Assignees can either include or exclude the goodwill of the business when they transfer ownership of trademarks as they arise during the course of a transaction. Whenever a trademark is sold or transferred, its ownership must be entered in the Register of Trademarks in the event that it is a registered assignment of trademark agreement.
An assignment or transfer of a mark can be done using any of the following methods:
- In a trademark agreement, the owner of a brand transfers all its rights to another entity, including the right to further transfer all rights, the right to earn royalties, etc., to the other party. (For instance, X may sell his brand entirely to Y through such an agreement).
- Assignments to other entities only transfer ownership of certain products or services to those specific products or services. In the case of P, a brand proprietor for dairy products, jams and jellies, only the dairy products rights are assigned to Q, but the jams and jellies are retained by P.) This is called partial assignment.
- It can be defined as a trademark assignment that also transfers the right and value of the trademark associated with the product to another party when it is assigned by the trademark owner. A dairy product brand, Shudh, is owned by P and sold by Q so that Q can use it to manufacture dairy products and other products).
- It is a form of assignment where the original owner limits the buyer’s rights by preventing him from using the brand in the same manner he had before the assignment. It is thus impossible for the buyer to obtain the goodwill associated with the brand. In some jurisdictions, such as the United States, trademarks can’t be assigned without goodwill. On the other hand, India allows them.
Moreover, under the Trade Mark Act 1999 there are restrictions on the assignment of registered trade marks where there is the potential to cause confusion amongst the general public or users of the marks. They are as follows:
- This means that no rights will be assigned that create exclusive rights in more than one person over the same goods or services, or for similar goods and services that are associated together (as is the case in most cases).
- Depending on the restrictions on assignment, it may not be possible for one person to use the trademark simultaneously in two parts of the country due to trademark restrictions.
Licensing of Trademark Assignment
It can be agreed to license a mark meaning to grant others permission to use the mark without assigning ownership of the mark, whether it is for all of the goods or services covered by the mark. Under the Trademark Act, the term ‘Registered User’ is used rather than that of ‘License’.
Licensed trademarks benefit both parties. The licensor gains rights to the mark and earns royalties from its use, while the licensee gains market recognition and increases market share.
Licensors can license trademark rights in any way they wish using licensing. Depending on the product or service a licensee can use a trademark or brand on, the duration for which it can be used, and the geographic area in which it can be used, licensees may be limited in their rights to use the trademark or brand.
AGREEMENTS FOR TRANSMISSION
It is important to ensure that when drafting Trademark Assignment Agreements, which pertain to the transfer of ownership of trademarks from one owner to another, that the following points are included:
- A brand owner is not adversely affected by the agreement due to its obligations.
- The assignment explicitly stipulates and negotiates business goodwill as a requirement
- When drafting a transaction agreement, it is important to consider the purpose of the transaction
As opposed to the requirement for Assignments, it is voluntary and not compulsory to register license agreements with the Trademark Registrar of a mark. It is crucial to clearly define and predetermine the licensee’s rights and duties when drafting a License Agreement, just as it is in an Assignment Agreement. Furthermore, such protection is important for the licensee, as well as protecting the Licensor’s brand (from misuse).