How to Transfer Trademark to a 3rd party?

Trademark is essentially another word for brand or brand name. A trademark can be any name, word, symbol, slogan, or device that serves to both identify and distinguish a business or product from others in the market. It has a significant value and trust associated with the trademark which compels people to purchase a product without thinking about it twice. This blog aims to clear your doubts on ‘How to transfer Trademark to a 3rd Party?’.

The Trademark Act, 1999 provides the procedure for the transfer of trademarks. The proprietor of the trademark has the power to assign his trademark to another in exchange for some consideration. Such assignment can be made with or without the element of goodwill of the trademark.

Trademarks like any asset can be transferred from one owner to another. The transfer could be temporary through licensing or permanent through an assignment. Assignment of trademarks is a process in which the owner of the trademark transfers the ownership of the mark either with or without the goodwill of the business. In other words, it is transferring of proprietary rights in the property of the proprietor.

A request has to be made on Form TM-16 for an unregistered trademark to be assigned or transferred with or without the goodwill of the business concerned. A registered trade mark shall be 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. 

The assignment of trademark is mainly based upon the contract entered into by the assignee and the owner of the trademark by developing any terms and conditions as they like. Section 40 of the Trademark Act, 1999 provides certain limitations to avoid two assignees from clashing with each other by selling under the same mark. The Act limits the use of the trademark by multiple people in the same area.

As per Section 40 of The Trademark Act, 1999, 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, exclusive rights in more than one of the persons concerned to the use, in relation to-

(a)     Same goods or services;

(b)     Same description of goods or services;

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

of trademarks nearly resembling each other or of identical trade mark, if having regard to the similarity 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.

Following shall be kept in mind while drafting contract for transfer/assignment of trademark:

  • It is important to assign the territorial extent of the assignment clearly;
  • The consideration should be clearly mentioned in the agreement. The stamp duty has to be calculated on the basis of the consideration;
  • The effective date of the assignment must be clearly mentioned;
  • It is important to mention if the assignment is along with the goodwill or not;
  • Any restrictions, if any must be clearly stated in the agreement.

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