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Recent developments in licensing laws and their impact on IP owners

This chapter examines recent developments in licensing laws and their potential impact on businesses and IP rights owners and licensees in the context of trademark law. One of the challenges faced by a trademark owner in a licensing arrangement is how to ensure that use of its trademark by the licensee does not deceive the trade and the public into thinking that the goods or services originate from a source other than the rights holder. A related issue posed by trademark licensing is a rights holder’s loss of control and supervision of the quality of the goods and services provided by the licensee, leading ultimately to the registered trademark being expunged from the Trademarks Register. Recently, two significant issues relating to licensing in Malaysia were considered by the Court of Appeal and the Federal Court – the final appellate court in Malaysia: • which party benefits from the goodwill and reputation generated through use of a trademark by a licensee; and • whether a licensee has an independent right to sue for trademark infringement and passing off. Licensees are parties granted the right to use a trademark. Licensees generally do not enjoy the same rights and benefits as the licensor; licensees who are not listed as registered users are not entitled to institute an action for trademark infringement. However, it is debatable whether licensees are entitled to share the reputation and/or goodwill generated through use of a trademark.

Recent developments in licensing laws and their impact on IP owners

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