Pitfalls Of Trademark Licencing

From Mondaq (free registration required):

"A fundamental principle of trademark law requires a trademark owner to control the nature and quality of the goods or services sold under a licensed mark. Failure to do so may result in the loss of rights in the licensed mark. However, recent case law suggests that a trademark owner who becomes too involved in a licensee’s operations runs the risk of being held liable for injuries caused by defective products produced by that licensee. Put another way, a company that allows its trademarks to appear on licensed products can be held liable under state trademark common law for injuries caused by those products."