Rethinking the Role of Arbitration Agreements in Trade-Mark Licensing

Abstract

Trade-mark licensing is now ubiquitous in the global marketplace as companies seek to protect their brand while operating in a number of jurisdictions. Licensing agreements and related commercial agreements will, more often than not, contain an arbitration agreement. While much ink has been spilled on the virtues of arbitration as a preferable dispute resolution process for intellectual property disputes, there has been no consideration of whether an arbitration agreement might be relevant to substantive trade-mark law – specifically, the concept of necessary to imply a trade-mark license. Arbitration agreements provide a licensor with a specific mechanism to enforce a licensee’s contractual obligations. They also a licensee’s access to other dispute resolution forums and the additional remedies available in those forums. Further, the separate legal identity of an arbitration agreement means that this is distinct from the underlying contract. This level of over the underlying wares and services surpasses the low bar for direct or indirect control. Arbitration agreements also exercise over the trade-marks themselves. Where arbitration is mandatory, a party attempting to challenge the validity of a trade-mark will be excluded from national courts. In most jurisdictions, this protects the registration of the mark from any challenge because even a successful arbitration award is an in personam decision only. This protection is significant because, more and more, the trade-mark itself is becoming a commodity just as much as the wares and services it adorns. In turn, this type of protection raises questions about whether the theory of quality control remains an adequate legal framework for governing trade-mark use.