Assignment and licensing of Trade Marks
- Intellectual Property Rights Blogs Opportunities Subject-wise Law Notes
- January 16, 2021
A trademark is an intellectual property right which is a combination of signs or any individual that are used to distinguish products, goods, or services from the others which are offered by other people. Now, these signs include names, letters, numerals, figurative symbols, and combinations if different colours. In trademarks too, just like any physical property such as land, any trademark owner or brand can transfer the rights of their trademark by assignment or licensing it under The Trademarks Act of 1999. Prior to this act, the act of 1958 only covered the horizon of ‘registered and permitted use’. Commercialisation of trademarks in IPR have gained a high momentum because of a huge area of exploitation of financial factors. In due course of changes over the years in the country’s financial & commercial factors, the government has adjusted the trademark law radically with respect to the supply of trades and administration.
This slow adjustment is to move toward licensing and the government slowly took up the pint of commercial development which has influenced the law. The law on this hand has refused to accept that the licensed trade has become a commercial hub but on the other hand, have made sure that conditions like quality control and association course of exchange is present. To put this together the area 53 of the trademark acts of 1999 made a driving force for enlistment by refusing the unregistered licenses of the privileges made under section 52. Developing trust in the merchandise and ensuring the satisfaction of potential sutures is a must in order to prevent crimes over attempts to hinder individual goals. That is why keeping a point of recheck is important for the maker to reflect the individual’s personal stake. Trademark assignment and licensing are the two most efficient modes for commercialisation which are widely used by intellectual property proprietors. These proprieties can utilise the transfer of rights just like consideration of exchange in the forms of royalties etc.
In medieval times Merchants and Productive marks were the two essential forms of imprints which were used for mark demonstration of different production needs and their origin. Such marks were essential for specific techniques on which many individuals worked together or on where societies began recognising such marks for their merchandise. This helped the producers stand out from the rest of the manufacturers and helped them to hold a kind of identity which were easily recognised by their loyal clients. [1]
Trademark authorising or permitting is a condition wherein a trademark proprietor approves an outsider or any third party to utilise the check-in course of exchange of the control and authority over the offer of the items or when an administration authorises someone. There is an establishment of trademark permitting which is done under the licensee which allows utilise the trademark authorisation. So in trademark permitting the trademark proprietor basically allow others to utilise the checks without exchanging the possession of the trademark. [2]
Now one can ask us why a permit for the trademark is even a good idea? The answer would be that there is no harm in doing so rather it is advantageous. It will help you to expand your business in local areas and eventually it will be gainful for both the licensee and the licensor. From the licensee’s predictive this approach will allow you to partner with a perceived trademark which will give you a high ground over your other rivals and from the licensor’s perspective it will become an irresistible business methodology to enhance and make trademark deceivability and extend the topographical reach of the trademark. As trademark has certain privileges to permit, offer, and exchange and therefore certain strategies can be made for it. On the off chance that there should be an event of an assignment of a brand name, there is a change in the duty regarding enrolled mark and in case of allowing; the advantage in the trade stamp continues resting with the primary owner yet far scarcely any kept rights to use the brand/check are given to the pariah. [3]
Licensing and trademark have various business objectives: Firstly negotiations can be done by entities for lump-sum prices for transferring of assignment of their trademarks, this is considered as a new area in the current society. It also allows entities from different parts of the world to render different services and produced goods under different owner’s trademarks by establishing a kind of relationship through an agreement of licensing of the trademark. Having a trademark renders different benefits to the partners and increases the capacity of services, marketing, and producing but this new form of agreements of licensing and assignment opens up new roads for delivery, expanding new companies, and partitioning of market. Many companies enter into different partnerships with owners of trademarks of different geographical areas and make it available to the world. Every entity have their own selections which are often challenging but also appears to be of appealing nature. On the off chance that if there debates, uprising, obtaining or bankruptcy of the Company, the proprietors can take the choice to unite a couple or can be surrendered by the proprietors of the Company.
Secondly, owners can always retain their concerned ownership of the trademark and can also put it on lease it to someone. This will allow the owner to retain their businesses under the name of that particular trademark without actually abandoning the public domain of business. The proprietor can at present procure incomes having a similar brand name permit. In the current world, Partnership permitting is into the great beyond of just loaning a logo into building up a genuine banding together of a business relationship which gives a ton of drive and accomplishment to the critical business of the Company.
For instance when a Paper mash maker and a Temporary stopping Contractor collaborated to grow bogus roof tiles which was not a straightforward Licensing but rather was a setup business tie-up of building up an item which was genuinely an extraordinary accomplishment for both the gatherings. Thirdly, when a trademark is infringed by any third party with an intention to reduce the company’s brand name, it’s reputation and it’s quality, the infringers can exploit such potential business owners or local vendors, and convince the later to become a part of no-profit deals or tie up into business which only destroys their brand reputation. For a large portion of the Companies, enrolling a brand name is simply an acknowledgment than a wellspring of income. The organization shows an unmistakable fascination for expanding the Customer acknowledgment of the item that the income or deals as a piece of advancement or notice. While another Entity accomplices the brand, the limited time or the commercial expenses are shared. [4]
Apart from the upper given objectives considerations for other commercial and financial factors of trademarks should also be given. The royalties can be paid up in the form of lump-sum amounts at the tie when the rights of the licensee are granted upon other entity. This payment can be done all at once or can be paid periodically. There is a way in which royalties are need to be dealt with, these are: we need are sure that when certain royalties are to be paid then we should determine that what kind of penalties are there for failing to pay it on time. Any issues of holding global duties where there were a prerequisite to pay out the monies in the Country of setup business. Any accumulated interest on the extraordinary installments or because of sort of installment.
Royalty calculation would depend on many factors such as relative bargaining skill of both licensee and licensor, its potential accumulated profit, and what will be the marketplace of that trademark which deals in different kinds of product and services. The base calculation is based on gross sale or the net sale, all other associated costs of the overheads, profit margins, the calculation depends on a pre-determined rate at which the owner feels appropriate which is within a range of the owner’s profit margins. This is necessary because there is competition on the market which is quite challenging. This enchases the business. This all involves the process of the trademark which is required for its enrolment in India.
Assignment of trademarks: A assignment of brand name is a complete exchange of the privileges and titles in an imprint. The assignment of assignment happens when the responsibility for brand name is moved starting with one substance then onto the next, which may either be alongside or without the generosity of the reserved business and which must be recorded in the register of brand names. The owner transfers every one of his privileges held in the brand name to the next element for assignments of certain products and enterprises. Here, the responsibility is restricted to just certain items or administrations. Assignment should be done with goodwill but assignments can be done without goodwill also. Here, the outright responsibility for rights and estimation of a trademark related with the item is moved to start with one substance then onto the next. Utilising the case cycle of Trademarks Act 1999 , there is a limitation of these cycle according to the enrolled cycle and their disarray in the midst of different other clear open clients and other clear expectations. These restrictions would be providing a record of these assignments and their outcomes would have rights in a more frantic work have compelling merchandise and enterprises. It further has an unmistakable requirement for relationship according to deeds. Taking the methodology of these Assignments and their outcomes would have a diverse successful cycle in a bigger Spectrum. [5]
In the case of YAHOO!, Inc. V. Akash Arora & anr. [6] respondent made an equivalent space as of Yahoo!, however, was not related with it in any case. The court held that web clients could be befuddled and misdirected into accepting both the spaces as the same. The respondent took a safeguard that it had put a disclaimer on its site. However, it was not conceded by the court and consequently, it was held that a simple disclaimer can’t be adequate as the idea of the web is such. Besides, the name gains exceptional and particular belonging and is predominantly connected with the offended party.
And similarly in the case of the Cola Company V. Bisleri Int. Pvt. Ltd . [7] bisleri concurred, sold and allotted the brand name Maaza including plan rights, realise how rights, altruism, and so on as for mango organic product drink Maaza to Coca Cola. After a timeframe, the litigant organisation recorded enrolment for the characteristic of Maaza in Turkey and began sending out such beverages. Coca Cola requested perpetual directive and harms for encroachment of brand name. Hence, the court allowed a break directive against litigant for utilising the brand name Maaza in India just as different countries.
Licensing of Trademarks : Trademark licensing allows any licensee to use the trademark though the trademark itself is not assigned to other entities that is on chance that the ownership has been transferred. One of the uses of the trademark are to supervise the permission of licensee. Henceforth such licensing of trademark have profuse benefits and advantages for both entities. Hence on this hand, the licensor may enjoy their rights to their trademarks by generating royalties but on the other hand the licensee enjoys a chance to broaden his market /brand chain by using their brand names for building reputation and brand quality and value. [8] The process for registration as a registered user is enumerated in Section 49 of the Trademark Act [9] . The basics for authorising of brand name or enrolment as enlisted client seem to be: The enlisted owner and the enrolled client will together apply recorded as a hard copy for example Brand name License Agreement, to the Registrar of Trademark in the accompanying way:- The arrangement will be recorded as a hard copy as for allowed utilisation of the brand name An affirmation by the enlisted owner of the brand name verifying the points of interest of the understanding, similar to degree of level of control by the owner over allowed utilisation of the imprint, expressing the products and ventures in regard of which enrolment is proposed, expressing condition or limitation on utilisation of the imprint and the period for which the brand name has been authorised. In the case of M/S Hilton Roulunds Ltd. vs Commissioner Of Income Tax, Delhi High Court [10] the court determined that the transfer of a Trade Mark can either be by means of a license or an assignment. And It can be of two kinds:
a) A simple license agreement in the form of permissive use;
b) the license agreement where it is done by a Registered User, is supposed to be registered with Registrar of Trade Marks and it give rise to certain rights as per the provision.
Agreement for different transmissions : Brand name assignments are for the most part executed via brand name assignment arrangements under which the transmission of move happens starting with one element and then onto the next one. While drafting the agreements of licensing and assignments of trademarks in India few points should be taken into considerations mandatorily, these are: That the privileges of the brand name brand don’t will in general reason hurt because of commitments recommended in such agreement. The arrangement as to the assignment is with or without the altruism of the business should be appropriately arranged and unequivocally referenced in the agreement. The understanding should be drafted as per the motivation behind the exchange in question. The rights and obligations of the licensee should be unmistakably pre-decided and defined. The permit arrangement should be enrolled with the brand name Registrar, despite the fact that it isn’t mandatory yet from a legitimate point of view, it is generally prudent. [11]
Difference between Licensing and Assignment of Trademark : Assignments can be of different sorts. For example, an Assignment can be a product but they have complete and absolute ownership in the assignee. Assignment of an enrolled exchange imprint can be with or without the generosity of the business concerned. Such an assignment can be in regard to the relative multitude of products or administrations or part of the merchandise or administrations for which the imprint is enrolled. Be that as it may, an unregistered brand name is assignable with the generosity of a business and if the equivalent is appointed without the altruism of the business, the idea of the exchange would need to be resolved on current realities of a specific case. The central test to decide with respect to whether a specific imprint has been authorised or appointed is to check whether the licensor/assignor has held any rights in the imprint. In the event that rights are held with the proprietor, ordinarily, it is a permit and on the off chance that no rights are held by the proprietor, at that point it would normally be an assignment. A permit is, thusly, only a tolerant utilisation of the imprint, which consent, is revocable. A ‘right to use’ is generally a permit and not an assignment, besides in specific conditions. [12]
In a Delhi High Court case i.e, Su-Kam Power Systems Ltd. vs Mr. Kunwer Sachdev & Anr [13] , the court put worth questions that will help in determining whether a system of agreement is license or an assignment.
- “ Whether the user acknowledges the licensor ’ s right and title over the mark?
- Whether it is a mere right to use the mark or it was a transfer/assignment of a permanent nature?
- Whether the manner of use is specified and restricted and the effect thereof on the rights of the user?
- Whether the payment made by the User is one-time, fixed running royalty or a percentage of sales, with or without investment made by the Licensor on marketing and advertising?
- Whether the licensor has right of supervision and control over the use of the mark?
- Whether sole and exclusive right was conferred on the user and the effect thereof?
- Whether the user can further transfer his rights to third party, with and without consent of the licensor and the effect thereof?
- Whether the licensor had the right to terminate the license and if so, under what circumstances?
- Whether upon termination by the licensor, the user has to stop use of the mark?
- Whether or not the right to sue is given and conferred on the user?
- Whether there is a transfer of goodwill of the business and/or goodwill in the mark?
- Whether there are multiple users of the same mark? ”
Now again in the case of Himalaya Drug Co. Pvt. Ltd., Bangalore v. Arya Aushadhi Pharmaceutical Works, Indore [14] the court held that only a registered proprietor is competent to start proceedings for prevention of its infringement. The court said that if any company or corporation fails to provide evidence that it is a genuine registered proprietor then the suit will be dismissed. [15]
Conclusion : Using the process of trademarks assignment and licensing will have its repercussions. Comprehending the cycle of assignment and permitting of brand names in India is a fundamental issue. The way toward showcasing and vital administration would clearly open plenty of widening skylines in this space, for the licensor and licensee in like manner. Everything relies on the improvement of a brand, and the utilisation of the brand, which aggregately structures a factor to help to showcase in different areas. Possessing an understanding which set a model for making IPR and do permit licensed innovation move of these business returns. It is additionally guaranteed that different deliverable financial increase will have usage according to the Agreements and have buy esteem utilising the advantage of right made up and furthermore give legitimate and fair rights to law and other significant issues. Further quickening of these intellectual property rights would do consider the intellectual property rights all the more thoroughly and have organisations own important necessities all the more cautiously justifiable and have intellectual property rights made out of degree and address the requirements of the asset. It supplementally characterises and furthermore gives clear commitments to not ready to uncover and make provision to address the issue with the locale of Alternative Agreement statement for these issues lawful agreement for their consistence exist laws.
It however is worth taking note that the capacity of a Company to Sell or purchase is a lot needed to support on the lookout. Despite the fact that the Trademark doesn’t take a lot of room, a lot of intellectual properties can really be a weight to the Company because of the assets needed to keep up the enrolling expenses, for its appropriate safeguard if there is any outsider case or for assembling and deal for the last creation. , or making and promoting an eventual outcome. For a Company to sell an unused intellectual properties, this can usher the Company’s monetary position and could create incomes and lessening the general Costs. Selling unused or surplus protected innovation can have a quick constructive outcome on an organisation’s funds, creating income and diminishing expenses. At the point when the Company intends to upgrade its business, Company glances forward in buying a brand name to help their business intention, making a character for themselves and guarantee that this is appropriately showcased.
Article by: Sanjoli Verma [Student, Student of Hidayatullah National Law University ,Raipur]
[1] Ng, D. L. a. P. W., 2010. Intersect between Intellectual Property Law and Competition Law. Journal of Management.
[2] https://blog.ipleaders.in/assignment-and-licensing-of-trademarks-in-india/
[3] Anon, 2010. REGULATION OF INTELLECTUAL PROPERTY IN THE LEGISLATIVE CONTEXT WITH SPECIAL REFERENCE TO. Journal of Management.
[4] Anupam Goyal, 2003. “Recognizing the property rights regime for indigenous knowledge of biodiversity in face of TRIPS Agreement”. National Capital Law Journal, 6(9), pp. 129-153
[5] L, W. B., 2000. law relating to patents, trademarks, copyright, designs and geographical indications. 2nd ed. Delhi: universal law publishing co pvt .
[6] 1999 IIAD Delhi 229, 78 (1999) DLT 285
[7] I.A. No. 2861/2009, I.A. No. 12490/2008, I.A. No.13904/2008 and I.A. No. 13905/2008 in CS (OS) No. 2166/2008
[8] Dutta, R., 2008. Critical Analysis: Reflection of IP in Competition Law of India. And kumar, B. a., 2006. law of trademarks in India. 2nd ed. Delhi: center for law.
[9] Trademark Act, 1999
[10] ITA 325/2005
[11] S.Chakravarthy, 2005. Evolution of Competition Policy and Law in India. New Delhi: Academic Foundation.
[12] https://www.latestlaws.com/articles/all-about-trademark-assignment-agreement-explained/#_ftn4
[13] CS(COMM) 1155/2018 & I.As.13597/2018 AND 14309/2018
[14] AIR 1999 MP 110
[15] https://www.vakilno1.com/legal-news/licensing-of-trade-marks-in-india.html#_ftn2
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IP Assignment and Licensing
IP rights have essentially transformed intangibles (knowledge, creativity) into valuable assets that you can put to strategic use in your business. You can do this by directly integrating the IP in the production or marketing of your products and services, thereby strengthening their competitiveness. With IP assignement and IP licensing, IP owners can also use your IP rights to create additional revenue streams by selling them out, giving others a permission to use them, and establishing joint ventures or other collaboration agreements with others who have complementary assets.
Expert tip: Assignment, license and franchising agreements are flexible documents that can be adapted to the needs of the parties. Nevertheless, most countries establish specific requirements for these agreements, e.g. written form, registration with a national IP office or other authority, etc. For more information, consult your IP office .
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You can sell your IP asset to another person or legal entity.
When all the exclusive rights to a patented invention, registered trademark, design or copyrighted work are transferred by the owner to another person or legal entity, it is said that an assignment of such rights has taken place.
Assignment is the sale of an IP asset. It means that you transfer ownership of an IP asset to another person or legal entity.
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You can authorize someone else to use your IP, while maintaining your ownership, by granting a license in exchange for something of value, such as a monetary lump sum, recurrent payments (royalties), or a combination of these.
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If you own a patent, know-how, or other IP assets, but cannot or do not want to be involved in all the commercialization activities (e.g. technology development, manufacturing, market expansion, etc.) you can benefit from the licensing of your IP assets by relying on the capacity, know-how, and management expertise of your partner.
Expert tip: Licensing can generally be sole, exclusive or non-exclusive, depending on whether the IP owner retains some rights, or on whether the IP rights can be licensed to one or multiple parties.
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