Retroactive Trademark License for Past Use

What Is a Retroactive Trademark License?

A retroactive trademark license is the owner’s written consent to a defined period of past use, paired with a release of the claims that use created. When the user will keep using the mark, the same document also licenses future use under the owner’s control.

Consent is the center of the agreement because both infringement statutes are built around it. Federal law reaches “Any person who shall, without the consent of the registrant” use a copy or colorable imitation of a registered mark in a way likely to cause confusion, under 15 U.S.C. § 1114(1). Minnesota’s statute for state-registered marks, Minn. Stat. § 333.28, covers a person who shall “use without the consent of the registrant any mark” that is likely to confuse or deceive purchasers. Written consent addresses that element for the uses and the period the agreement describes, and for nothing beyond them.

The agreement is a contract. In Jallen v. Agre, 119 N.W.2d 739 (Minn. 1963), the Minnesota Supreme Court said that “A compromise settlement of a lawsuit is contractual in nature.” Because a retroactive license resolves a dispute over past use, I suggest drafting it to the standard Minnesota applies to settlements. The discussion can begin with a cease and desist letter, with an audit that finds a former licensee still selling under the mark, or with a request from the user itself.

What Claims Should the Past-Use Release Cover?

The release should cover every claim the past use could support under federal and Minnesota law, including claims the owner’s demand letter did not name. The claims a Minnesota dispute over past use can raise include:

1. Infringement of a federally registered mark under 15 U.S.C. § 1114(1).
2. Infringement of an unregistered mark and false designation of origin under 15 U.S.C. § 1125(a), which reaches use that “is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.”
3. Infringement of a Minnesota-registered mark under Minn. Stat. § 333.28.
4. Deceptive trade practices. Minn. Stat. § 325D.44 subd. 1 covers a business that “causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services,” and one that “causes likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another.” The second clause fits a former licensee whose signs or website still suggest a connection to the owner.

Each of these claims rests on confusion or a likelihood of it, so the strength of the owner’s position depends on the likelihood of confusion analysis. I suggest that the release name the period it covers, from the date the use began through the signing date, because use after signing should be governed by the license terms instead. The release should also say whether it reaches past sales neither side has identified yet, such as sales through a channel the owner never learned of. The release and dismissal mechanics in a trademark settlement agreement apply to a retroactive license as well.

How Is the Payment for Past Use Set?

No statute sets a price for past use. The parties negotiate it, and each side’s reference point is what a court could award if the claims were litigated.

Under 15 U.S.C. § 1117(a), a plaintiff that establishes a violation may recover the defendant’s profits, the plaintiff’s damages, and the costs of the action. That recovery is “subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity.” Under 15 U.S.C. § 1111, which names the ® symbol as one form of registration notice, in a suit by a registrant “failing to give such notice of registration, no profits and no damages shall be recovered under the provisions of this chapter unless the defendant had actual notice of the registration.” When profits are assessed, the statute splits the proof: “In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed” (§ 1117(a)). The same subsection allows an increase: “In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount.” Attorney fees under subsection (a) are narrower: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”

Counterfeit use changes those numbers. Under 15 U.S.C. § 1127, “A “counterfeit” is a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” When a violation of § 1114(1)(a) consists of intentionally using a mark knowing it is a counterfeit mark as defined in 15 U.S.C. § 1116(d), the statute provides that “the court shall, unless the court finds extenuating circumstances, enter judgment for three times such profits or damages, whichever amount is greater, together with a reasonable attorney’s fee” (§ 1117(b)). In a case involving use of a counterfeit mark, § 1117(c) provides that “the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits under subsection (a), an award of statutory damages.” Section 1116(d) defines a counterfeit mark as “a counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use,” and excludes goods whose maker “was, at the time of the manufacture or production in question authorized to use the mark or designation,” so goods a former licensee made while its license covered them fall outside it.

For a Minnesota-registered mark, Minn. Stat. § 333.29 subd. 1 allows profits, damages, or both, and adds: “The court, in its discretion, may enter judgment for an amount not to exceed three times the profits and damages and reasonable attorneys’ fees of the prevailing party if the court finds the other party committed the wrongful acts with knowledge or in bad faith or otherwise as according to the circumstances of the case.” For a claim based only on reproducing the mark on labels, signs, or packaging, § 333.28 provides that “the registrant shall not be entitled to recover profits or damages unless the acts have been committed with knowledge that such mark is intended to be used to cause confusion or mistake or to deceive.”

The owner also holds an injunction as a lever. Under 15 U.S.C. § 1116(a), “A plaintiff seeking any such injunction shall be entitled to a rebuttable presumption of irreparable harm” on the findings the statute describes. Under Minn. Stat. § 325D.45 subd. 1, “A person likely to be damaged by a deceptive trade practice of another may be granted an injunction against it under the principles of equity and on terms that the court considers reasonable.” The same subdivision adds: “Proof of monetary damage, loss of profits, or intent to deceive is not required.”

The payment can take three forms:

1. A lump sum for the covered period.
2. A royalty on the user’s past sales, at the same rate the future license will carry, applied to the user’s sales records.
3. A combination, such as a reduced lump sum in exchange for a longer license term or a higher future royalty.

I suggest that the agreement state the user’s sales under the mark for the covered period, with the user’s representation that the figures are accurate. That term matters because the owner otherwise has only the user’s word for the number the payment is built on.

Why Does a License Signed Now Not Cover Quality Control for the Past?

For a registered mark or a mark sought to be registered, federal law credits a licensee’s use of the mark to the owner when the owner controls the nature and quality of the licensee’s goods or services. If the owner did not inspect or approve what the user sold during the unlicensed period, a license signed later does not change that fact.

Two provisions set the rule. Under 15 U.S.C. § 1055, “Where a registered mark or a mark sought to be registered is or may be used legitimately by related companies, such use shall inure to the benefit of the registrant or applicant for registration, and such use shall not affect the validity of such mark or of its registration, provided such mark is not used in such manner as to deceive the public.” The same section adds: “If first use of a mark by a person is controlled by the registrant or applicant for registration of the mark with respect to the nature and quality of the goods or services, such first use shall inure to the benefit of the registrant or applicant, as the case may be.” 15 U.S.C. § 1127 defines a related company as a person whose use “is controlled by the owner of the mark with respect to the nature and quality of the goods or services on or in connection with which the mark is used.”

Uncontrolled use also bears on whether the mark stays strong. Section 1127 treats a mark as abandoned “When any course of conduct of the owner, including acts of omission as well as commission, causes the mark to become the generic name for the goods or services on or in connection with which it is used or otherwise to lose its significance as a mark.” Minn. Stat. § 333.18 subd. 6 applies the same idea to Minnesota marks, “when a course of conduct of the owner, including acts of omission as well as commission, causes the mark to lose its significance as a mark.” Under 15 U.S.C. § 1115(b), even an incontestable registration is subject to a defense that “the registered mark is being used by or with the permission of the registrant or a person in privity with the registrant, so as to misrepresent the source of the goods or services on or in connection with which the mark is used.”

My legal research did not identify a court or Trademark Trial and Appeal Board decision on whether a license signed after the fact makes earlier uncontrolled use count for the owner. Because the statute ties that credit to control, I suggest these steps for the owner:

1. Before signing, inspect samples of what the user sold during the unlicensed period, and keep a record of what you found.
2. Write quality standards, approval rights, and inspection rights into the future license, using the terms a trademark license should carry.
3. Avoid relying on the user’s unlicensed sales as proof of your own use or priority in a later registration or dispute.

How Does the Owner’s Delay Affect a Retroactive License?

An owner that knew about the use and waited gives the user equitable defenses to raise, and those defenses can lower what the past-use claims are worth in a negotiation.

In federal court in Minnesota, which follows the Eighth Circuit, a user raising laches must prove “(1) a delay in asserting a right or a claim; (2) that the delay was not excusable; and (3) that there was undue prejudice to the party against whom the claim is asserted,” according to A.I.G. Agency, Inc. v. American International Group, Inc., 33 F.4th 1031 (8th Cir. 2022). Under the doctrine of progressive encroachment, which that court weighs in deciding whether a delay was inexcusable, the delay is measured “not from when the [claimant] first learned of the potentially infringing mark, but from when such infringement became actionable and provable” (A.I.G., 33 F.4th 1031). An owner that knew of a small use that later grew may have less delay counted against it than the date it first learned of the use suggests.

Federal law names the defenses. Under 15 U.S.C. § 1069, “In all inter partes proceedings equitable principles of laches, estoppel, and acquiescence, where applicable may be considered and applied.” That section governs contested proceedings at the U.S. Patent and Trademark Office (USPTO). In court, 15 U.S.C. § 1115(b) lists among the defenses to an incontestable registration “That equitable principles, including laches, estoppel, and acquiescence, are applicable.” Monetary recovery under § 1117(a) is also “subject to the principles of equity.”

For the user, evidence that the owner knew and stayed silent supports a request for a lower payment or a longer transition, subject to the laches elements above. For the owner, a written objection sent once the use is discovered puts the objection on record, which bears on the acquiescence and estoppel arguments these provisions name. A federal appeals court outside Minnesota, in Burger King Corp. v. Mason, 710 F.2d 1480 (11th Cir. 1983), upheld a finding that a former franchisee was estopped from claiming consent; that decision is persuasive in Minnesota but not binding. The owner there had accepted royalties after termination but had agreed to the continued operation “provided that it retained its right to seek damages.” Separate deadlines for filing suit can also apply, and I suggest checking them against the current law for your claims before relying on any delay. How courts weigh delay is covered in the discussion of the laches defense.

What Should a Retroactive License Say About Ownership and Registrations?

The agreement should state that the owner owns the mark, that the user claims no rights of its own in it, and what happens to any trademark application or registration the user filed.

Ownership needs its own clause because a user can sometimes hold rights of its own. Under Minn. Stat. § 333.30, “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, except that the rights as against the registrant of the same or confusingly similar mark are limited to the areas of the person’s use established prior to the registration date and areas in which the person’s mark has become known prior to the registration date.” Under Minn. Stat. § 333.18 subd. 4, “the person to whom the registration of a mark under sections 333.18 to 333.31 is issued” is the registrant in that section. Under Minn. Stat. § 333.25 subd. 1, the secretary of state shall also cancel, “in compliance with an order of a district court, any registration concerning which the court shall find that: . . . (ii) the registrant is not the owner of the mark” (subd. 1(4)(ii)). For a federal registration, the prior-user defense in 15 U.S.C. § 1115(b)(5) applies “To the extent that the right to use the registered mark has become incontestable under section 1065” (§ 1115(b)). That defense also requires a mark “adopted without knowledge of the registrant’s prior use” and “shall apply only for the area in which such continuous prior use is proved” (§ 1115(b)(5)). Before the registration becomes incontestable, it “shall not preclude another person from proving any legal or equitable defense or defect, including those set forth in subsection (b), which might have been asserted if such mark had not been registered” under § 1115(a). If the user has a claim like that, the agreement should resolve it expressly, by the user’s acknowledgment, a defined territory of its own, or a separate payment. The difference between registered and common-law rights bears on how much that claim is worth.

Conflicting filings should be cleared in the same document. If the user registered a similar mark with the Minnesota Secretary of State, the agreement should require the user to request cancellation. Under Minn. Stat. § 333.25 subd. 1, the Secretary of State shall cancel “any registration concerning which the secretary of state shall receive a voluntary request for cancellation from the registrant.” For a federal registration, 15 U.S.C. § 1057(e) provides: “Upon application of the owner the Director may permit any registration to be surrendered for cancellation.” Pending federal applications and contested USPTO proceedings need their own filings, which the settlement agreement page covers.

The license should also state that the user’s future use under the license is for the owner’s benefit and that the user will not challenge the owner’s mark. The first clause tracks § 1055, under which legitimate use by related companies “shall inure to the benefit of the registrant or applicant for registration,” and the second records the user’s promise not to attack the mark it is paying to use.

When Is an Assignment or a Phase-Out Better Than a License?

A retroactive license fits when both businesses want the user to keep using the mark under the owner’s control. When either side does not want that relationship, two other structures resolve the past use.

1. A release with a phase-out. The owner releases the past claims and consents to use only for a dated transition period, after which the user stops. The agreement should list what comes down by the end date (signs, packaging, websites, domain names, and social media accounts) and what inventory may be sold before then.
2. An assignment. One business buys the mark outright. Under 15 U.S.C. § 1060(a), a registered or applied-for mark “shall be assignable with the good will of the business in which the mark is used, or with that part of the good will of the business connected with the use of and symbolized by the mark,” and “Assignments shall be by instruments in writing duly executed.” An application filed on an intent to use the mark cannot be assigned before the applicant alleges use, except to a successor to the applicant’s ongoing and existing business to which the mark pertains. Under § 1060(a)(4), “An assignment shall be void against any subsequent purchaser for valuable consideration without notice, unless the prescribed information reporting the assignment is recorded in the United States Patent and Trademark Office within 3 months after the date of the assignment or prior to the subsequent purchase.” For a Minnesota registration, Minn. Stat. § 333.23 provides that “The secretary of state shall record written conveyances of any mark along with that part of the goodwill of the business in connection with which the mark is used,” and that “An assignment of any registration under sections 333.18 to 333.31 shall be void as against any subsequent purchaser for valuable consideration without notice unless it is filed with the secretary of state within three months after the date of the assignment or before the subsequent purchase.” I suggest checking the current text of both sections before relying on the recording window. The drafting points for a trademark assignment agreement apply here.

I suggest choosing among the three structures before negotiating price, because the structure decides what the payment buys: release of past use only, past use plus future rights, or the mark itself.

How Do Minnesota Courts Enforce the Agreement?

Minnesota courts treat the agreement as a contract. It binds when the parties agree on its essential terms, and a party can enforce it through a breach-of-contract lawsuit or, generally speaking, by motion in the original lawsuit, subject to the federal-court limit described below.

In Jallen, the Minnesota Supreme Court said: “To constitute a full and enforceable settlement, there must be such a definite offer and acceptance that it can be said that there has been a meeting of the minds on the essential terms of the agreement.” In Voicestream Minneapolis, Inc. v. RPC Properties, Inc., 743 N.W.2d 267 (Minn. 2008), the court said a settlement agreement “can be enforced by an ordinary action for breach of contract,” and added: “Generally speaking, settlement agreements can also be enforced by motion in the original lawsuit.” For a case in federal court, in Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375 (1994), the U.S. Supreme Court said a federal court may embody the settlement in its dismissal order or retain jurisdiction over it “if the parties agree,” and “Absent such action, however, enforcement of the settlement agreement is for state courts, unless there is some independent basis for federal jurisdiction.”

Because essential terms decide whether a deal exists, I suggest putting the covered period, the payment, the release, and the future license terms in one signed document. The agreement should also choose the governing law and the court for disputes, require written notice and a chance to cure before either side sues, and say whether it binds a buyer of either business. How to date the document is a separate choice, discussed in the questions below and in the page on backdated effective dates.

Next Steps for Resolving Past Unauthorized Use

Before signing a retroactive license, four checks cover the main risks on this page. The first is whether the release names the covered period and every federal and Minnesota claim the past use could support. The second is whether the payment rests on sales figures the user has represented as accurate. The third is whether the future license carries real quality control, with the owner not relying on the unlicensed period as controlled use. The fourth is whether the agreement settles ownership and clears any conflicting registration. If neither business wants an ongoing license, a phase-out or an assignment may fit better.

More on trademark law for Minnesota businesses is on the practice page. If you would like to know whether a proposed retroactive license, or a demand for payment for past use, covers the claims, payment terms, and quality control your business needs, email [email protected] with a short description of how each business has used the mark. I will run an intake and conflict check before you send any confidential documents.