Transfer of ownership in Trademarks is done through assignment agreements. The transfer of ownership could be partial or complete or could be a short-term or long-term agreement.
Trademark is comparable to a physical asset, an inference can be drawn that, like physical assets, so transfer ownership of a trademark is feasible. The Trademark Act, 1999, makes this possible by means of trademark licensing or trademark assignment agreements.
Any property is invaluable when it is acquired out of one’s hard work or one’s hard-earned money. Intellectual property is not an exception to this fact. Trademark is one of the most commonly used intellectual properties by businesses all over the world. Any business, whether product or service-based, would have a name to refer to itself. With time, the trade name of the business becomes the brand name and builds up its own goodwill and reputation. Therefore, a trademark is priceless to a business, just like any other physical asset it would have earned during the course of the business.
As the name implies, in trademark assignment, the ownership vested in the trademark can be assigned to another party. By assigning the trademark to another party, the ownership and rights are shifted to another person by means of the Trademark Assignment Agreement. Also, when a trademark is only partially assigned without giving the rights completely to the other person, it is called licensing. According to the Trademarks Act, 1999, the assignment facilitates the transfer of the owner’s right, title, and interest in the trademark. In the case of registered trademarks, the assignment has to be notified in the trademark register.
Types of Trademark Assignment:
There are various types of Assignment in Trademarks, enlisted by the Act, as depicted below:
- Complete Assignment
- Partial Assignment
- Assignment with Goodwill
- Assignment without Goodwill.
Here, the rights pertaining to the trademark are transferred in totality, to the other party. The owner of the registered trademark opts to transfer all the rights vested in the trademark, and gains royalty in return for the same. Thereafter, the owner loses any right to the trademark after the transfer is accomplished. For instance, Paula the owner of ‘OXA’ assigns the trademark to ‘Tom’ through a complete assignment agreement. Once the agreement is signed by the parties, Paula does not have any right over the trade name ‘OXA’.
In this case, the ownership of the trademark is given by the registered proprietor to another party, for specific products or services as agreed by the parties. The terms pertaining to the products or services where the trademark can be used should be clearly mentioned in the assignment agreement. Thus, here, the original owner can hold the rights on the trademark to some extent and can prevent the party to whom the rights are transferred from encroaching the same. For example, an owner of a shoes and socks brand can assign the trademark proprietary rights pertaining to the shoes alone to a third party and can retain the rights with respect to the socks brand. This kind of transfer is referred to as Partial Assignment.
Assignment with Goodwill:
Here, while the transfer of ownership in a trademark takes place, the brand value and the goodwill associated with it are also transferred. When an assignment with goodwill is opted by the parties, the party to whom the rights of the trademark are transferred, can use the said trademark over the same goods and services the proprietor was using. If the owner uses the trademark ‘OXA’ for products relating to cleaning agents, and if the ownership is assigned with goodwill to another person, say ‘A’, then A can use the trademark, ‘OXA’ for marketing and selling cleaning agents manufactured by them.
Assignment Without Goodwill:
This is also termed as Gross Assignment. The original proprietor of the trademark transfers its ownership to another party here, but without goodwill. Here, the new buyer is restricted from using the trademark for the same class of products the proprietor was dealing with. Therefore, the new buyer deals with products that are totally different from the products that the original owner was selling. Although they use the same trademark, the former will not be able to carry the goodwill the original proprietor had acquired. For instance, if the owner of the trademark ‘DOVE’, dealing with personal care products like soaps and shampoos, sells the trademark without goodwill, then the new owner can use the same trademark over any product other than personal care products.
Apart from voluntarily entering into assignment agreements, companies are also forced to assign trademarks during mergers or acquisitions between them. During such transitions, the trademark is sold with the goodwill to a new company that takes over the former, or the trademark is sold separately without the goodwill. If you have any queries please reach out to Vakilsearch.
The assignment deed is executed accordingly. Thus, the assignment of a trademark facilitates business collaborations or expansions to a large extent. Most often, a trademark assignment is a win-win situation for both the assignor and the assignee. The assignor gets to enjoy the royalty, while the assignee gets to establish a business effortlessly without having to undergo the pain of marketing and registering a new brand.