Is It Possible to Sell a Registered Trademark in India?
Significance of Registered Trademark for Indian Businesses
The 21st century has ushered in the era of globalization in India. It is beyond any doubt that today, business competition has grown tougher than ever. In such a situation, one of the most valuable assets of a business entity today is the business trademark that safeguards the business brand name. Online Trademark registration has indeed become one of the most indispensable legal formalities for a business entity, simply because people have become more and more brand conscious.
Selling a Registered Trademarks have been of great significance for any business, as they help put much influence on the targeted clients. These are often instrumental in boosting sales. A TM logo over the product adds a huge emphasis image to it, thus serving as a mark of superiority over fellow market players.
If a brand has already earned some value, the brand owners or the business house may also opt to sell its trademark to a third party. This process in legal parlance is known as Trademark Assignment.
Why do Businesses Opt to Sell their Trademark Registration?
The business may opt to sell their registered trademark in the near future due to a variety of reasons such as:
- Dissolution of the business.
- The amalgamation of 2 or more business units.
- The takeover of business by another entity.
Whatsoever be the reason behind the selling of an existing trademark, the brand owners may sell their brand names along with their trademarks to any third party through the process of trademark assignment. The term itself denotes that the right over the existing trademark registration has been “assigned” to a particular individual or an entity.
Definition of Trademark Assignment
According to Section 37 of the Trademark Act 1999, trademark assignment has been defined as below-
“A transfer of an owner’s right, title, & interest in a registered trademark or brand mark. In a case a trademark is registered, the assignment is required to be recorded in the trademark register.”
Different Ways of Trademark Assignment
As per the Indian Trademark laws, the trademark assignment can be done in 4 different ways:
- Partial Trademark Assignment.
- Complete Trademark Assignment.
- Trademark Assignment with Goodwill.
- Trademark Assignment without Goodwill.
Partial Trademark Assignment
Partial trademark assignment is a situation where the ownership of the trademark gets transferred to the 3rd party (assignee) only with regard to some products/services of the company specified in the Trademark Assignment Agreement between the 2 parties. The main benefit of this kind if an assignment is that the first owner (assignor) of the trademark can sell TM ownership over some products, and keep the remaining rights with him. This way he can confine the trademark transfer to the specified goods, services and/or both only.
Illustration: Britannia, the owner of bread products may decide to transfer ownership (proprietary) rights only in respect of the sweet-buns product to some 3rd party, and retain the ownership right over the bread products. Such transfer is an example of a Partial TM Assignment.
Complete Trademark Assignment
Complete Trademark Assignment in India is a situation where the complete ownership of the trademark gets transferred to the assignee. In such a case, the assignor opts to transfers all the rights to the assignee to earn royalty out of them. In this type of trademark assignment, once the assignor transfers the ownership of a trademark through the agreement to the assignee, he won’t be able to retain any single right on the sold trademark. However, he may be able to earn regular royalty out of the sold trademark, as per the agreement.
Illustration: Oppo, the owner of “OPPO-Real” smartphone, transfers complete trademark ownership over this type of smartphone to the Realme company. In this type of trademark assignment, Oppo shall not be able to retain proprietary rights over this phone, though it can earn royalty over the same, if in agreement.
Trademark Assignment with Goodwill
In this kind of the trademark assignment, the assignor of the trademark opts to transfer the ownership rights of a trademark along with the goodwill in respect of the brand name associated with the trademark. In such kind of trademark assignment, the TM rights as well as the “brand value” get transferred to the assignee. The assignee can now reap the complete benefits of the proposed trademark with regard to the brand, along with its goodwill.
Illustration: BPL, the owner of electronic goods sells his brand to “Sanyo”. Now, “Sanyo” will be able to get the monetary benefit of BPL’s brand with regard to its electronic goods which it manufactures, along with its goodwill.
Trademark Assignment without Goodwill
“Assignment without goodwill” is also known as Gross Assignment. In this kind of the trademark assignment, the assignor of the trademark opts to transfer only his trademark, while restricting the right of the brand name to the assignee. Now, the assignee won’t be able to use such a “brand” of the product, though he can sell the product and earn a profit. The “brand” is still in possession of the assignor. Hence, the goodwill attached to this brand associated with the product remains with the assignor only.
Illustration: Suppose, an owner of a trademark “Redmi” uses this trademark to manufacture and market smartphones. Now, he decides to sell it to some other company without any goodwill. the assignee, in this case, can only use the “trademark” for the smartphone products and not the brand value associated with them.
Documents required for trademark assignment in India
Here are the main documents required for a trademark assignment:
- Trademark assignment agreement between the 2 parties.
- Business proof of both assignor & assignee.
- NOC from the assignor.
- Power of Attorney of the assignor.
- Trademark registration certificate of the assignor.
Additional Validation Requirements of Trademark Assignment
The consent of the assignor for Trademark Assignment is the first requirement, as per his real intention to sell the trademark.
- The Trademark Assignment must be in a written agreement.
- In every Trademark Assignment, there are 2 identifying and witnessing parties – Assignor & Assignee.
- Complete and valid documentation of both the Assignor and Assignee.
- Proper Execution of the valid Trademark Assignment Agreement
- Correct identification of the trademarks
- Proper consideration by the assignee in lieu of the trademark being owned.
- Important: Mention whether or not goodwill also sold along with the transfer of trademark.
These are the key considerations with regard to the Trademark Assignment. Carefully drafting and executing the Trademark Assignment agreement as per the above requirement, helps in the smooth process of Trademark Assignment, and rules out chances of a dispute.