IPR: Trademarks: Assignment and Transmission of Trademark

 Assignment and Transmission of Trademark

Section Applicable:

37. Power of registered proprietor to assign and give receipts.

 38. Assignability and transmissibility of registered trade marks.

 39. Assignability and transmissibility of unregistered trade marks.

 40. Restriction on assignment or transmission where multiple exclusive rights would be created.

 41. Restriction on assignment or transmission when exclusive rights would be created in different parts of India.

 42. Conditions for assignment otherwise than in connection with the goodwill of a business.

 43. Assignability and transmissibility of certification trade marks.

 44. Assignability and transmissibility of associated trade marks.

 45. Registration of assignments and transmissions.

CONCEPT OF ASSIGNMENT AND TRANSMISSION

A trademark assignment is a transfer of an owner’s rights, title, and interest in a trademark or service mark. The transferring party (“assignor”) transfers to the receiving party (“assignee”) its property rights in the mark. An assignment differs from a license, which is the grant of permission to use a mark in some manner but does not transfer any rights of ownership in the mark.

 Section 37 recognizes the right of registered proprietor to assign the trade mark for any consideration and to give receipt. It provides that subject to the provisions of the Act and to any rights appearing from the register to be vested in any other person, the proprietor of a Trade Mark has the power to assign the trade mark and to give effectual receipts for any consideration for such assignment. It means that a registered owner /proprietor of a registered trade mark can assign his rights in trade mark to any other person. A registered trade mark is 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.

 ASSIGNMENT: Section 2(1)(b) of the Trade Marks Act, 1999 defines as “assignment” means an assignment in writing by act of the parties concerned. It means that an assignment must be in writing. An assignment will be through an instrument and both assignor and assignee must execute the instrument. The word used in definition “by act of the parties concerned”, means that assignor and assignee must execute the instrument and any unilateral act shall not constitute assignment.

CONDITIONS FOR VALID ASSIGNMENT

Although the specific requirements for trademark assignments vary by jurisdiction, in most jurisdictions a trademark assignment, to be valid, must, at a minimum:

 i) Be in writing;

 ii) Identify the parties to the assignment, that is, the assignor and the assignee;

iii) Identify the mark(s) to be assigned and any relevant applications or registrations for the mark(s);

 iv) Identify the goods and/or services to be assigned (in some jurisdictions, all the goods and/or services in an application or registration must be assigned);

 v) Be given for consideration;

 vi) Identify the effective date of the assignment;

 vii) Be duly executed (some jurisdictions require that it be signed by all the parties to the assignment, while in others, execution by the assignor alone is sufficient); and

 viii) Include the transfer of goodwill (required in certain jurisdictions). (In India, for example, a trademark can be assigned with or without goodwill, whereas in the United States an assignment without goodwill is considered an assignment “in gross” and considered invalid under U.S. law.)

METHODS TO ASSIGN OR TRANSFER THE MARK TO ANOTHER ENTITY

•      Complete Assignment to another entity– The owner transfers all its rights with respect to a mark to another entity, including the transfer of the rights such as right to further transfer, to earn royalties, etc. (E.g. X, the proprietor of a brand, sells his mark completely through an agreement to Y. After this X does not retain any rights with respect to the brand).

•      Assignment to another entity but with respect to only some of the goods/services- The transfer of ownership is restricted to specific products or services only. (E.g. P, the proprietor of a brand used for jams and jellies and dairy products. P assigns the rights in the brand with respect to only dairy products to Q and retains the rights in the brand with respect to jams and jellies.) This is called partial assignment.

•       Assignment with goodwill– Such assignment is where the rights and value of a trademark as associated with the product is also transferred to another entity.(E.g. P, the proprietor of a brand “Shudh” relating to dairy products, sells his brand to A such that A will be able to use the brand “Shudh” with respect to dairy products as well as any other products it manufactures.)

•       Assignment without goodwill– Such assignment also referred to as gross assignment, is where the owner of the brand restricts the right of the buyer and does not allow him to use such brand for the products being used by the original owner. Thus, the goodwill attached to such brand with respect to the product already being sold under such brand, is not transferred to the buyer. (E.g. P, the proprietor of a brand “Shudh” relating to dairy products, sells his brand to Q such that Q will not be able to use the mark “Shudh” with respect to dairy products but can use this brand for any other products being manufactured by it. In such case the goodwill which is associated with brand “Shudh” for dairy products is not transferred to Q and Q will be required to create distinct goodwill of brand “Shudh” for any other product or service like Restaurant wherein Q proposes to use this brand.).

•       In many jurisdictions like United States, assignment of mark without goodwill is not allowed at all. India on the other hand allows assignment without goodwill.

RESTRICTIONS ON ASSIGNMENT OR TRANSMISSION: SECTION 40(1) OF TRADEMARK ACT, 1999

A Trade Mark is not assignable or transmissible in a case in which as a result of the assignment or transmission there would subsist exclusive rights in more than one of the persons concerned, to use of trade mark, nearly resembling each other or identical trade mark which is likely to deceive or cause confusion , in relation to;

 i) Same goods or services;

 ii) Same description of goods or services; or

 iii) Goods or services or description of goods or services which are associated with each other.

Of trade marks nearly resembling each other or of identical trade mark, if having regard to the similarly of the goods and services and to the similarity of the trade marks, the use of the trade marks in exercise of those rights would be likely to deceive or cause confusion.

REGISTRAR CAN ISSUE CERTIFICATE IN THIS CASE

Section 40(1) of the Trade Mark Act, 1999

The proprietor of a registered trade mark who proposes to against it may submit to the Registrar in the prescribed manner a statement of case setting out the circumstances and the Registrar may issue to him a certificate stating whether, having regard to the similarity of the goods or services and of the trademarks referred to in the case, the proposed assignment would or would not be invalid under sub-section (1), and a certificate so issued shall, subject to appeal and unless it is shown that the certificate was obtained by fraud or misrepresentation, be conclusive as to the validity or invalidity under sub-section (1) of the assignment insofar as such validity or invalidity depends upon the facts set out in the case , but as regards a certificate in favor of validity, only if application for the registration under section 45 of the title of the person becoming entitled is made within six months from the date of which the certificate is issued.

It means that the proprietor of a registered trade mark, can apply with registrar to get a certificate on validity of assignment according to the provisions of Section 40(1) of the Trade Marks Act, 1999. The certificate from registrar will be the conclusive evidence on the validity of assignment.

Restriction on assignment or transmission when exclusive rights would be created in different parts of India

SECTION 41 Restriction on assignment or transmission when exclusive rights would be created in different parts of India.—Notwithstanding anything in sections 38 and 39, a trade mark shall not be assignable or transmissible in a case in which as a result of the assignment or transmission there would in the circumstances subsist, whether under this Act or any other law—

 (a) an exclusive right in one of the persons concerned, to the use of the trade mark limited to use in relation to goods to be sold or otherwise traded in, in any place in India, or in relation to services for use, or services available for acceptance in any place in India; and

 (b) an exclusive right in another of these persons concerned, to the use of a trade mark nearly resembling the first-mentioned trade mark or of an identical trade mark in relation to—

 (i) the same goods or services; or

(ii) the same description of goods or services;

 (iii) services which are associated with those goods or goods of that description or goods which are associated with those services or services of that description, limited to use in relation to goods to be sold or otherwise traded in, or services for use, or available for acceptance, in any other place in India.

PROVIDED THAT in any such case, on application in the prescribed manner by the proprietor of a trade mark who proposes to assign it, or by a person who claims that a registered trade mark has been transmitted to him or to a predecessor in title of his since the commencement of this Act, the Registrar, if he is satisfied that in all the circumstances the use of the trade mark in exercise of the said rights would not be contrary to the public interest may approve the assignment or transmission, and an assignment or transmission so approved shall not, unless it is shown that the approval was obtained by fraud or misrepresentation, be deemed to be invalid under this section or section 40 if application for the registration under section 45 of the title of the person becoming entitled is made within six months from the date on which the approval is given or, in the case of a transmission, was made before that date.

REGISTRATION OF ASSIGNMENTS AND TRANSMISSIONS

DISCRETION PROVIDED TO THE REGISTRAR UNDER SECTION 45 (2) OF THE TRADEMARKS ACT, 1999-

As per section 45 of the Act, an assignment deed needs to be registered in the appropriate form with the Trademarks Registry in order to bring the Assignee as an owner of the trademark on records. The Section runs as follows-

Where a person becomes entitled by assignment or transmission to a registered trade mark he shall apply in the prescribed manner to the Registrar to register his title. And the Registrar shall on receipt of the application and on proof of title to his satisfaction register him as the proprietor of the trade mark in respect of the goods or services in respect of which the assignment or transmission has effect, and shall cause particulars of the assignment or transmission to be entered on the register.

•      Provided that where the validity of an assignment or transmission is in dispute between the parties, the Registrar may refuse to register the assignment or transmission until the rights of the parties have been determined by a competent court.

  Except for the purpose of an application before the Registrar under sub-section (1) or an appeal from an order thereon, or an application under section 57 or an appeal from an order thereon, a document or instrument in respect of which no entry has been made in the register in accordance with sub-section (1), shall not be admitted in evidence by the Registrar or the Appellate Board or any court in proof of title to the trade mark by assignment or transmission unless the Registrar or the Appellate Board or the court, as the case may be, otherwise directs. As per the provisions of Section 45 and Rule 68 of the Trademarks Act, 1999, an 7/11 application to register the title of a person who becomes entitled by assignment or transmission shall be made in Form TM-24 or TM-23 as it is made by such person alone or conjointly with the registered proprietor. Further, as per the practices of the Indian Trademarks Of ice, an affidavit for no legal proceedings pending related with the trademarks which are subject of the merger is also to be filed on behalf of the transferee company. Now, in case of a merger, since a proprietor registered on record is no more in existence and hence an application for change in title shall be filed in the name of the transferee. The Registrar may require statement of case to be verified by an affidavit on form TM 18 and may call upon the person concerned to furnish such proof or additional proof of title as he may require for his satisfaction. On proof of title to his satisfaction, the registrar will register him as a subsequent proprietor of the trade mark in respect of the goods or services and shall cause the particulars of the assignment or the transmission to be entered on the register. Once the trademark is assigned with goodwill, the assignor cannot in the eyes of law have any interest in the trademark assigned and the assignee alone, as a person interested in the trademark assigned, can represent in opposition proceedings as a party to protect its interest.

The law empowers the registrar to refuse to register the assignment or transmission when the validity of an assignment or transmission is in dispute between the parties, until the rights of the parties have been determined by a competent court [section 47 (2)]

JUDICIAL DECISIONS BY COURT

Radhakashan Khandelwal vs. Asst. Registrar of Trade Marks–The Delhi high court held that “it is true that the rules do not expressly require a notice to be issued or a hearing to be given to the party adversely affected by the order when an application on form TM 24 is made before the registrar, but there is in eye of law a necessary implication that the party adversely affected should be heard before an order for the removal of his name can be made against him.

Cott Beverage Inc., A Georgia … vs. Silvassa Bottling Company on 7 October, 20032-In this case, section 44 does not create a bar for filing a suit by the assignee whose application is pending disposal for registration. Discretion, however, is vested in the Court under Subclause (2) of Section 44 of the Act, whether to permit the said unregistered document in evidence or not. At the same time, it cannot be said that the procedure of registration of assignment is a mere formality. Section 44 has been incorporated merely as a safeguard by the Legislature in order to avoid the multiplicity of the proceedings and also in order to ensure that the various other laws prevailing in the country are safeguarded while registering the assignment. Thus, the grant of registration of assignment or transmission cannot be said to be a mere formality and on a conjoint reading of the provisions it will be apparent that the Registrar has to be satisfied after going through the application, which has to be filed in the prescribed form giving various particulars. In the present case, non-registration of the assignment will have to be considered as an important factor.

Mohammad Zumoon Sahib vs. Fathimunnisa, it was held that the “registration of assignment is not a condition precedent to an action for infringement by the assignee and an assignor of registered trademark will not be disentitled to an action on infringement on ground that assignment was not registered.” The Madras court held that the law prescribes a procedure for the assignee or the representative to have registration of this title. The fallacy in the argument is that it is this registration by the Registrar under section 35(1) of the act that confers title. The title already exists in the legal representative and on proof of such title to his satisfaction; the registrar registers him as the proprietor of the trade mark. The plaintiff to the suit for infringement, whose name was not entered as subsequent proprietor, was allowed to maintain the suit on proof of prima Facie title to the mark.

 Hindustan Lever Ltd. v. Bombay Soda Factory, it was held that “the plaintiff could not be non-suited merely because the change in the name of the registered proprietor had not been effected by the time suit was instituted. Registration of the name of the proprietor does not confer title on him. it is merely an evidence of his title. The plaintiff –company was the owner of the trademark in question at all times.” Modi Threads Ltd. v. Som soot Gola Factory and another, it was held that despite non-registration of the application the civil suit was maintainable. The court held that it is true that the plaintif ’s application for getting transferred and registered trade mark in its name in the of ice of the registrar is still pending but that does not debar the plaintiff to protect the violation of the aforesaid trademark at the hands of unscrupulous persons by filing an action in court of law for injuction.so this is clear prima facie for the court.

CONCLUSION

It is important to register assignment of trade mark, with concerned authority or registrar. An assignee dose not gets rights assigned to him from the assignor, without registration of assignment. Assignment agreements are of considerable importance in IPR since they allow the intellectual property owners to transfer their intellectual property for commercial returns, ensuring intellectual property can be used for monetary gains as well. So, 9/11 issues relating to ownership of IPR must be carefully considered. Though the law provides safeguards, but the slight ambiguity present in the Indian Trademarks Law on this point shall be dealt with by the legislature. However, another important thing the courts show that even without registration of assignment, a suit by the assignee is maintainable. If necessary, the suit may be stayed to enable the assignee to register the same. Therefore, it is an obvious fact that after an assignment or merger or transmission as the case may be the assignee has to step into the shoes of the assignor for purposes of any legal proceedings which are pending or indisposed.