Trademark Assignment

A trademark assignment is the transfer of ownership of a trademark from one party (assignor) to another (assignee). It can be 'with goodwill' (the brand reputation transfers too) or 'without goodwill' (only the mark, in defined goods/services).

The Act permits both, and it says so expressly. Section 38: "Notwithstanding anything in any other law to the contrary, a registered trade mark shall, subject to the provisions of this Chapter, be assignable and transmissible, whether with or without the goodwill of the business concerned and in respect either of all the goods or services in respect of which the trade mark is registered or of some only of those goods or services." Section 39 covers unregistered marks in the same terms, though in permissive language — an unregistered mark "may be assigned or transmitted with or without the goodwill." Section 37 is what gives the registered proprietor the power to assign and to give effectual receipts in the first place.

Assigning without goodwill has a condition most deeds ignore, and it is fatal if missed. Section 42 provides that where an assignment is made otherwise than in connection with the goodwill of the business, "the assignment shall not take effect unless the assignee, not later than the expiration of six months from the date on which the assignment is made or within such extended period, if any, not exceeding three months in the aggregate, as the Registrar may allow, applies to the Registrar for directions with respect to the advertisement of the assignment, and advertises it in such form and manner and within such period as the Registrar may direct." Two cumulative duties on the assignee: apply for directions within six months (nine at the outside), and then actually advertise as directed. Miss either and the assignment simply does not take effect. Note the Act does not fix the advertisement form or period — that is left to the Registrar's direction.

Two things the Explanation to section 42 takes out of that requirement. An assignment of the mark for only some of the registered goods or services, accompanied by transfer of the goodwill of the business in those goods or services only, is not an assignment otherwise than with goodwill. Nor is an assignment of a mark used on goods exported from India, or on services for use outside India, where it is accompanied by transfer of the goodwill of the export business only. Both carve-outs are commonly relevant and commonly missed.

Recording is not optional. Section 45(1) — as substituted by Act 40 of 2010 with effect from 8 July 2013 — provides that a person becoming entitled by assignment or transmission "shall apply in the prescribed manner to the Registrar to register his title", and that the Registrar "shall" register them as proprietor and enter the particulars. Section 45(2) limits the Registrar to requiring further evidence of title "only where there is a reasonable doubt about the veracity of any statement or any document furnished." Section 45(3) lets the Registrar refuse registration where validity is disputed, until a competent court determines the rights.

And section 45(4) is the commercial reason to file promptly: "Until an application under sub-section (1) has been filed, the assignment or transmission shall be ineffective against a person acquiring a conflicting interest in or under the registered trade mark without the knowledge of assignment or transmission." An unrecorded assignment is not void — but it does not bind a later bona fide acquirer. In an acquisition or a financing, that is the clause diligence looks for. (There is no six-month limit in section 45 itself and no extension power in it; the six-month periods in this chapter live in sections 40(2), 41 and 42.)

Two restrictions worth checking before signing. Section 40 bars an assignment that would create exclusive rights in more than one person for the same goods or services, the same description of goods or services, or associated goods or services, where the use of nearly resembling or identical marks would be likely to deceive or cause confusion — with a proviso saving the case where the resulting rights are not exercisable by two or more persons in the same market or on the same export market. Section 40(2) lets the proprietor submit a statement of case and obtain a Registrar's certificate on whether the proposed assignment would be invalid, which is "conclusive as to the validity or invalidity" subject to appeal and to fraud — but a certificate in favour of validity keeps that conclusive effect only if the section 45 application is made within six months from the date the certificate is issued. Section 41 bars an assignment creating exclusive rights limited to different places in India, with a proviso letting the Registrar approve it where use "would not be contrary to the public interest" — again conditioned on a section 45 application within six months of the approval.

Associated and certification marks have their own rules. Section 44: associated trade marks "shall be assignable and transmissible only as a whole and not separately." Section 43: a certification trade mark "shall not be assignable or transmissible otherwise than with the consent of the Registrar", applied for in writing.

We draft the deed, structure the goodwill correctly, and file the recordal. If the change of ownership arises from a merger, succession or restructuring rather than a sale, trademark transfer is the same recordal on different underlying proof; and the renewal should be filed after the proprietor is updated, not before.