Get Consent from Tenant to Use Trademark and Logos to Your Benefit
Despite the abundance of online retailers offering great prices and free delivery to customers at the click of a button, shopping centers have slowly but surely made a comeback since the economic downturn nearly 10 years ago. But it’s not enough for center owners to coast on customers’ excitement over seeing items in person or enjoying a shopping experience that leads to sales. Center owners have to stick to marketing strategies more than ever, to grab customers who might resort to buying online if they can’t get what they want in person. A big part of drawing in customers is the ability to market the center, and that involves visibility. Another hurdle to jump over is competition from other centers, which can be tough.
You’re in a much better position if you have high-profile tenants that make your center a destination for customers looking for these particular stores. But that’s only as good as your ability to let potential customers know which stores are at your property. One way to do this is to mention those tenants—and include their recognizable trade names, trademarks, logos, or designs—in the marketing materials you distribute to brokers or potential tenants, on pylons, or on your center’s website. This type of marketing can not only draw in customers, it can also help your building or center achieve name recognition, build prestige, and attract other high-profile or desirable tenants. But you’ll need to get the right to use a tenant’s trademark and logos for promotional purposes. Here’s how you can get that permission.
Be Aware of Permission Requirement
You can’t use any of the tenant’s trade names, trademarks, logos, and designs in your marketing materials unless you first get the tenant’s consent. Why? Because they are its “intellectual property.” And if the tenant decides to withhold its consent, or you never ask, but you print them in your marketing materials anyway, the tenant could sue you for trademark infringement.
To prevent that scenario, you’ll want to include a clause in the lease in which the tenant grants you a “trademark license”—that is, a special right to use a tenant’s trade names, trademark, designs, and logos in your marketing materials. And you’ll want that clause to include certain protections.
Strive for Five Protections
Here are five protections to include in your lease’s trademark license clause, which are in our Model Lease Clause: Draft Key Protections in Trademark License. Work with your attorney to adapt them for your particular leases.
Protection #1: You don’t pay for license. Say that the tenant is giving you the license to use its trade names, trademarks, logos, and designs on a royalty-free basis [Clause, par. a]. That means you’re not required to pay the tenant any fees for getting the license.
Protection #2: License’s scope is broad. Make sure that the scope of the license is as broad as possible so you can use the tenant’s trade name, trademark, logo, or design in ways that best suit your marketing. To do this, simply say in the lease that the tenant agrees to give you the license to use the tenant’s trade names, trademarks, logos, and designs in the printing, publication, and distribution of your promotional newsletters, ads, marketing brochures, and other marketing materials—including the center’s website. To satisfy the tenant, you’ll also have to acknowledge that your license is nonexclusive. This way, the tenant can grant licenses to other parties [Clause, par. a].
Protection #3: Tenant promises it has title to trade names, trademarks. Require the tenant to promise that it has the right and power to grant you the license. Make it also promise that its trade names, trademarks, logos, and designs don’t infringe on the rights of any third parties [Clause, par. b]. You want this protection in case it turns out that the tenant’s trademark infringes on another party’s valid trademark rights and the other party sues you for using it. This protection would allow you to sue the tenant to require it to defend you from the other party’s claim.
Protection #4: License is in effect throughout lease. Say that the license will be in effect for the entire lease—starting on the date the lease is signed—plus any extensions or renewals [Clause, par. c]. You’ll then be able to add the tenant’s trade names, trademarks, logos, and designs to your marketing materials during that time without any problem.
Protection #5: Distribute remaining materials after license ends. It’s possible that after your license ends, you’ll still have unused marketing materials that include the tenant’s trade name, trademark, logo, or designs. So say that you’ve got the right to distribute any remaining marketing materials that were printed or ordered before the license ended [Clause, par. d]. Otherwise, you’ll have to destroy those materials and reprint new marketing materials every time a tenant moves out of the building or center—a cost that could be prohibitive.
Prepare for Pushback in Form of Limits
The tenant may try to limit your license in several other ways. Prepare for a savvy tenant to demand the following additional limits:
Limit #1: License covers only selected trademarks, logos, and designs. If the tenant has a large number of trade names, trademarks, logos, and designs, it may want to limit the license to a select few of them. If the tenant has a lot of negotiating power, you may have to accept this limit.
Limit #2: License is revocable. The tenant may demand that the license be revocable at its will and upon short notice. Try to resist this. If you can’t, at least say that the tenant can revoke the license only for cause and in the tenant’s reasonable discretion, with at least 30 days’ prior written notice.
Limit #3: Tenant has preapproval rights. The tenant may demand the right to see and approve your marketing materials before they’re sent out. For example, a high-profile steak restaurant tenant might want to be able to reject a flyer that also mentions a vegetarian restaurant. Ideally, you want to say no to a demand for prior consent. But if you must agree to it, add that the tenant’s consent shouldn’t be unreasonably withheld.
Limit #4: You can’t assign license. Expect the tenant to want to bar you from assigning the license. This is another way of keeping control over the use of its valuable trade names, trademarks, logos, and designs. If you must agree to an assignment restriction, try to get the right to assign the license with the tenant’s prior consent—which also shouldn’t be unreasonably withheld.
Understand Anomalies with Certain Types of Tenants
As with any lease negotiations, the outcome will depend on the specific type of tenant you’re dealing with. And tenant leverage is an additional consideration.
For example, be aware that some high-profile tenants won’t let an owner use their trademarks under any circumstances. And a few high-profile tenants might prefer to sign a separate, stand-alone trademark license agreement, rather than address the subject in the lease. So it’s especially important to discuss these issues during negotiations and to ask your attorney to help you draft the proper documents that will appease a tenant and also work in your favor.
See The Model Tools For This Article
|Draft Key Protections in Trademark License|