Trademark Assignment
Trademark Assignment Process
Ahmedabad, Gujarat
A trademark is property, and like any property it can be sold, gifted, inherited or transferred as part of a business. The transfer itself is an assignment, made by a written deed. The step most people underestimate is what happens afterwards.
Until the assignment is recorded on the register, it is largely unusable as proof of ownership. Section 45(2) of the Trade Marks Act, 1999 provides that a document in respect of which no entry has been made in the register shall not be admitted in evidence by the Registrar or any court as proof of title by assignment or transmission, unless the Registrar or the court otherwise directs.
So a signed deed in a drawer does not make you the proprietor in any practical sense. Recording it does.
With goodwill or without
Section 38 allows a registered trademark to be assigned with or without the goodwill of the business, and the distinction is real.
With goodwill is the normal case. The buyer takes the brand together with the reputation and customer connection attached to it, and can use it for the same goods or services without restriction. This is what happens when a business is sold.
Without goodwill means the mark alone changes hands while the seller keeps the business behind it. This is permitted, but Section 42 attaches a condition: the assignment is not effective unless the assignee applies to the Registrar for directions regarding advertisement of the assignment, and advertises it as directed, within the prescribed period. Skipping that step is a common and expensive error.
Unregistered marks can also be assigned, with or without goodwill, under Section 39.
The restrictions that can invalidate an assignment
Two provisions exist to stop assignments creating consumer confusion, and both are easy to trip over in a partial sale.
Section 40 restricts an assignment that would result in more than one person having exclusive rights to confusingly similar marks for the same or similar goods or services. You cannot carve a mark up so that two unrelated businesses each end up able to use it for the same products.
Section 41 restricts an assignment that would give different people exclusive rights in different parts of India for the same or similar goods. Territorial splitting of a mark within India is not freely available.
Where there is doubt, Section 40 allows the parties to obtain a certificate from the Registrar as to whether the proposed assignment is valid, which is worth doing before money changes hands rather than after.
How the recordal works
The transfer is recorded on Form TM-P, and under Section 45 the person entitled to the mark applies to the Registrar to register their title. The government fee is ₹9,000 by e-filing.
You will need the executed assignment deed. It should identify the parties, the mark and its application or registration number, the classes covered, whether goodwill passes, and the consideration. Where a company is a party, the signatory needs authority to bind it, which is a question of board resolution rather than trademark law.
Recordal is not instant, and the register continues to show the old proprietor until the entry is made, so the practical advice is to file promptly rather than at leisure.
Stamp duty
An assignment deed is an instrument transferring property, so it attracts stamp duty under the relevant State Stamp Act, not under the Trade Marks Act. The rate and the basis of calculation vary from state to state, and the duty is generally worked out on the consideration.
This is a frequent source of confusion because people look for the figure in the trademark rules and do not find it. The government fee on Form TM-P and the stamp duty on the deed are separate amounts payable to different authorities.
Other ways a mark changes hands
Not every transfer is a sale. A mark can pass by transmission — by operation of law, on the death of a proprietor, or on the conversion, merger or amalgamation of an entity. These are recorded in the same way, though the supporting documents differ: a succession certificate, a scheme of amalgamation, or the conversion documents rather than a deed of assignment.
Conversion is worth singling out. When a proprietorship or partnership becomes a private limited company, the mark does not move automatically with the business. It stays with the original proprietor until it is assigned and recorded, which is why so many converted businesses find during due diligence that their brand is still registered to a firm that no longer exists.
Before you assign
Confirm the mark is live and renewed, check that the proprietor details on the register match the actual seller, and decide the goodwill question explicitly rather than leaving it to inference in the deed.
If you are deciding who should hold the mark in the first place, the guide to trademark ownership covers the choice between a founder, the operating company and a holding entity. For the full fee schedule, see government fees, and if you would rather have the recordal handled, see trademark assignment and transfer.