Trademark Licensing Agreements in Minnesota

What is a trademark license, and how is it different from selling your brand?

A trademark license lets another business use your mark while you keep ownership of it; an assignment transfers ownership of the mark itself. The distinction controls everything that follows. A licensor stays the owner and can lose the mark if the license is mishandled. An assignor gives the mark away. Minnesota’s conveyance statute, Minn. Stat. § 333.23, reflects this: it directs the secretary of state to record written conveyances of a mark “along with that part of the goodwill of the business in connection with which the mark is used.” A trademark cannot be sold as a bare name detached from the business behind it; the goodwill travels with it.

Business owners often blur the two. A founder who tells a relative they can “use the company name for their own location” may think they granted a license when the loose arrangement looks more like a giveaway. The two paths have different consequences, so the agreement should say plainly which one it is.

If your goal is a permanent transfer, you want an assignment, and the best practices for trademark assignment agreements differ from licensing practice. If your goal is ongoing use with you still in control, you want a license.

Can I let another company use my brand for a fee in Minnesota?

Yes. Federal law expressly allows it. Under 15 U.S.C. § 1055, when a mark “is or may be used legitimately by related companies, such use shall inure to the benefit of the registrant,” and the licensee’s use “shall not affect the validity of such mark or of its registration.” In plain terms: a licensee’s use counts as your use, and licensing does not weaken your registration, as long as one condition is met. The licensee must be a “related company,” and the statute adds the limit that the mark must not be “used in such manner as to deceive the public.”

That single condition is the whole game. Licensing is permitted, charging a fee is permitted, and licensing to more than one company is permitted, provided the owner controls the quality of each licensee’s use. What federal law does not permit is licensing without control. The right to license your brand is broad; it comes attached to a duty, explained in the next section, to control how the brand is used. Minnesota adds no separate permission requirement to license a mark, though if the deal also looks like a franchise, a separate registration question arises.

Why does a trademark license have to include quality control?

Quality control is the legal core of a valid trademark license, not an optional clause. Federal law defines the “related company” whose use counts as the owner’s use as “any person whose use of a mark is controlled by the owner of the mark with respect to the nature and quality of the goods or services” (15 U.S.C. § 1127). Read that closely: a licensee is a related company only when the owner controls the nature and quality of what the licensee offers. Strip out the quality control and the licensee is no longer a related company, the licensee’s use no longer inures to you, and the license becomes what courts call a naked license.

A trademark exists to tell the public that goods carrying the mark meet a consistent standard from a single controlling source. That is the reason the law ties licensing to quality control: if the owner lets licensees do whatever they want, the mark stops communicating anything reliable to consumers. This is the same logic that applies when you are licensing a brand among related companies you own: even an arrangement between a parent company and a subsidiary needs real quality standards, not just a shared logo. A workable license states the standards the licensee must meet and reserves the owner’s right to inspect and to require correction.

What happens if I don’t police how my licensee uses my mark?

A naked license can cause you to lose the mark. The mechanism is abandonment. Federal law deems a mark “abandoned” when “any course of conduct of the owner, including acts of omission as well as commission, causes the mark to . . . lose its significance as a mark” (15 U.S.C. § 1127). Failing to monitor a licensee is a course of conduct made of omissions, and if uncontrolled use causes the mark to lose its significance, the owner has abandoned it. Once a mark is abandoned, the registration is exposed: under 15 U.S.C. § 1064, a petition to cancel may be filed “by any person who believes that he is or will be damaged,” and paragraph (3) allows cancellation “at any time” if the registered mark “has been abandoned.”

This abandonment route is different from the more familiar one. Federal law also treats a mark as abandoned when “its use has been discontinued with intent not to resume such use,” a separate route that turns on stopping use of the mark entirely. Naked licensing is not that. The owner is still using the mark and still collecting royalties; the loss comes from the failure to control, not from disuse. That is what makes it dangerous, because it does not feel like abandonment while it is happening. A competitor sued for infringement will often raise the naked-license defense, and the licensee’s own past unauthorized use can become evidence that the owner never controlled the brand. Minnesota’s own trademark chapter recognizes a parallel idea for state-registered marks: Minn. Stat. § 333.18, subdivision 6, treats a mark as abandoned through a course of conduct that causes it to lose significance, and Minnesota’s nonuse trigger for a state-registered mark runs for a shorter period than the federal one. If a nonuse question matters to your situation, the controlling statute’s current text should be checked, because the periods differ by jurisdiction.

Can a trademark license accidentally become a franchise in Minnesota?

Yes, and this is the Minnesota-specific trap that most surprises business owners. Minnesota’s franchise statute, Minn. Stat. § 80C.01, subdivision 4, defines a franchise as an arrangement with three elements: the licensee is granted the right to do business “using the franchisor’s trade name, trademark, service mark, logotype, advertising, or other commercial symbol”; the parties “have a community of interest in the marketing of goods or services”; and “the franchisee pays, directly or indirectly, a franchise fee.” A trademark license supplies the first element automatically. If the deal also gives the licensee a marketing stake and charges a fee, all three elements are present and the “license” is a franchise under Minnesota law.

That matters because Minnesota regulates franchises. Under Minn. Stat. § 80C.02, “no person may offer or sell any franchise in this state unless there is an effective registration statement on file” with the state, unless an exemption applies. The statute reaches a franchise fee paid “directly or indirectly,” so the fee element is not limited to an upfront lump sum: a payment built into the arrangement in another form can satisfy it. A business owner who believes they signed a simple trademark license, and who never registered anything, may have offered an unregistered franchise. Before signing any license that bundles a brand grant with a marketing relationship and a payment, the arrangement should be checked against the franchise definition. This is the single most common point where a Minnesota trademark license needs more than generic licensing language.

How should a Minnesota trademark license handle scope, royalties, and sublicensing?

A Minnesota trademark license should define three things in detail: the scope of the grant, the royalty the licensee pays, and whether the licensee may sublicense. The reason to be precise is structural. Minnesota courts apply ordinary contract-construction principles to a trademark license, and Minnesota has no statute that fills in license terms the parties left out. When language is genuinely ambiguous, Minnesota treats construing it against the drafter as a last-resort canon, used only after the parties’ actual intent cannot be determined from the evidence (Staffing Specifix, Inc. v. TempWorks Management Services, Inc., 913 N.W.2d 687 (Minn. 2018)). That canon resolves an ambiguous term; it does not write in a missing one. So leaving a term unstated does not hand you a convenient default: it invites a dispute. A complete license fixes scope on four axes:

• Goods or services. Which products or services the licensee may attach the mark to, and which it may not.
• Territory. The geographic area the license covers, whether a single city, the state, or a wider region.
• Channels of trade. Whether the licensee may use the mark in retail, wholesale, online, or all of these.
• Exclusivity. Whether the license is exclusive, so even the owner cannot use or license the mark in that territory, or non-exclusive.

The license also states the royalty structure, a flat fee, a percentage of sales, a per-unit amount, or a combination, and how it is reported and audited. Sublicensing is its own decision: the license should say whether the licensee may grant sublicenses at all, because a license silent on the point invites a dispute. These scope and payment terms are where intellectual property clauses fit into business contracts, and the question of whether your licensee may grant sublicenses deserves a deliberate answer rather than a default.

How does a trademark license end, and what happens to the mark afterward?

A trademark license should state how it ends and what the licensee must do once it does. Because the license is a contract governed by Minnesota contract-construction principles, the parties control the termination terms: a fixed term, a renewal mechanism, or termination rights triggered by breach, insolvency, or a change in control. The agreement should also address what happens to the mark when the relationship ends, because that is where disputes concentrate.

The moment a license ends, the licensee’s authority to use the mark ends with it. Continued use after termination is not a contract problem; it is trademark infringement under the same Lanham Act standard that governs any unauthorized use. A well-drafted license avoids the gray zone by stating a defined post-termination phase-out: a short, fixed window during which the licensee sells off existing inventory, removes the mark from signage and marketing, and stops new use. Without that clause, an owner trying to stop continued use of the brand after a relationship ends is left arguing about how much wind-down time was reasonable. A clear phase-out term replaces that argument with a date.

Does it matter whether my Minnesota brand is registered before I license it?

You can license a brand whether it is federally registered, registered with the State of Minnesota, or not registered at all. Registration is not a precondition to licensing. Minnesota expressly preserves unregistered marks: Minn. Stat. § 333.30 provides that “nothing herein shall adversely affect a person’s rights or the enforcement of the rights in a mark acquired in good faith at any time at common law.” A Minnesota brand built through actual use in the market is a real, protectable, licensable asset on its own.

Registration still changes what you are licensing. A federal registration provides nationwide constructive notice and a stronger enforcement position, so a licensee receiving a registered mark receives a more valuable right than a licensee receiving an unregistered one. Registration also makes the licensed asset easier to describe with precision. When the mark is unregistered, the license carries more of the work: it must identify the mark and the associated goodwill carefully, because there is no registration certificate to point to. For most growing companies, the practical sequence is to register the mark and then license from a documented, registered position.

How do I draft a trademark license so I don’t lose my mark?

A trademark license that keeps the mark safe does five things, and the first is non-negotiable. It defines real quality standards and reserves the owner’s right to inspect and require correction; this is the term that satisfies the federal “related company” requirement of 15 U.S.C. § 1127 and keeps the license from being naked. It fixes scope and territory so the grant has clear edges. It sets the royalty and states whether sublicensing is allowed and on what conditions. It states the term, termination rights, and a defined post-termination phase-out. And it is checked against Minnesota’s franchise definition before signing, so a brand license does not become an unregistered franchise.

Of the licensing problems I see in my practice, the recurring pattern is the same: the quality-control clause was missing, vague, or written but never used. A license that grants inspection rights the owner never exercises is close to as exposed as one that granted no rights at all, because the question a court asks is whether the owner actually controlled the licensee. The drafting and the practice have to match. For a fuller picture of how a brand fits into a company’s other holdings, our trademark practice covers the related questions of registration, enforcement, and portfolio structure.

A trademark license is one of the few contracts where getting the paperwork wrong can cost you the asset itself, not just a deal. The core requirement is straightforward: keep real control over the quality of what your licensee sells, and exercise that control, not just reserve it on paper. The Minnesota-specific layer is the franchise question, which can convert a routine brand license into a regulated franchise. If you are preparing to license your brand, or you suspect a license you already signed never gave you the control the law requires, email [email protected] with a short description of the arrangement for a practical read on where it stands. To share draft documents, start an intake and conflict check first.