The term ‘trademark assignment’ refers to the transfer of a trademark from one person to another. In simpler terms, it involves the movement of benefits, interests, rights, and titles related to the trademark. This transfer essentially entails passing the ownership benefits, rights, title, and interests from the original owner to another individual. The person who transfers the trademark is known as the ‘Assignor,’ while the individual receiving it is termed the ‘Assignee.’ In this blog, we shall see the assignment of trademark without goodwill of business in India.
Significance of Trademark Assignment
Assignment of trademark with goodwill or assignment of trademark without goodwill is a crucial aspect of intellectual property law, specifically governed by the Trade Marks Act, 1999 in India. Understanding the power and applicability of trademark assignment is essential for individuals and businesses seeking to transfer or acquire trademark rights.
Assignment Under U/s 37 of the Trade Marks Act, 1999
Section 37 of the Trade Marks Act, 1999, delineates the authority vested in the registered owner of a trademark. This section is paramount in determining the ability to assign a trademark and the ensuing legal implications. According to this provision, the individual registered as the owner of the trademark in the trademarks register holds the exclusive power to assign the trademark. The assignment, when carried out correctly, results in the effective transfer of trademark rights and responsibilities.
Assignability of Registered and Unregistered Trademarks
Two distinct scenarios arise in the assignment of trademark registration, each governed by specific sections within the Trade Marks Act, 1999:
1. Assignment of Registered Trademarks (U/s 38)
Under Section 38 of the Trade Marks Act, 1999, the assignment of a registered trademark is permitted. This assignment can occur with or without the transfer of business goodwill. This flexibility offers trademark owners various options when assigning their registered trademarks, facilitating strategic business decisions.
2. Assignment of Unregistered Trademarks (U/s 39)
Section 39 of the Trade Marks Act, 1999 deals with the assignment of unregistered trademarks. Unlike registered trademarks, unregistered trademarks can also be assigned, whether with the goodwill of the business or assignment of trademark without goodwill of the business.
Types of Trademark Assignment
Trademark assignments can be categorised into two main types, each with distinct implications for the assignor and assignee. Understanding these two types is essential for those involved in trademark transactions.
1. Assignment of the Trademark with Business Goodwill
When a trademark is assigned along with business goodwill, it involves not just the transfer of the trademark itself but also the associated rights, values, and entitlements linked to that trademark concerning specific goods and/or services. In this scenario, the assignor passes on the trademark and its goodwill to the assignee.
2. Assignment of Trademark without Goodwill of Business
In contrast, in assignment of trademark without goodwill, the assignor transfers the trademark to the assignee with entitlements and rights limited to goods and/or services that the assignor is not utilising under that trademark. This assignment of trademark without goodwill prohibits the assignee from using the trademark in connection with goods and/or services that the assignor continues to use under the same trademark.
Procedure for Assignment of Trademark without Goodwill
Assignment of trademark without goodwill involves specific steps and forms to be filed based on the trademark’s registration status. The procedure differs for pending and registered trademarks:
For Pending Trademarks (Not Registered Yet):
1. Fill out Form TM-M: Start by completing Form TM-M, which is the application for assignment of a pending (unregistered) trademark.
2. Submit Statutory Fees: When filing offline, you must submit the statutory fees of Rs.1,000. In the case of online filing, the fees are Rs.900.
For Registered Trademarks:
1. Fill out Form TM-P: If the trademark is already registered, use Form TM-P to apply for the assignment without goodwill.
2. Submit Statutory Fees: When filing offline, the statutory fees are Rs.10,000, and for online filing, the fees amount to Rs.9,000.
File Form TM-P with Preliminary Fees: Initially, file Form TM-P along with preliminary fees of Rs.3,000 for offline filing or Rs.2,700 for online filing. This should be done within six months from the assignment date or within the three months extended period. This step is crucial for obtaining directions from the registrar regarding the ‘advertisement of assignment of trademark without goodwill.’
File TM-M or TM-P, as Required: After receiving the necessary directions, you will need to file either Form TM-M or Form TM-P based on the specific requirements of your assignment. The choice between these forms will depend on whether the assignment involves a pending or registered trademark.
Process of Trademark Assignment Registration
The process of registering a trademark assignment involves several steps governed by the relevant provisions of the law. Mentioned below is a comprehensive overview of the procedure for registering a trademark assignment:
1. Application for Registration (U/s 45):
The subsequent proprietor/assignee of a trademark, who has acquired entitlement through assignment, must apply to the Registrar of Trademarks for the registration of the assignment.
2. Registrar’s Evaluation (U/s 45):
Under Section 45, once the Registrar is fully satisfied with the application, the assignee’s details will be officially recorded by the Registrar as the new proprietor of the trademark, specifically for the goods and/or services covered by the assignment.
3. Disputes Regarding Assignment Validity (U/s 45):
If disputes arise between the involved parties regarding the validity of the assignment, the Registrar has the authority to withhold registration of the assignment until a competent court resolves the conflicting rights of the parties.
4. Timely Disposal of Application (Trade Marks Rules, 2017 – Rule 76):
The Registrar is required to process and dispose of the application for assignment registration within three months from the date of its receipt. This rule ensures a timely and efficient handling of trademark assignment applications.
5. Verification of Documents (Trade Marks Rules, 2017 – Rule 77):
In cases where doubts exist regarding the authenticity of the documents or statements submitted, the Registrar may request the applicant, who seeks registration as a registered trademark proprietor, to provide additional evidence or proof of title.
6. Proper Stamp Duty (Trade Marks Rules, 2017 – Rule 78):
In the event that the Registrar finds any document provided to establish a person’s title is inadequately or improperly stamped, the Registrar reserves the right to take appropriate actions as per Chapter IV of the Indian Stamp Act, 1899, to rectify the matter.
Once the assignment registration is approved by the Registrar, the following information will be documented in the register:
- Assignee’s name
- Assignee’s address
- Assignment date
- Description of the assigned rights, if the assignment pertains to specific rights
- Basis of the assignment
- Date of the register entry
This process ensures the proper transfer of trademark rights from the assignor to the assignee and provides clarity in the ownership of the trademark for specific goods and services. It also offers a mechanism for dispute resolution if there are disagreements concerning the assignment’s validity.
Final Thoughts
The assignment of trademark without goodwill of a business is a careful legal process that separates the rights to a trademark from the business reputation and customer loyalty it may carry. This separation allows for the distinct transfer of trademark rights for specific goods or services, while the assignor retains the goodwill attached to the trademark. The procedure involves filing the requisite forms and paying statutory fees as per the Trade Marks Act. Additionally, the assignment of trademark without goodwill must be registered with the Registrar of Trademarks, ensuring clarity and legal recognition of the transfer. This practice offers flexibility in trademark transactions, allowing businesses and individuals to strategically manage their intellectual property rights while preserving the goodwill built around the brand in their respective sectors.
