Taking a licence of a trade mark can have many benefits, for example the ability to acquire exclusive trade mark rights in specified fields or territories without having to bear the costs of prosecution and maintenance of trade marks. Unfortunately, depending on the licensor to keep the trade marks in force can sometimes lead to difficulties. For that reason, many trade mark licences contain provisions which give the licensee clear authority to renew trade marks if the trade mark owner fails to do so.

In a recent European case, Jurado Hermanos SL v OHIM, the Court of First Instance held that an exclusive licensee of a trade mark did not have any right to apply to restore a lapsed trade mark unless the licensee had obtained the trade mark owner's express authorisation to request renewal of the Community Trade Mark's registration.

In this case the owner of the Community Trade Mark "Jurado" granted an exclusive licence of that mark to Jurado Hermanos SL. The term of the licence was until 2046. The trade mark was due to expire on 25 April 2006 and OHIM (the European Trade Marks Registry) sent a letter to both the trade mark owner and Jurado Hermano SL as the exclusive licensee informing each of them of the expiry date and how to renew the mark. As OHIM did not receive any application for renewal of the mark before the 25 April 2006 deadline, it then removed the trade mark from the register.

There is a procedure available which can allow for trade mark rights to be re-established if, despite all due care required by the circumstances having been taken, the owner of a Community Trade Mark or "any other party to the proceedings" before OHIM was unable to observe a time limit. The expression "any other party to the proceedings" could include somebody who was expressly authorised by the owner.

Jurado Hermanos SL (the exclusive licensee) filed an application to OHIM requesting renewal of the registration, stating that Jurado Hermanos had not received the letter from OHIM and that it had found out purely by chance from looking at the OHIM website that the mark had lapsed.

An exclusive licensee is given a number of rights under trade marks legislation but the ability to renew lapsed marks is not one of those rights. The Court held that, even if a person is the exclusive licensee of the trade mark, that person does not automatically have the right to apply for the restitution of a Community Trade Mark which had lapsed because the owner had failed to apply for renewal in sufficient time. Instead, the Court said that the licensee would need to have been expressly authorised to request renewal.

In light of this decision, trade mark licensees should not assume that they will have any implied entitlement to renew a trade mark if the owner fails to renew it on time.

We recommended that licensees review any existing licences and consider requesting the trade mark owner to provide separate written authorisation allowing the licensee to renew the trade mark. Anybody considering obtaining a new trade mark licence should try to ensure that express permission is given which authorises the licensee to apply to renew the trade mark if the licensor fails to do so.