A licensing agreement sets out what is granted (which brand or character, on which products), where (territory and channels), for how long, at what price (royalties, minimum guarantee, advance), with which controls (approvals and audits) and what happens at the end. The two parties should settle these points before a draft exists; the drafting itself belongs with a lawyer.
What Italian law says
Italy’s Industrial Property Code allows a trademark to be licensed, exclusively or not, for all or only some of the goods and services it is registered for and for all or part of Italy; under a non-exclusive licence the licensee must undertake to use it on goods equal to those sold under the same mark by the owner or other licensees. In any case the licence must not mislead the public about the essential characteristics of the goods (article 23 of the Industrial Property Code, in Italian). Everything else is up to the contract, which is why the points below must be put in writing.
If the contract also covers characters, illustrations or other works, copyright law applies (Italian Law 633/1941): economic rights can be assigned or licensed in any form the law allows, but the transfer must be proven in writing (Articles 107 and 110, text of the law, in Italian). That is why the contract should state precisely which works and which uses are granted.
When the deal covers several EU countries, ask a lawyer to review its clauses against EU competition law as well.
The points to decide before the draft
- Subject: which marks, logos or characters, for which product categories.
- Exclusivity: whether the licensee is the only one in that category and territory.
- Territory and channels: countries, and whether sales go through shops, mass retail or online.
- Term and renewal: how many years, whether renewal is automatic and the notice needed to end it.
- Payment: royalty rate, what it is calculated on, minimum guarantee, advance, reporting deadlines.
- Quality and approvals: who approves what, at which stages, against which style guide.
- Audits: the owner’s right to check accounts and production.
- Brand protection: who acts and who pays against counterfeiting.
- Assignment: whether the licensee can transfer the contract to others.
- End of the contract: grounds for termination, what happens to stock and when use of the mark stops.
- Law and disputes: governing law, mediation, arbitration or court.
Most of these items appear in the model trademark license agreement published by the Bologna Chamber of Commerce (in Italian), which also requires the owner to maintain and renew the trademark registration. Sales channels, advance, approvals and style guide are typical of consumer-brand and character licenses and are worth adding. How royalties and minimum guarantees are calculated is explained in royalties and minimum guarantees in licensing; what the guide used to judge products contains is in the article on the licensing style guide.
The most common gaps
- Vague boundaries on exclusivity, territory and channels: these are among the first points to define precisely.
- No rules for the last season: how much can still be produced and how stock is sold after expiry.
- No payment security, such as an advance or a minimum guarantee.
- Weak audit rights over accounts and production.
- “Material breach” left undefined, so hard to enforce.
These are some of the ten red flags listed on the Alt Legal blog, a trademark-management software company (Alt Legal, in English): use them as a checklist, not as a rule of law.
What to prepare before seeing a lawyer
A lawyer drafts better and faster when the parties arrive with clear ideas: the list of products and categories, the countries and sales channels, a realistic sales estimate (it sets the minimum guarantee), the launch calendar, and who approves products on the owner’s side. If the mark is not yet registered in every class and country you need, now is the time to check: we explain how in how to license your brand.
This article is general guidance, not legal advice: every licence agreement should be drafted or reviewed by a lawyer experienced in intellectual property.
Where to start
The basics are in the guide on how brand licensing works and the terms in the glossary. If you are preparing a licensing programme and want to work out with whom and how, write to us from the licensing service page.
