A trademark licence allows the holder of a registered trademark to grant rights to use it to another person or company, which may cover all or only certain categories of goods and services for which the mark is protected. These rights may be granted for the whole or only part of the territory of Bulgaria, and it is possible for the licence to include unregistered trademarks that are subject to registration.

Main Characteristics of the Licence Contract

A trademark licence contract must be in written form and must contain all the essential clauses that determine the type and terms of the licence. The licensor (the proprietor of the mark) or the licensee (the user of the mark) may request the recordal of the licence contract in the State Register of Marks, maintained by the Patent Office. This recordal is important because the licence acquires legal effect against third parties only after it has been officially recorded.

Types of Licence: Exclusive and Non-Exclusive

A licence contract may provide for two main types of rights:

  1. Exclusive licence: In this case, the proprietor of the mark undertakes not to grant rights to use the mark to persons other than the licensee. Likewise, the licensor retains the right to use the mark only if this is expressly stated in the contract. A licensee with exclusive rights may also grant on rights to use the mark through sub-licences, if this is provided for in the licence contract.
  2. Non-exclusive licence: If it is not stated that the licence is exclusive, it is deemed to be non-exclusive. This means that the licensor may grant the right to use the mark to persons other than the licensee as well.
Remuneration Under the Licence Contract

The licensee is obliged to pay the licensor remuneration for the right to use the mark. The remuneration may be structured in various ways depending on the arrangements between the parties. The main forms of licence remuneration include:

  • A one-off payment – a lump sum payable upon conclusion of the contract;
  • Annual instalments of a fixed amount – periodic payments, for example on an annual basis;
  • A percentage of revenue – calculating the remuneration as a percentage of the revenue generated from the sale of products or services bearing the mark;
  • A percentage of profit – the remuneration is calculated on the basis of the profit generated from products or services bearing the mark.

The choice of a suitable remuneration scheme depends on the nature of the business and the strategy of the two parties, weighing the advantages and disadvantages of each option.

Term and Termination of the Licence Contract

A licence contract may be for a fixed term or open-ended:

  • A fixed-term contract: The contract is valid for a specified period and terminates automatically upon the expiry of that term.
  • An open-ended contract: This type of contract may be terminated at the initiative of either party by six months' written notice. Under the law, the licensor may not terminate an open-ended contract before the expiry of the first year.

“Wind-down clauses” may be included in the contract to govern the licensee's rights in respect of unsold products bearing the mark upon termination of the contract. Where the licensee continues to use the mark after the expiry of the term of the contract, without objection from the licensor, the contract is deemed to have been tacitly extended.

If you need advice and assistance with drafting and recording a trademark licence contract, contact us on tel.: 0887550706 or by e-mail: [email protected]