If you own and lease your hotel or licensed establishment to a third party operator, you might want to think about protecting not just the physical premises, but the intellectual property (IP) that goes with its name.
Many premises have existing goodwill in relation to their business name or some other name, slogan or logo. However, not enough property owners protect this goodwill through a registered trade mark and appropriate licensing arrangements with the tenants or third parties who use this IP.
We have previously looked at the importance of registering a trade mark, and in this article we now explore the benefits of entering into licensing agreements to protect goodwill as well.
Failing to trade mark and licence
Licenced premises owners often have lease agreements with the tenant, but these often fail to adequately address the parties’ positions in relation to the trade marks used in connection with the premises.
As an example, imagine that you have recently purchased the freehold of an iconic pub named “Big Hotel”, that has been in business under that name since 1870. The premises is leased to a tenant that has been operating the business for the last decade. The tenant now wishes to sell the business and places an additional $500,000 price tag on the name “Big Hotel”, while also applying to register the trade mark “Big Hotel”.
The tenant, having operated the business for 10 years, has a strong argument that it owns the trade mark “Big Hotel”. As the freehold owner, you risk losing the goodwill associated with the ‘Big Hotel’ name unless you have a clear IP licence agreement in place, either as a clause in the lease or under a separate agreement.
The advantages of licensing your IP
Without a clear licence agreement, the extended use of a trade mark can blur the lines of ownership and lead to disputes between the owner and the user. Licences clearly establish which party owns the trade mark and which party is merely using the mark.
Licensing your trade mark (or other form of IP) also permits another person to use the trade mark under clearly agreed terms and conditions. The licensee then has the right to use, but not own, the trade mark, under the terms of the licence. The owner of the trade mark is also paid a sum in return for the licence of the legal right to use the IP.
Licences can be an effective way to exploit and commercialise IP, particularly where you lack the resources or know-how to market or develop your product or service yourself. A further development on this is franchising, which is a form of licence agreement where IP is licensed to franchisees, enabling the business owner to expand without needing additional capital. We will look at franchising in more detail in the near future.
How can your lawyers assist you
Addressing ownership and licensing issues early can help avoid complex and costly opposition proceedings at a later date. We have a great deal of experience in obtaining trade mark registrations, overcoming adverse reports from IP Australia and drafting licence agreements. In particular, we can:
- Provide holistic advice in relation to your IP strategy.
- Apply to register your trade mark and assist with overcoming any adverse reports from IP Australia.
- Prepare licence agreements that are tailored to suit your circumstances.
- Act for freehold owners, business owners, landlords, tenants and sub-tenants.