Trade Name Licence Agreement — Colombia

The Trade Name Use Agreement in Colombia is the license contract by which the owner of a trade name — whether registered or unregistered — authorizes a third party to use it in the development of commercial activities, within a defined territory and for a specified period, in exchange for compensation or free of charge. In Colombia, trade names are protected under Andean Community Decision 486 of 2000 (Common Intellectual Property Regime), which governs their registration and protection at the Superintendencia de Industria y Comercio (SIC), and under Law 256 of 1996 on unfair competition, which prohibits the unauthorized use of another's trade name or sign.

The trade name is the designation under which an entrepreneur carries out their commercial activity and is distinguished from the trademark (which identifies products or services) and the corporate name (which identifies the legal entity as registered at the Camara de Comercio). A trade name acquires protection through use and/or registration: Article 190 of Decision 486 protects even unregistered trade names against unauthorized third-party use, provided the owner can demonstrate prior and continuous use in the relevant market. Registration at the SIC provides additional protection and evidentiary certainty.

The Trade Name Use Agreement defines the scope of authorized use: geographic territory (one or more Colombian departments, or the entire national territory), economic sector or business activity, duration of the license, and whether the use is exclusive or non-exclusive. An exclusive license prevents the licensor from granting the same right to other parties in the licensed territory, while a non-exclusive license allows the licensor to continue using the trade name and license it to others simultaneously.

Under Colombian law, the license of intellectual property rights including trade names must be registered with the SIC to be enforceable against third parties. The Circular Unica of the SIC and Resolution 57530 of 2012 govern the registration procedure for trademark and trade name licenses. forms-legal.com provides this Trade Name Use Agreement template, updated to current SIC requirements and Colombian commercial practice for 2025.

The Trade Name Use Agreement in Colombia is needed when: an entrepreneur wishes to expand their brand by authorizing distributors, franchisees or strategic partners to operate under their trade name; a holding company authorizes its subsidiaries to use the group's trade name; a company assigns temporary use of its trade name to a joint venture or special purpose vehicle (SPE) during a project; an individual entrepreneur authorizes their successor to continue operating under their name during the business transition period; or when an exclusive distribution contract includes the right to use the manufacturer's or importer's trade name.

The agreement is also necessary in co-branding or brand collaboration operations where two companies decide to operate jointly under both names, and in franchise agreements where, together with the trademark, the franchisor's trade name is licensed. Formalizing the agreement protects the licensor from unauthorized uses that could constitute unfair competition under Law 256 of 1996, and the licensee against claims from third parties.

Trade name use agreements are common in temporary commercial alliances (uniones temporales) for public procurement bids under Law 80 of 1993, where the consortium must register under a combined name identifying its members as required by Colombia Compra Eficiente (SECOP). The trade name use agreement is part of the formation documents of the temporary union.

The agreement is particularly relevant in the technology and startup ecosystem in Colombia, where companies such as those operating in the Ruta N innovation district in Medellin or in the Distrito Creativo in Bogota frequently license their trade names to white-label partners or licensees who provide services under the licensor's brand in markets where the licensor does not have direct presence.

The Trade Name Use Agreement in Colombia must include the following elements to be valid and enforceable at the SIC and in Colombian courts:

Identification of the trade name: Precise designation of the trade name being licensed, its SIC registration number (if registered), the commercial activity or business sector it identifies, and the territory in which it is protected.

Identification of the parties: Full identification of the licensor (owner of the trade name) and the licensee (authorized user), including name or corporate name, ID document (CC or NIT), registered address and legal representative where applicable.

Scope of the license: Whether the license is exclusive or non-exclusive; the geographic territory covered (municipality, department, national); the specific commercial activities or business sectors for which the trade name may be used; and whether sublicensing to third parties is permitted.

Duration: Start date and end date of the license, or indication that it is indefinite (subject to termination conditions). Under Decision 486, licenses may be registered for the duration of the underlying IP right or for a shorter agreed period.

Compensation: License fee (royalty), which may be a fixed periodic payment, a percentage of the licensee's sales, or a one-time lump sum. For licenses between related companies, the fee must comply with DIAN transfer pricing rules under Articles 260-1 to 260-11 of the Estatuto Tributario to avoid tax adjustments.

Quality control: Obligation of the licensor to supervise and the licensee to maintain the quality standards associated with the trade name. Failure to maintain quality standards may constitute dilution of the trade name's distinctiveness and is grounds for termination of the license.

SIC registration: Obligation of one or both parties to register the license agreement with the SIC within a specified period after signing, to ensure enforceability against third parties under Decision 486 of 2000.

Termination and post-termination obligations: Grounds for early termination, notice period, and obligations of the licensee upon termination — including immediate cessation of trade name use, removal of signage, return of materials, and notification to clients and suppliers. forms-legal.com provides this template updated to current SIC criteria and Colombian intellectual property practice for 2025.