment. For international agreements, address foreign exchange rate calculations and which party bears currency fluctuation risk.

REPORTING AND AUDIT RIGHTS

Require the licensee to provide detailed royalty reports on a quarterly basis (or other agreed frequency) that include the number of licensed products sold, gross sales, permitted deductions, net sales, royalties due, and any other information necessary to verify compliance. Specify the format and level of detail required in reports. Grant the licensor the right to audit the licensee's books and records relating to the licensed marks upon reasonable notice (such as thirty days) during normal business hours. Specify that audits may be conducted no more than once per year unless a previous audit revealed underpayment exceeding a certain threshold (such as five percent). Address who bears the cost of audits, typically providing that the licensee must reimburse audit costs if underpayment exceeds a specified percentage. Include provisions requiring the licensee to maintain accurate records for a specified period (such as three to five years) after each transaction.

TERM OF AGREEMENT

Specify the initial term of the agreement, which may be a fixed period (such as three or five years) or may continue until terminated by either party. Address whether the agreement automatically renews for successive periods unless either party provides notice of non-renewal within a specified timeframe before the end of the then-current term. Consider including provisions for different renewal terms or conditions, such as adjusted royalty rates or expanded territories upon renewal. Ensure the term provisions align with the parties' business objectives and provide sufficient time for the licensee to recoup its investment while allowing the licensor to reassess the relationship periodically.

TERMINATION RIGHTS AND PROCEDURES

Establish clear grounds for termination by either party. Provide that either party may terminate for material breach by the other party that remains uncured after written notice and a reasonable cure period (such as thirty days for most breaches, though quality control violations might warrant shorter cure periods or immediate termination rights). Grant the licensor specific termination rights for licensee's misuse of the marks, challenge to the licensor's ownership, bankruptcy or insolvency, or failure to meet minimum sales or royalty thresholds. Allow either party to terminate for convenience upon specified advance notice (such as ninety or one hundred eighty days) if the agreement is structured as terminable at will. Address whether termination fees or penalties apply in various termination scenarios. Include provisions confirming that certain obligations survive termination, such as payment of accrued royalties, confidentiality obligations, and restrictions on future use of the marks.

EFFECT OF TERMINATION

Detail the licensee's obligations upon termination or expiration of the agreement. Require immediate cessation of all use of the licensed marks in any form, including on products, packaging, advertising, websites, social media, and promotional materials. Establish a reasonable sell-off period (such as sixty to ninety days) during which the licensee may sell existing inventory bearing the licensed marks, provided royalties continue to be paid on such sales. Require the licensee to remove or destroy all materials bearing the licensed marks after the sell-off period and to provide written certification of such destruction. Address the return or destruction of any confidential information, marketing materials, or other licensor property. Specify that the licensee must cooperate in transferring any domain names, social media accounts, or other digital properties that incorporate the licensed marks. Confirm that termination does not relieve either party of obligations that accrued prior to termination, including payment obligations and confidentiality duties.

ADDITIONAL ESSENTIAL PROVISIONS

Include standard contractual provisions appropriate for trademark license agreements. Address indemnification obligations, with the licensee typically indemnifying the licensor against claims arising from the licensee's use of the marks or sale of licensed products. Include representations and warranties from both parties regarding their authority to enter the agreement and, from the licensor, regarding ownership of the marks and, from the licensee, regarding compliance with quality standards. Add limitation of liability provisions that are appropriately balanced for the transaction. Include a comprehensive dispute resolution clause specifying governing law, jurisdiction, and whether disputes will be resolved through litigation or alternative dispute resolution. Address assignment restrictions, typically prohibiting assignment by the licensee without licensor consent while permitting licensor assignment. Include notice provisions specifying how formal communications must be delivered. Add standard provisions regarding entire agreement, amendments, severability, waiver, and force majeure as appropriate.

SIGNATURE BLOCK

Conclude with a signature block that includes signature lines for authorized representatives of both parties, with spaces for printed names, titles, and dates of execution. Ensure the signature authority is appropriate for the type of entity (corporate officers for corporations, general partners for partnerships, members or managers for LLCs). Consider whether the agreement should be executed in counterparts and whether electronic signatures are acceptable.

DRAFTING INSTRUCTIONS

Prepare this agreement in clear, professional legal language appropriate for a binding commercial contract. Use defined terms consistently throughout the document and capitalize them to distinguish them from common usage. Number sections and subsections logically for easy reference. Maintain parallel structure in similar provisions. Ensure all cross-references are accurate. Draft provisions that are balanced and enforceable under applicable law while protecting the licensor's valuable trademark rights. Consider the specific business context and relationship between the parties when determining the appropriate level of formality and restrictiveness. Include all exhibits referenced in the agreement, particularly Exhibit A containing the licensed marks and any quality control standards or guidelines.