Decision Implementing Trademark License Requirements in Israel and a Comparison to the US and Mexico

June 18, 2020

By: Michal Fisher¹, Ben Natter²and Jessica Sblendorio³

In some jurisdictions, the local trademark offices will require an owner to record trademark licenses used by entities other than the registered owner. It is important to know whether this is a requirement wherein a licensee may be using a mark as to avoid interference with authorized uses of such marks in those jurisdictions. Furthermore, it is important to monitor this requirement, as developments in certain jurisdictions may relax this requirement, as was recently done in Israel. In contrast, two of the major jurisdictions in North America, the United States and Mexico, do not have a mandatory requirement to register a trademark license, but there may be risks that a trademark owner should be aware of with respect to deciding whether to record a trademark license with the respective trademark offices in the United States and Mexico.

Israel is an example of a jurisdiction where the owner has an obligation to record a trademark licensee as an authorized user of the mark. However, in 2020, the Israeli trademark office in a recent decision clarified the requirement to record trademark licensees as authorized users with the office, finding that in circumstances where a trademark is being used by a company different from the owner, but where both companies belong to the same group or are affiliated or related entities, the trademark owner is not required to record the companies as registered users. In this case, the Israeli trademark office rejected a petition to revoke Toyota’s TOYOTA trademarks on the grounds that the trademarks were used in Israel by Toyota Europe, which is an affiliate of the trademark owner, and by the authorized Toyota distributor and licensed dealerships, despite the fact that these entities were not recorded as registered users. The Israeli trademark office held that revocation of the trademarks due to non-use is discretionary, and that the requirement to record licensed dealerships was impractical and use of a trademark by related entities is not required to be recorded.

Notwithstanding the above, in cases where the regular consumer does not perceive the entity that uses the trademark as directly related to the trademark owner, the requirement to record a trademark license still holds.

In contrast, Mexico does not have a mandatory requirement to register a trademark license; however, not recording a trademark license before the Mexican trademark office may have severe consequences for the trademark owner. Mexican law states that a trademark license is only enforceable against third parties if it is recorded with the Mexican trademark office; which means that if a license is not recorded, the owner will not be able to prove use in a cancellation action alleging non-use.

Furthermore, another important reason to record the trademark license in Mexico is that it relates the trademark to the owner for purposes of its reputation and level of distinctiveness. “Well-known” trademarks and “famous” trademarks are trademarks that the majority of the public of a given sector is familiar with through the trademark use. These trademarks benefit from a broader scope of protection (i.e. distinctiveness in all classes). To provide evidence of this, the owner can only rely on its own use and registered licensees. There is thus a significant advantage in recording a license in order to bolster protection for a trademark due to reputation and distinctiveness of the mark.

In light of the potential consequences that may arise from not recording a trademark license in Mexico, even though the recordation of trademark licenses in Mexico is not compulsory, recording a trademark license is highly recommended in order to avoid these negative consequences.

Additionally, in the United States, there is no requirement that a license agreement be recorded with the United States Patent and Trademark Office. A trademark applicant is merely required to state that the use of a trademark is through a controlled licensee in the application. By complying with this requirement, the examining attorney will not inquire about the relationship of the parties, as long as the record contains nothing inconsistent with the claim of ownership.

While it is not required to record the agreement, a trademark owner that engages in a license agreement must be cautious about keeping control of its trademark. Failure to do so may result in a legal finding that the trademark owner has abandoned it rights in the trademark.