Entrepreneurs who license their protected brand to third parties can expose themselves to some risks of misappropriation by the licensee (their deal partner).
In a licensing arrangement, the licensor (holder of intellectual property rights) grants limited rights to one or more licensees (parties having an interest in using the intellectual property rights developed by the licensor).
All intellectual property rights can be licensed to third parties in exchange for royalties or profit-sharing compensation. The risk arises when the licensee decides to create a brand of their own, usually VERY SIMILAR to the licensor’s intellectual property rights (covered by either patents, trademarks, and/or copyrights owned by the licensor).
It’s possible that a licensee sees the commercial value of the licensed brand, and decides to develop additional products labeled with a similar brand without the authorization of the brand owner. Since this creates significant confusion in the market place, and creates direct competition between their brands, the licensor is usually not happy with this scenario.
This case is a perfect example of misappropriation by a licensee, where the licensee was caught copying the trademark and copyright protected brand called “Grumpy Cat.” The right verdict was reached in this case.
Read for amusement and for some good ideas on creating a profitable brand of your own!