Trademarks like any asset can be transferred from one owner to another. The transfers could be temporary through licensing or permanent through an assignment. Assignment of a trademark is a process in which the owner of the trademark transfers the ownership of the mark either with or without the goodwill of the business. In other words, it is transferring of proprietary rights in the property of the proprietor. The manner in which an assignment can be made are as follows:
- Complete assignment;
In a complete assignment, the owner of the trademark transfers all the rights with respect to the trademark, including the transfer of the rights such as right to further transfer, earn royalties, etc., to another entity.
For example, A, owner of “xyz”, sells his brand to another through an agreement to B. After this, A does not retain any rights with respect to “xyz”.
- Partial assignment;
In a partial assignment, the transfer of ownership is restricted to specific product or service only. The owner may retain the right to further transfer, to earn royalties etc.
For example, A, owner of a tea and a biscuit brand, transfers proprietary rights only with respect to the tea brand and retains the rights over the biscuit brand, this is said to be a partial assignment.
- Assignment with goodwill;
This is an assignment where the owner transfers the rights and value of the trademark as associated with the product it sells;
For example, A, owner of “TH” trademark for manufacturing and selling of watches, can assign the trademark along with giving the assignee the right to use the said trademark for the same product.
- Assignment without goodwill;
This is an assignment where the owner restricts the assignee to use trademark for the products he uses it for. That is, the goodwill attached to the owner’s brand with respect to the product already being sold under such brand, is not transferred to the buyer. This means that assignor & assignee both can use the same trademark but in dissimilar goods or services.
For example, if the owner of the trademark “TH” uses it for manufacturing and selling of watches and decides to assign it without goodwill, it means that the assignee can use the trademark “TH” for any other product other than watches.
Once a trademark is assigned it is important to record the change in ownership with the Trademark Registry. Specific forms with fees have to filed to ensure that the records reflect the ownership details.
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Procedure to record the assignment with the Registry:
Assignment of an unregistered mark:
Section 39 stipulates that an unregistered trade mark may be assigned or transmitted with or without the goodwill of the business concerned. A request has to be made on Form TM-16 for an unregistered trademark to be assigned or transferred.
Assignment of a registered trademark:
Section 38 stipulates that trade Marks can be either assigned in full or transmitted in part, with or without the goodwill of the business. All transmissions or assignments must be registered with the Registrar of Trade Marks on Form 23 or 24 of the Trade Marks. (Rule 68 of the Trademarks rule, 2002).
In a case of assignment or transfer of a single trade mark:
- if made within six months from the date of acquisition of proprietorship, then the official fee is Rs. 5000;
- if made after expiration of six months but before 12 months from the date of acquisition of proprietorship, then the official fee is Rs. 7,500;
- if made after 12 months from date of acquisition of proprietorship, then the official fee is Rs. 10,000.
In case of assignment of more than one trademark:
- if made within six months from the date of acquisition of proprietorship, then the official fee is Rs. 5000 for the first mark and Rs. 1000 for every additional mark;
- if made after expiration of six months but before 12 months from the date of acquisition of proprietorship, then the official fee is Rs. 7,500 for the first mark and Rs. 1500 for every additional mark;
- if made after 12 months from date of acquisition of proprietorship, then the official fee is Rs. 10,000 for the first mark and Rs. 2000 for every additional mark.
From a practical perspective, this is what you need to incorporate in any assignment deed which involves trademarks;
- The assignment deed must be in writing where the assignor’s name must be same as it is in the Register of Trademarks, i.e. the owner of the trademark;
- It is absolutely necessary that the territorial extent of the assignment is clearly laid down; for example, if the assignee is based in India, then it is a must that the assignment deed contain a clause saying the assignment is for that particular region;
- The next obvious thing is, the mark/marks that the proprietor wants to assign must be mentioned clearly;
- The consideration that the assignee needs to pay should be mentioned as well; the standard phrase of “good and valuable consideration” wouldn’t hold good; The stamp duty has to be calculated on the basis of the consideration.
- The effective date of the assignment must be laid down clearly;
- The most important part of an assignment deed is to mention if the assignment is along with the goodwill or not.
As can be noted, transfer of proprietary rights in trademark is similar to transfer of any other asset; Trademarks are valuable assets since they quantify a company’s reputation and goodwill. While making sure the assignment is in order you also have to keep the records of the trademark registry updated with these changes.