Trademark royalties
When a trademark is officially licensed between companies, it is possible to charge fees for the use of the trademark. Such fees are referred to as trademark royalties.
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Royalties for trademarks
Owners of registered trademarks can arrange to licence the use of a registered trademark. In effect, they grant a right to use the trademark in return for charges or payments for such use.
Royalties can be a valuable part of the income from a trademark.
This can arise from royalties earned from goods or services.
Trademark royalty optimisation
When trademark royalties become highly valuable, trademark owners can consider appropriate ways to optimise the commercial returns from trademark royalties.
This would require a review of trademarks, licensing, usage and trademark royalties.
Trademark royalties - EU Directive
The EU passed a directive in 2003 dealing with taxation of interest and royalties under the EC Interest and Royalties Directive 2003/EC/49.
Ireland has implemented this directive.
The directive allows for trademark licence royalties to be earned by associated companies in member states of the EU that are part of a group, to be exempt from double taxation in certain circumstances. Withholding tax exemption can also apply in several member states.
Owners of registered trademarks should consider trademark licencing and trademark royalties with a view to optimising commercial returns.
This may be attractive for trademark royalties in groups of companies that either charge licence royalties or obtain trademark royalties from licence agreements dealing with use of intellectual property rights.
Creating valuable trademark royalties
An example of highly valuable royalty income arose in the case of Winnie The Pooh. Winnie The Pooh started off as a character in a children's book. Certain exclusive rights to the book were obtained by Stephen Slesinger in 1930 from the book's author AA Milne.
Disney acquired certain merchandising rights from Slesinger's company in 1961.
The bear trademark that's worth billions
It is estimated that merchandise related sales of Winnie the Pooh goods amounted to $6bn in 2005.
Trademark royalties estimated between €150m and $240m per year
The significance of the trademark royalties, is that based on the sales, they can be quite sizeable. In the case of Winnie the Pooh, it is estimated trademark royalties could be worth between €150m and €240 million, every year.
So, registered trademarks and ownership of the royalty rights can become highly valuable.
Disney & Pooh - trademark licence or assignment?
On account of the scale of the earnings from Winnie the Pooh, the royalties can amount to considerable sums.
The Milne family & Disney have been disagreeing over the extent of their rights for many years.
In 1983, the parties revoked the 1930 and 1961 agreements and signed a new agreement to clarify matters. However, that agreement has been the subject of proceedings between Milne's granddaughter & others against Disney Enterprises. One issue revolves around whether that agreement was a licence or a full assignment of the trademark rights.
So a firm that concentrates on trademarks may provide more appropriate solutions. Visit our page about trademark licences.