The Essence of a License Agreement
Trademark licensing means that the holder of the mark (the licensor) grants another person (the licensee) the right to use the trademark under a license agreement. This instrument is the legal foundation of brand expansion, franchising and partner manufacturing. The rules are set by the Georgian Law on Trademarks: Article 26 defines the content of the license agreement, the types of license and the parties' rights, while Article 24 defines what counts as use of a trademark — decisive for assessing the reality of the license.
Exclusive and Simple Licenses
Under the law a license is exclusive or simple. If the character of the license is not evident from the agreement, a simple license is presumed — in that case the licensor may itself use the trademark and conclude other license agreements. An exclusive license, conversely, does not give the licensor the right to conclude other license agreements or to use the mark itself, unless otherwise provided by the agreement; the rights arising from an exclusive license remain in force for the validity period of the trademark registration, unless otherwise provided by the agreement.
A license agreement may be concluded with respect to the entire list of goods or to a part of it — so the parties' concessions can also be divided by category of goods. The licensee is prohibited from transferring the rights arising from the license agreement or granting a sublicense where this does not directly follow from the agreement — a boundary that cuts off the risk of uncontrolled expansion against the brand owner's interests.
Breach of the Agreement and Paths of Dispute
In case of breach of the license agreement, the holder of the trademark has the right to exercise its special rights provided for by law against the licensee where the breach concerns the term of the agreement, the form of use of the trademark, the list of goods for which the license was granted, the territory where the trademark may be used, or the quality of the goods. The rules for bringing an action also deserve note: in case of infringement of rights to the trademark, the licensee brings an action only with the consent of the holder, but for the purpose of compensation for damage caused to it, the licensee has the right to join court proceedings concerning the infringement.
The fact of concluding a license agreement on a trademark is registered at Sakpatenti, and the corresponding information is published in the bulletin after payment of the established fee. Moreover, the transfer of rights to a trademark or a license does not extend to a license previously granted to a third person — the earlier license remains in force. Marks containing a protected geographical indication or appellation of origin of Georgia as an unprotected part require particular care: a license on such a mark is permissible only where the licensee has the right to use that indication or appellation.
What Counts as Use of the Mark
For the reality of a license, Article 24 of the law is decisive: use of a trademark is deemed to include its use by the holder, by the licensee, and by a third person with the holder's consent. Also deemed use is the use of a registered mark with minor differing elements that do not change the distinctive character of the mark, regardless of whether the mark is registered in the form in which it is used, and the affixing of the mark on goods or their packaging intended for export from Georgia. This means that the licensee's real use of the mark keeps the registration alive. At the same time, the acts of use must be performed in such a volume that they are deemed real use of the mark on the market.
Frequently Asked Questions
Which license is presumed if the agreement does not state its character?
A simple license. In that case the licensor may itself use the mark and conclude agreements with other licensees.
May the licensee grant a sublicense?
Only where this directly follows from the license agreement; otherwise both transfer of the rights and sublicensing are prohibited.
Where is the fact of the license agreement registered?
At Sakpatenti; the information is published in the bulletin after payment of the established fee.
Can the licensee sue independently?
On infringement of rights to the trademark the licensee brings an action only with the holder's consent, but for compensation of damage it has the right to join ongoing court proceedings.
How We Help on Legal.ge
A properly constructed license agreement — with the right choice of license type, list of goods, territory and quality control — settles conflicts years in advance. On the Legal.ge platform you can find an experienced intellectual property lawyer who will help you prepare the draft agreement, manage registration at Sakpatenti and protect your rights in case of breach. Choose a specialist and achieve a licensing relationship that serves the interests of both parties.