Over a while, the nature of business dealings has drastically shifted from earning through the sale of goods and services to the sale of brand value for commercialization. Brand recognition is one of the very popular functions of a trademark and every company believes that the better the brand value, the better the growth of the company. We all know that trademark is territorial and individual-centric, by which we mean that the person under whose name trademark is registered will be the sole and absolute owner of the mark. Along with the ownership, the owners also let a lot of other associated rights like – right to transfer, the right to resell, the right to royalty, and the list go on.
In this article we will be dealing with one such right – RIGHT TO TRANSFER THE TRADEMARK, by two modes –
- Assignment of the trademark
- The license of the trademark
These two terms may seem to be very similar in nature and purpose but there is this thin line difference that makes them altogether two different concepts. Having said that, let’s get directly into the conceptual understanding of the assignment and license of a trademark under the Indian regime.
ASSIGNMENT OF TRADEMARK:
Assignment as the term suggests in giving away or transferring the mark to another person or entity. In this transfer, the ownership and the associated rights to ownership are altogether transferred to the assignee. The assignor relinquishes his rights over the mark and transfers the same to the assignee for consideration.
There are four types by which assignment can be concluded:
- Complete assignment
- Partial assignment
- Assignment with goodwill
- An assignment without goodwill or gross goodwill
To make it simple and straightforward, we have deduced it in tabular form.
|Basis of classification||Type||Meaning|
|Based on ownership||Complete||Under this, the entire ownership of the mark is transferred to the assignee along with rights to resell, royalty, transfer, license, etc for all the products and services associated with the brand name|
|Partial||The transfer of ownership is limited to specific goods or services associated with the brand|
|Based on goodwill||With goodwill||Rights and value associated with the mark are transferred to the assignee. This implies that the assignee can use the mark in products and services manufactured by him as well.|
|Without goodwill||The brand is transferred without transfer of value- i.e., the assignee is restricted from using the mark for the same product line as used by the owner but can use it for other products.|
“RIGHTS OF THE ASSIGNMENT OF THE MARK ARE NOT ABSOLUTE IN NATURE”– RESTRICTIONS ON ASSIGNMENT ARE AS FOLLOWS:
- If such an assignment can confuse the minds of people as to the brand of the product;
- If such assignment creates exclusive rights on more than one person- related to products with the same description, same type, same category, and same business line
- If by such assignment, the trademark will be used by different people across the globe.
Things to keep in mind while drafting the Assignment Deed for a trademark:
- Name of the assignor and assignee – with proper details and proof
- Trademark certificate/ application number
- Nature of assignment- complete or partial/ with or without goodwill
- The extent of rights and obligations of the assignee
- Duly stamped and compulsory notary requirements
- Date of assignment
- Consideration to be paid, if any
- NOC from the owner of the trademark.
Process of Assignment Of Trademark:
We have divided the assignment process into three simple steps:
- Collection of data
- Execution of documents
- Filing and submissions at the registry
Licensing of Trademark:
As mentioned above, there is a thin line difference between the assignment and license of a trademark; under assignment, there is a transfer of ownership and rights associated with ownership, whereas in licensing, there is a transfer of limited rights as mutually agreed by the licensor and licensee and the ownership of the trademark remain with the owner of the trademark (licensor)
Therefore, when the owner of the mark transfers the right to use the mark to a third-party in exchange for some royalty fee, it is termed as licensing.
There are major benefits associated with licensing of trademark:
- Royalty benefits: once you license the use of the mark, you get a good amount of royalty from the third party.
- Expansion of business, mark, and value associated with the product.
- Increase in the popularity of the use of a trademark
Who can get the License: A trademark license can be given to any person who wishes to use the mark, trade in the name of the mark, and exploit the mark for all purposes allowed by the law.
Who can give the license: A person who is the legitimate owner of the mark and has registered himself as the proprietor of the mark at the registry, his successors, legal heirs are all allowed to license the mark.
How can it be done? The registration of a TM License is not a mandatory requirement under the Act, However, we suggest you register the same because it acts as concrete evidence in the Court. It will state the true owner of the document and save the owner from losing his rights to the licensee.
Only a registered user/ licensor/licensee will be able to proceed and maintain the legal proceedings. If the user is not registered then, it might be difficult to maintain a suit. Therefore, it is recommended and advised to register.
Contents of a licensing agreement:
- Details of the parties- Name and Address of the Licensor and Licensee
- Territorial extent for use of the mark
- Royalty details
- Nature and scope of the usage
- List of products and services for which the mark will be used- quality check clause to maintain the brand identity and reputation.
- Indemnification clause
- Termination clause
- Breach of agreement clause
- Remedies for breach
- Dispute resolution clause
Procedure: There is no fixed and detailed process of registration or license of a trademark. The agreement has to be
- in writing,
- signed by both the parties and
- Duly stamped.
The said agreement has to be registered along with the requisite fees (Rupees Four Thousand Five Hundred Only) given on the official website of IP India.
- Application of license has to be made under Form TM-U filed along with required affidavits mentioning the duration, relation of the parties, and scope of the license.
- It is mandatory to apply for the license within 6 months of registration of the agreement, failure to which, the application will stand abandoned.
- Once the application is filed, the contents of the application will be verified. If the contents are correct and satisfactory, the application will be accepted. If the contents are disputable, a hearing for the same can be set up by the registrar to make necessary corrections in the application.
In case the licensee breaches any of the terms of the agreement, then the agreement stands to be canceled and the license is revoked.