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Trade Mark Assignment Agreement

The intellectual property rights assignment is a transfer of the rights of the owner, title and the interest in certain intellectual property. The party transferring the rights are called assignor and the party receiving the rights are called assignee. The assignor transfers to the assignee its property in intellectual property rights such as trademarks, patents etc.

The owner of the rights may transfer all of his rights or part of his rights. Like the copyright owner could assign only some of his economic rights. The licence agreements, grants permissions to use the intellectual property rights under certain conditions. Likely, the general rule assignments are transfers of property rights without any condition under which rights will be used.

An intellectual property assignment agreement is a contract to transfer intellectual property ownership from assignor to assignee. It empowers the assignor to permanently consign all of his intellectual property rights to the willing candidate in exchange for a defined amount. This agreement makes the owner sell his rights similarly as he could sell a physical property marking a permanent transfer. It means he will no longer hold any control, involvement, or claim on the transferred rights.

Section 37 of the Trade Mark Act,1999 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 right 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 receipt for any consideration for such assignment. It is a settled principle that the assignor cannot possibly transfer more rights to the assignee that what he himself has.[1]

A registered trade mark is only assignable, whether with or without the goodwill of the business concerned and in respect either of all the goods or services in respect of the trademark which is registered for those goods or service.

Section 2(1)(b) of the Trade Mark Act,1999 defines the “assignment” to mean “an assignment in writing by act of the parties concerned”. In view of this definition, an assignment has to be in writing and by the act of the parties concerned. Both the assignor and the assignee must execute the document. Such document will be known as the assignment agreement. There cannot be a unilateral execution of document by one party alone.[2]

Type Of Assignment Of Trademark

Complete Assignment of a Trademark: Here the owner of the trademark transfers his ownership and rights completely to the assignee related to the trademark. Such also includes the right to make any further transfer to other person as assignee. After the complete assignment of the trade mark the owner loses his rights over the trademark and the assignee retains all the such respective rights.

Partial Assignment of a Trademark: Here the transfer of the ownership is done to certain products and services only. The assignor holds the rights over the part which he has not transferred to the assignee in terms of assignment. The assignor has the right to make choice related to the partial assignment. The assignor can use such exclusive rights in his business and administration.
Trademark Assignment with Goodwill: Here the assignor can transfer the rights of ownership as well as the image valued rights over the trademark. Then the assignee can use such representation in the market reputation of the trademark for the promotion of the product.

Trademark Assignment without Goodwill: Here lies the restriction over the usage of the trademark product on the part of the assignee i.e the assignor can restrict the assignee for not using the trademark in business. The same trademark can be used by both, the assignor and the assignee in their different business filed. This assignment is also called as gross trademark assignment.
According to the Trade Mark Act, in case of registered trade mark there are some restriction on the assignment of a registered trade mark under section 40 of the act wherein exist the possibility of creating the confusion in the minds of the public. Such includes:


Restriction On Assignment Where Multiple Exclusive Rights Are Created

A trade mark is not assignable in a case in which as a result pf assignment there would subsist exclusive rights in more than one of the persons concerned, to the sue of trade marks nearly resembling each other or of identical trade mark which is likely to deceive or cause confusion relating to:
  1. Same goods or services
  2. Same description of goods and services
  3. Goods or services or description of goods or services which are associated with each other.
However, such assignment is not deemed to be invalid, if having regard to the limitations imposed, the exclusive rights subsisting in the persons are such as not to be exercisable by two or more of those persons in relating to goods to be sold, or otherwise traded in, within India otherwise than for export therefrom, or in relation to goods to be exported to the same market outside India or in relation to service available for acceptance in India.


Restriction On Assignment Where Multiple Exclusive Rights Are Created In Different Part Of India

Section 41 of the Trade Mark Act,1999 lays down the restriction on assignment so as to prevent splitting of rights of a trade mark on a territorial basis and creating the rights upon different person in the different part of India.

Such restriction includes:
An exclusive right in one of the persons concerned, to use the trade mark limited to use in the 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 the acceptance in any place of India.

An exclusive right in one of the persons concerned, to use the trade mark resembling the:
  1. Same goods or services
  2. Same description of goods and services
  3. Goods or services or description of goods or services which are associated with each other.

However, on an application either 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 his predecessor in title, the registrar, if he is satisfied that in all the circumstances the use of the trade mark in exercise of the rights would not be contrary to the interest of public.

Registration Of Assignment

Section 45 of the Trade Mark Act,1999 lays down the procedure for the registration of the assignment. Where a person becomes entitled by assignment to a registered trade mark, he shall apply in the prescribed manner to the registrar to register his title. Registrar shall upon the receipt of the application, register him as the proprietor of the trade mark in respect of the goods or services in respect of assignment.

Registrar may require further evidences and statement in proof of title if there is any reasonable doubt about the veracity of the statement or any document furnished.

If the validity of the assignment is in dispute between the parties, the registrar may refuse registration of the assignment until the rights of parties have been determined by a competent court. Until an application is filed in a aforesaid manner, the assignment shall be ineffective against a person acquiring the conflicting interest in or under the registered trade mark without the knowledge of assignment.

Discretion Provided To The Registrar

According to the provision of section 45, rule 68 of the Trade Mark Act,1999 application for the registering the title of a person shall be made in form TM-24 or TM- 23. It can be made jointly or alone by the registered proprietor. Further, an affidavit for no legal proceedings pending in relation to the trademark which are part of the merger can also be filed on behalf of the transferee company.

The registrar may ask for the statement of the case for the verification which is to be done by the affidavit on form TM-18 and he may call person for furnishing the proof of the title for his satisfaction. On getting satisfied the registrar will register him as subsequent proprietor of the trade mark in respect of the goods and services. Once the trade mark get registered with the goodwill, the assignor cannot have the interest in the trade mark assigned. The assignee alone can represent the opposition proceedings as a party interested.

Position Of Non-Registered Assignee

The registrar has the power to refuse to register the assignment when the validity of the assignment is in the dispute between the parties. Such registration cannot be made until the dispute is settled by the competent court. The refusal of the registrar to register the assignment will arise only before the actual change is made. Assignor can complain that the assignment is not valid or it will repudiate he transaction. In such situation the registrar cannot decide o the validity of the assignment.

Trade Dispute

However, in India the trademarks are protected under the Trade Mark Act,1999. Assignment is an important aspect of the Act. According to the section 2 (1)(b) of the Act, the assignment is the one which is in writing and is in in the concern of the parties. This clarifies that the assignment needed to be in writing and to be in the act of assignor and the assignee of their own volition and not a third party. The assignment agreement is needed to be drafted in a proper manner. Badly drafted agreement can bring ambiguity and confusion between the parties. Such agreements mislead the party and can become the big cause of the dispute.

Thoughts:
It is very important to draft the agreement clearly and precisely state the extent of the rights related to such trademark. It is important to ensure that the assignee thoroughly go through the terms of the agreement so that there should not arise any ambiguity. Minutes details should be checked and pointed out so that no dispute can arise further.

Conclusion
The assignment agreements are always considered important in the intellectual property. It allows the property owner to transfer his ownership rights for the commercial returns and ensures the monetary gains to him. It is a written, enforceable contract that pertains to transfer the rights in a formalize agreement between two persons. It protects and regulates the rights of all the parties that are engaged in the agreement. Assignment agreement involves the exclusive sale of the rights which gives the assignee complete ownership over the marks of the assignor in whatever way, shape, or form it is in.

End-Notes:
  1. Johnson appliances (P) Ltd. v. H.E. Industries, 2016 (68) PTC 247 (Del), p. 275.
  2. Riverdale School Society v. Riverdale High School, 2008 (36) PTC 131 (IPAB).

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