A trademark has immense intangible value, which can be quantifiably exchanged in the long term. This is why many brands and businesses consider transferring trademark rights from one company to another.
In India, the concept of intellectual property has evolved over time. The intellectual property and the rights connected with it is now viewed through the lens of intangible assets. In fact, there has been a significant surge in legal understanding of intellectual property over the last decade.
A trademark denotes a brand identity (such as Tata Tea, Red Label). Trademarks are one of the most rapidly evolving intellectual property rights and the Indian Trademarks Act, 1999 governs trademarks in India.
The Act addresses all of the legal concerns surrounding trademarks. It permits the transfer of trademark and connected rights and offers several means for doing so.
The following are the two options available to a trademark owner who wishes to transfer their rights:
Trademark assignment is a method of transferring trademark rights from the owner to another person. In legal terms, it involves the transfer of trademark rights of a product or service. A trademark can be assigned whether it is registered or unregistered, with or without the assignment of goodwill.
It can be done in either of the following ways:
Complete Assignment of Trademark
A complete assignment of a trademark facilitates the transfer of all connected rights of a trademark from the owner to another party. These rights include the right to receive royalties, the right to use the mark, the right to sell or transfer the mark to someone else, and so on.
For example, if Flipkart sells its trademark rights to Walmart, it is a complete assignment in the sense that Flipkart no longer has any rights to the logo, brand, or anything else related to it.
Partial Assignment of Trademark
It is not always necessary to make a complete assignment of the trademark. If desired, a partial assignment of a trademark can be made. Partial assignment of trademark restricts the transfer of rights of the assignee to only certain products or services, effectuated via trademark assignment.
For example, if the owner of the trademark ‘Parley’ specifically adds a clause in the assignment agreement that the assignee is only entitled to use the trademark in relation to dairy products then, in that case, the trademark cannot be used for any other segment apart from dairy.
Step by Step Procedure for Trademark Assignment
Step 1: Making an application
For trademark assignment, either the assignee or the assignor of the trademark can make an application requesting the same. An application can also be made jointly by both the assignor and the assignee for effectuating such a transfer. The application should entail the terms of the transfer, the present and proposed proprietor details etc. The application must be made via FORM TM-P.
Step 2: Filing the application
After having prepared the application in TM-P format, file it before the Registrar of trademarks. This should be done within 6 months of the acquisition of the trademark in question. Though filing can be delayed, it attracts payment of some additional fees.
Step 3: Obtaining the order of the Registrar
The process of transfer is slightly different if it is a transfer with goodwill or a transfer of a registered trademark. In both these cases, the direction from the Registrar of a trademark is required before the expiry of 6 months (starting from the day on which the assignment is made). This period may even be extendable, but only if such extension is allowed by the Registrar.
Step 4: Advertisement of trademark assignment
The Registrar through their direction may also specify the way in which the assignment is to be advertised. Following the direction of the Registrar, the advertisement shall be made. In order to ensure compliance, a copy of the advertisement along with a copy of the Registrar’s direction should be submitted.
Step 5: Final approval and transfer
The Registrar, once satisfied with the authenticity of the application, advertisement and other documents, will officially transfer the proprietorship of the said trademark from the original owner (assignor) to the new proprietor (assignee).
The name of the Assignee is to be registered in the register as the new proprietor of the said trademark. Thereafter, as per the terms of the trademark assignment agreement, the assignee can use the trademark.
The case of licensing a trademark is such that the full ownership over the trademark is not transferred to another entity. However, restricted use by the licensee is permitted. License agreements relating to a trademark are mutually beneficial for both the licensor and the licensee. The licensor gets to broaden their market and consumer base, while the licensee can enjoy the royalties generated by the trademark.
Though the registration of a licensee or a licensing agreement is not mandatory, it is advisable. As it allows the licensee to exercise their rights over the trademark against third parties. The registration of the licensee is to be done within 6 months of the agreement before the Registrar of Trademarks. An application is to be made either by the licensor, licensee or jointly in the format of Form TM-28. Along with the said application, the following documents are also required at the time of registering a licensing agreement:
- A copy of the application form, attested by both the licensor and the licensee
- An affidavit by the licensor specifying the terms and conditions of the agreement
- Power of attorney towards the agents, if any
- Any other document that may be required as evidence by the Registrar
If the Registrar is satisfied that all the documents and other formalities are accurately included in the process, then they shall make an entry into the register, to that effect. The entry shall state the agreement date, the date of application and other details.
To summarise, there are two ways to transfer a trademark from one business to another. The first is trademark licencing, and the second is trademark assignment. As stated in the article, each has its own set of requirements that must be fulfilled in order for the process to take place. Get in touch with Vakilsearch to start the process right away!