This contract tip is to avoid granting naked trademark licenses.
If your contract includes a trademark license, you also need to have a requirement that the goods and services associated with the trademark meet the licensor's quality requirements.
A license without quality requirements is called a naked trademark license.
Naked trademark licenses are risky for trademark owners.
Trademark laws allow licensing, but require the owners to exercise control over the quality of goods and services associated with the licensed trademarks.
When the trademark owner or its licensees grant naked trademark licenses, bad things can happen.
The trademark may lose value if the public starts to associate the trademark with poor quality.
But even worse, the owner risks losing its rights to the trademark itself.
The existence of naked licenses can be used as the basis for an abandonment claim against the owner. Those claims can result in the cancellation of the trademark registration.
This all leads to the question of exactly what quality requirements are required.
Like so much in the law, there is no universal test or standard. The inquiry is centered around whether the licensor actually exercised some quality control.
