Trademarks are also protected intellectual property, generally in the form of a word, symbol, shape, or any sign, that is affixed to a product to indicate its source and distinguish it from other goods. A trademark holder can license that trademark, often referred to as a mark, to an individual or entity, who may then distribute products under that mark. Without a licensing agreement between those parties, anyone using a mark protected as the property of another would be subject to penalties for trademark infringement.
Intellectual property recognizes trademark rights in part to protect the public, as people come to associate a trademark with certain products and can then rely on the fact that goods bearing that mark will be consistently of the same origin and quality when they make purchasing decisions. Therefore, trademark holders must enforce their right to use the mark, and if they fail to do so, may be found to have abandoned the trademark, leaving it open to use by anyone.
The same legal requirement of enforcement applies to trademark licensing: A trademark owner who licenses the mark must specify in the licensing agreement that the owner is entitled to approve the licensee’s use of the mark and oversee the quality of whatever the mark is being affixed to by the licensee. The failure to so specify in the trademark licensing agreement is called naked licensing and a court may find that the mark holder has abandoned the mark, thereby losing any rights under the law to use it. Even if the licensing agreement contains such a provision, the mark owner must actually oversee what the licensee is using the mark for, or a court may find the owner has abandoned the mark.