Published by LawTechie - September 23, 2010 - LawTechie

Naked LicenseThe “Naked” License is a trademark doctrine which says that if the exact source of the product is not clear to the consumer, then the trademark is worthless (recall that the sole purpose of a trademark is to prevent consumer confusion as to the source of the goods). Thus, in a dispute between a software developer and its distributor, should the distribution agreement neglect to make clear which party controls the quality of the software (updates, bug fixes, etc…), the distributor has a fairly good shot of canceling the trademark in its entirety.

The simplest way to prevent this is to include a quality assurance clause in the distribution agreement to confirm that the software developer has the final say on all Q/A aspects of the product.

Another alternative (but best used concurrently with the Q/A clause) is a trademark ownership clause confirming that the trademark belongs to the developer. This latter route is known as “licensee estoppel” and it literally stops the licensee (the distributor) from arguing that the trademark license is a naked license. Nevertheless, this is a weaker route than the Q/A clause because licensee estoppel applies only to the licensee, other unrelated parties can still vie to cancel the trademark as a naked license.

In Sum: Distribution agreements raise numerous IP issues, have them drafted by an attorney who is familiar with the ins and outs of IP law.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.


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