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10.2 Quality Control in Licensing

2 min readLast Updated on July 25, 2024

Quality control in trademark licensing is crucial for maintaining brand value and legal protection. Licensors must exercise control over licensed products to preserve consumer expectations and prevent trademark abandonment. This involves setting standards, monitoring compliance, and retaining the right to terminate licenses.

Effective quality control methods include developing guidelines, regular auditing, and providing support to licensees. Insufficient control can lead to loss of trademark rights, damage to brand reputation, and legal disputes. Cases like Barcamerica and Freecycle Network highlight the importance of active quality control efforts.

Quality Control in Trademark Licensing

Importance of quality control

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  • Maintains value and distinctiveness of the mark preserves consumer expectations and protects brand reputation (McDonald's consistent taste worldwide)
  • Prevents trademark abandonment ensures consistent use of the mark and demonstrates ongoing control by the licensor (Coca-Cola's strict formula control)
  • Supports legal enforceability of the trademark strengthens position in infringement cases and maintains the mark's validity (Apple's rigorous App Store review process)
  • Exercise adequate control over licensed products/services establish quality standards and monitor licensee compliance (Nike's manufacturing guidelines)
  • Retain right to inspect and approve goods/services include inspection clauses in licensing agreements and conduct regular quality checks (Starbucks' coffee bean sourcing standards)
  • Maintain ability to terminate license for non-compliance define termination conditions in the agreement and enforce termination when necessary (Disney's character licensing agreements)
  • Document quality control efforts keep records of inspections and communications and maintain evidence of ongoing oversight (Ford's dealership quality assurance program)

Methods for quality control

  • Develop comprehensive quality control guidelines specify product/service standards and outline approved use of the trademark (LEGO's precise brick specifications)
  • Implement regular auditing procedures schedule periodic on-site inspections and require submission of product samples (UL safety certification process)
  • Provide training and support to licensees offer initial orientation programs and provide ongoing technical assistance (Subway's franchisee training program)
  • Establish clear communication channels designate point of contact for quality issues and create reporting mechanisms for concerns (Amazon's seller performance metrics)
  • Use technology for monitoring and reporting implement digital tracking systems and utilize data analytics for quality trends (IBM's blockchain for supply chain tracking)

Consequences of insufficient control

  1. Loss of trademark rights
  2. Damage to brand reputation
  3. Decreased product/service quality
  4. Legal disputes with licensees
  5. Consumer confusion and dissatisfaction
  • Barcamerica International USA Trust v. Tyfield Importers, Inc. failure to exercise actual control over wine quality resulted in naked licensing and trademark abandonment
  • Freecycle Network, Inc. v. Oey insufficient control over use of trademark by member groups led to loss of trademark rights
  • Eva's Bridal Ltd. v. Halanick Enterprises, Inc. lack of meaningful quality control measures resulted in forfeiture of trademark rights
  • Kentucky Fried Chicken Corp. v. Diversified Packaging Corp. inadequate policing of unauthorized merchandise demonstrated importance of active quality control efforts

Term 1 of 17

Adequate quality control
See definition

Adequate quality control refers to the measures and processes implemented by a trademark owner to ensure that the goods or services associated with their trademark meet a certain standard of quality. This concept is critical in licensing agreements, as it helps protect the integrity of the brand and prevents consumer confusion by ensuring that licensed products maintain the same level of quality as those produced by the trademark owner.

Key Terms to Review (17)

Term 1 of 17

Adequate quality control
See definition

Adequate quality control refers to the measures and processes implemented by a trademark owner to ensure that the goods or services associated with their trademark meet a certain standard of quality. This concept is critical in licensing agreements, as it helps protect the integrity of the brand and prevents consumer confusion by ensuring that licensed products maintain the same level of quality as those produced by the trademark owner.

© 2025 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.

Term 1 of 17

Adequate quality control
See definition

Adequate quality control refers to the measures and processes implemented by a trademark owner to ensure that the goods or services associated with their trademark meet a certain standard of quality. This concept is critical in licensing agreements, as it helps protect the integrity of the brand and prevents consumer confusion by ensuring that licensed products maintain the same level of quality as those produced by the trademark owner.



© 2025 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.

© 2025 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.
Glossary
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