A trademark license agreement is a contract whereby the owner of a trademark confers on a third party (the licensee) the right to affix the trademark to its products and / or make commercial use of the trademark. The trademark license may be granted against payment per product sold or service rendered, or against payment of a lump sum or in return for some other remuneration, for instance based on proportionate royalties depending on the turnover of the licensee.

As far as trademarks are concerned the owner of the trademark has the exclusive right to market or sell the goods and services. The owner of the trademark has every right to transfer the trademark to the third party. It can be done by a license. This is called trademark license agreement. It is only for a specific duration the third party can enjoy that right. Once the duration gets over the right will lapse automatically and it will revert back to the owner. In other words, the exclusive rights over the trademark will revert back to the owner of the trademark.

If the third party uses even after the time period gets over, then the act of the third party will amount to trademark infringement.