Trademark Assignment and Licensing

The owner of a brand or trademark has the ability to transfer his rights with regard to his trademark either via the process of assignment or through the process of licencing. The Trade Marks Act, 1999 of India addresses both the transfer and licencing of trademarks in its provisions.

Trademark Assignment

To put it succinctly, when a trademark is assigned to a new owner, there is a change in the ownership of the registered brand. On the other hand, when a trademark is licenced, the right in the trade mark continues to vest with the original owner, but the licenced party is only granted a limited number of restricted rights to use the brand or mark.

A trademark is said to have been assigned when the legal ownership of the mark itself is passed from one party to another, with or without the transfer of the goodwill associated with the company. In the event of a Trademark that has been registered, the assignment has to be documented in the Register of Trademarks.

Ways in which Trademark can be Assigned or Transferred

It includes −

Complete Assignment to Another Entity

The owner transfers all of its rights with regard to a mark to another entity, including the transfer of rights such as the right to future transfer, the right to receive royalties, and so on. (For example, X, the owner of a brand, enters into an arrangement with Y in which he sells Y his whole brand.) Following this point, X will no longer have any rights with regard to the brand.

Assignment to another entity, but only with regard to certain of the goods or services

The transfer of ownership is only allowed with regard to certain products or services. (For example, P is the owner of a brand that is utilised for jams and jellies as well as dairy goods. P will continue to own the rights to the brand in regards to jams and jellies, while Q will take over ownership of the brand's rights in relation to dairy products alone. This method is known as partial assignment.

Assignment with goodwill

A kind of assignment that occurs when the rights and value of a trademark as linked with the product are also transferred to another business. This type of assignment is known as a "assignment with goodwill."

(For example, P, the owner of a brand called "Shudh" that is associated with dairy goods, sells his brand to Q in such a way that Q will be able to use the name "Shudh" in relation to dairy products as well as any other items that it creates.)

Assignment without goodwill

A type of assignment that is also known as a gross assignment. This type of assignment occurs when the owner of the brand places restrictions on the buyer's rights and does not permit the buyer to use the brand for the same products that are being used by the original owner. Therefore, the buyer does not get the benefit of the goodwill that is already associated with that brand in relation to the product that is currently being sold under that name. (For example, P, the owner of the brand "Shudh" that is associated with dairy goods, sells his brand to Q in such a way that Q will not be able to use the mark "Shudh" in connection with dairy products but will be able to use this brand for any other items that are created by it.)

In this scenario, the goodwill that is associated with the brand "Shudh" for dairy products is not transferred to Q, and instead, Q will be required to create its own distinct goodwill for the brand "Shudh" in order to use it for any other product or service (such as a restaurant, which is one of the scenarios in which Q proposes to use this brand). In many countries, including the United States, it is not at all permissible to transfer a mark without first acquiring goodwill. On the other hand, assignment without goodwill is permissible in India.

Restriction on Assignment or Transfer of Trademark

The Trade Mark Act of 1999 places specific limits on the assignment of a registered trade mark in situations where there is a possibility that users and members of the public would be confused by the assignment. These constraints include things like −

• Restriction on assignment that results in the creation of exclusive rights in more than one person with respect to the same goods or services, or for the same description of goods or services, or such goods or services as associated with each other. Associated goods and services refer to those that are sold together.

• Restriction on assignment that would result in many persons using the trademark concurrently in various regions of the nation.

Trademark Licencing

Protecting your brand is a crucial corporate asset that may be achieved via the use of trademarks. The granting of a trademark licence may be beneficial to your company plan since it will allow your brand to penetrate other markets and regions. Through the process of trademark licencing, the owner of a specific trademark has the ability to provide a third party the right to use the trademark in a restricted manner and in exchange for a royalty, all while maintaining ownership of the property for oneself or herself.

Advantages to Obtaining a Trademark Licence

Major advantages are −

• It contributes to extending the market potential of the aforementioned mark.

• It has the potential to make a beneficial influence on the daily operations of a corporation.

• The mark often ends up being more well-known and famous as a result of licencing agreements.

• The amount of work that the corporation must do decreases.

How does one go about registering for a trademark licence?

It includes −

• Make sure you have a written License Agreement.

• Submit a joint application with the prospective licensee to the Registrar of Trademarks using form TM-U for the purpose of obtaining a licence registration.

• Send in an affidavit that has been signed and dated by the owner, and make sure to state the following information in it: the particulars of the License, the nature of the connection between the parties, the length of time for usage, and the applicable goods or services.

• Make a payment to the government in the amount of Rs 4500 for each trademark that has to be licenced under each class.

• It is mandatory to submit an application for registration no later than six months after the date when the parties Agreement entered into force, which was signed by both parties.

Trademark Assignment vs. Trademark Licensing

Following are the major points that distinguish both the terms from each other −

• A transfer of ownership of a trademark registration can take place through the process of assigning a trademark. In contrast, when a trademark is licenced, the ownership of the trademark as well as the property rights associated with it continue to be held by the original owner, but the third party is only granted a limited number of rights to use the brand.

• Writing is required for the assignment deed regardless of the circumstances. There is no need that licences be issued in written form.

• A licence grants the rights for a predetermined amount of time, but an assignment may just involve a portion of those rights.

• Since the ownership has been transferred, an assignment is not time-sensitive. A licence is often only valid for a predetermined amount of time.

Conclusion

Both the assignment and licencing of trademarks are important concerns; nevertheless, with the right planning, possibilities may be opened up for all parties involved in the transaction, including the licensor, the licensee, the assignor, and the assignee. The process of building a brand and putting it to use is included in both trademark licencing and trademark assignment. All of them are at the control of the proprietor, and they constitute efficient management strategies for the same.

FAQs

Q1. What kind of impact does the assignment have on the duration of the registration period for the mark?

Ans. Transferring ownership of a mark does not result in an extension of the registration period for the mark. The assignee shall be held responsible for renewing the mark within the period of time that begins six months before the mark is set to expire. If you don't pay the renewal fee, your registration will be cancelled.

Q2. What are the key distinctions between a Registered trademark and Unregistered trademark?

Ans. A registered trademark is one that has been investigated, validated as distinctive, and granted legal protection in accordance with the Trademarks Act. When it comes to proving ownership of a trademark in court, this piece of proof is both direct and decisive. A trademark that has not been registered falls under the jurisdiction of common law and is only valid in the geographic region in which it has been used. The proprietor needs to provide evidence that his brand has garnered a sufficient amount of goodwill.

Q3. How do I go about transferring trademark rights to an individual or corporate entity that has only recently changed its name to one that is different from the one that was previously registered to hold the trademark?

Ans. If a person or business entity has changed its name but continues to own the same rights in and to a mark, then it is possible for that person or business entity to file an assignment in the same manner as if it were a distinct person or business entity that was being granted those rights.