Since the Thai Trademark Act (No.3) came into force on 28 July 2016, it has been possible for trademark owners to file applications to renew their registrations within six months after the relevant expiration dates subject to an official fee increase of 20 percent. This six months renewal grace period has been of great benefits to many owners of trademark registrations in Thailand. However, a if the registered owner has merged into another entity before the renewal period, this merger needs to be recorded along with the late renewal.
The Riddle of Mergers
While mergers are operations amply provided for under various Thai and foreign laws, the Thai Department of Intellectual Property does not recognize the specific transfer of trademarks through a merger of companies, preferring to class such occurrence as an assignment. This is likely because provisions of the Thai Trademark Act dealing with transfer of rights in trademark applications and registrations (Sections 48 and 49) only provide for transfers in terms of assignment and inheritance. Therefore, to obtain legal protection for marks obtained through a merger transfer, the owner is forced to comply with laws and regulations on trademark assignments.
What's Normally Required for Assignment Recordals
The law requires that assignments be made in writing and filed at the Trademark Division of the Department of Intellectual Property (DIP). To record a trademark assignment, DIP’s regulations require that either the Assignor or Assignee must file an application to record the assignment along with 1) an original notarized copy of the assignment agreement and 2) the original Registration Certificate (for registered marks). If the recordal application is filed through a single agent, the agent would be acting for both Assignor and Assignee, and thus, 3) a notarized power of attorney (POA) for the Assignor and Assignee each must also be filed.
From the procedural requirements above, anyone with a slight acquaintance of company law would see a series of impossibilities. Mergers, by definition, result in a single entity, as the target company is absorbed into the acquiring company. The target company (or, under Thai trademark law, the Assignor) no longer exists, and it is no longer possible for the recordal agent to obtain a POA from the Assignor. The trademark agent remaining on record for the subject registrations (if different from the recordal agent) no longer has any authority to act for the Assignor as the latter no longer exists and has no acting capacity to pass onto such agent – nemo dat quod non habet. In other words, no one can act on behalf of the Assignor in a merger recordal. Further, the assignment agreement must be submitted in original form showing both the Assignor’s and Assignee’s signatures on the same document. As the transfer of trademarks in a merger is likely effected through a Merger Agreement filing an original Merger Agreement may not be desirable for many companies, and oftentimes a newly executed short form agreement is filed instead of a detailed agreement. Again, a new short form agreement is not an option to record a merger because the Assignor no longer exists.
The obstacle course reaches its peak for a merger recordal filed together with a renewal application during the renewal grace period. As mentioned above, trademark renewal is now possible within six months following the expiration date but the DIP’s system does not allowing printing of Registration Certificate Duplicates during the renewal grace period. For ordinary assignment recordals, if the original Certificate is lost or cannot be conveniently provided, it is possible to obtain its duplicate to fulfill formal requirements of the assignment recordal. This is not an option when the recordal application is filed during the renewal grace period.
The Moral of the Story – Our Recommendations
From the above, if a merger is envisaged or has taken place that results in a transfer of ownership in Thai registered trademarks, it is highly recommended that the parties take into account the need to record such transfer early on, taking the following steps:
- A Thai trademark agent be designated to handle the recordals;
- A POA be executed in favor of such agent by the target company (current registered owner);
- A short form assignment agreement be executed by both the target and acquiring companies before the target company ceases to exist;
- Avoid recording the merger during renewal grace period, and;
- If recordal during renewal grace period cannot be avoided, locate the original Registration Certificates.
This article was first published in Managing IP - February 2019 edition