Assignments, Mergers, and Transmissions of trademarks

Trademarks, like all intellectual property, are an integral part of a modern business’ assets. It is not uncommon nowadays for the value of a business’ IP to far exceed its physical assets. Like any asset, trademarks can also be bought, sold, and transferred between entities. Whenever there has been any change in the details of the owner of a trademark, whether, through an assignment, name change, or merger, it is always advisable to record this change with the concerned trademarks office as well. Having the records of the trademarks office updated makes it easier to pursue any legal actions against any infringers.

The current system followed by the Indian trademarks office allows for the recordal of changes in the details of the owner under two methods:

1. Changes due to assignment/transmission.
2. Change of name of the proprietor.

The exact request to be filed depends on the specifics of each transaction.

Some scenarios where it is necessary to record a change due to assignment/transmission are mentioned below. For convenience, it is assumed that all the below scenarios refer to the transfer of trademarks with goodwill.

1. Company A sells its trademarks to Company B.

This is a straightforward case of trademark assignment.

2. Company A (which owns trademarks) merges with Company B (which also owns trademarks) to form a new Company C (which now owns the trademarks of A & B).

In the above example, companies A & B have ceased their operations due to the incorporation of the new Company C. Under the current practices of the Indian trademarks office (“TMO”), this would be treated as a case of a change in proprietor due to transmission.

3. Company A (which owns trademarks) merges with Company B (which now owns the trademarks of A & B)

In this situation, Company A has ceased its operations by virtue of its merger with Company B. This scenario would also be treated as a transfer of rights with respect to all trademarks owned by Company A, and therefore a request to record the assignment/transfer of such trademarks needs to be filed.

4. Change in the partnership structure

In the case of partnership firms comprising of only two partners, the retirement/death of one partner results in the dissolution of the firm. Accordingly, any trademarks owned by the firm would also be deemed to be assigned/transferred to a new entity.

While recording an assignment/transmission of trademarks, the following factors also need to be kept in mind:

• Under Indian law, it is imperative that a specific value is affixed to the trademarks in question. This is due to the fact that the transfer can only be enforced once the transfer document is duly stamped in accordance with the applicable stamp duty. The rate of stamp duty varies from State to State (for example, in Tamil Nadu, it is 7% of the consideration amount), and accordingly, it is important to have the requisite stamp duty paid.
• The TMO will reject any requests to record assignments/transmissions if the document has not been stamped, or not stamped as per the requisite amount.
• In the context of global assignments/transmissions, it is advisable to have an India-specific clause with respect to the consideration paid for the Indian trademarks. This is because under current practices, in the absence of a specific value for the Indian operations/trademarks, the stamp duty would be payable on the entire consideration. For example, if the value of the overall assignment was USD 10 million, in the absence of an India-specific consideration amount, the stamp duty would be payable on the entire sum of USD 10 million. As mentioned above, the transfer/assignment will not be enforced in India without the payment of the requisite stamp duty, so it becomes extremely important to address this issue.

Recording assignments/transmissions with the Trademark Office

In order to record assignments/transmissions with the TMO, the following documentation (broadly speaking) is required:

1. A stamped and notarized assignment deed/merger document showing the specific trademark application numbers being transferred, as well as the specific consideration value as described above.
2. An affidavit from the assignee stating that there is no litigation regarding the ownership of the mark(s) in India.

The official fees to record the assignment/transmission of marks is as follows:

INR 9000 per trademark (irrespective of the number of classes) for registered marks.

INR 900 per trademark (irrespective of the number of classes) for unregistered marks.

Of course, like most legal transactions, the exact method and documentation required to record the change in ownership are also dependent on the facts and circumstances of each specific case.

This article has been authored by our associate Nikhil Srivastava