Merchandising opportunities can be found in anything from movies to books to celebrity weddings. Licensed merchandise is emblazoned with a logo, character or other image related to the product or event, and often includes apparel and home décor items. The recent Royal Wedding and its unprecedented media coverage have highlighted the vast merchandising opportunities that are generated by a strong brand – for everything from tea towels to t-shirts to golf tees!

Merchandising opportunities can be found in anything from movies to books to celebrity weddings.

Any merchandising arrangement requires a strong license agreement to protect both the owner of the brand (the licensor) and the merchandise manufacturer or distributor (the licensee). Under the Canadian Trade-marks Act, a licensor needs to maintain control over the use of its trade-marks and the character or quality of its licensed wares or services through a license agreement.

A license agreement should address, at a minimum, the following key points:

  • a listing of the licensed merchandise and how it can be sold or distributed;
  • the term and territory of the license;
  • the frequency and amount of the royalty payable by the licensee;
  • the parties’ respective marketing obligations;
  • an agreement by the licensee to maintain the licensor’s standards of character and quality in the licensed merchandise;
  • a right for the licensor to inspect the licensee’s wares and services of the licensee and to receive samples of advertising and promotional materials to ensure compliance with the agreed standards of quality;
  • each party’s termination rights, as well as their rights and obligations after termination;
  • the party’s respective rights and obligations if they discover infringing use of the trade-marks by a third party;
  • how consumer complaints will be handled; and
  • each party’s insurance and indemnification obligations.

A licensor should also require its licensees to include a statement on all licensed merchandise (or its packaging), naming the licensor and acknowledging the licensed use of its trade-marks. Heenan Blaikie would be pleased to provide advice and assistance on all your merchandising and licensing arrangements.