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Licensing and assignments of Trademark

A business may commercially exploit its trademark by manufacturing its goods, or it may permit other entities to manufacture goods under its own brand name – through licensing or franchising arrangements (discussed later in this module). It may even sell a particular mark to another entity (known as assignment under trademark law).
Businesses which enter into licensing, franchising or assignment arrangements are also required to make appropriate filings under the Trademarks Act. The type of commercial arrangement and the associated regulatory filings are mentioned below:
  1. Assignment: A trademark is typically sold through assignment. Under the Trademarks Act, assignment may be of two types - with the goodwill of the business or without goodwill. Assignment is accompanied with the goodwill when an entity transfers the mark, along with the right to use it with respect to the products with which it was using the mark. After assignment, the assignor (seller) will not be able to use the mark with with respect to the products. Assignment with goodwill is taken when the business is sold to another entity. E.g. If Honda’s car and bike manufacturing assets (or the business) is acquired by Suzuki, an assignment with goodwill will have to be undertaken.
 Compliance requirements for assignment of a trademark with goodwill are quite simple - a filing is required to be made to the Registrar of Trademarks, in Form TM 23, if the request is made jointly by the owner and the assignee, or Form TM 24, if the request is made by the assignee alone) must be filed with the Registrar.
A trademark can also be assigned without the goodwill of the business – if Honda (the car and bike manufacturer) were to transfer the mark to a purchaser, but restrict the use of the mark to, say mobile phones, it would undertake an assignment without goodwill.
In case a trademark is sought to be assigned without the goodwill of the business, the owner is required to make an application to the Registrar in Form TM 20. The Registrar may permit assignment without goodwill after an advertisement is made in the newspapers and after he is satisfied that the interest of a third party is not adversely affected.
  1. Licensing/ franchising: Businesses frequently enter into licensing agreements for commercialization of trademarks. Occasionally, an early stage business may be a licensee or a franchisee of another entity’s trademark. In such a situation, it is important for an entrepreneur to be aware of the licensee’s rights under the Trademarks Act.
 Under the Trademarks Act, a licensee or franchisee has the option to make certain filings to the Registry (jointly with the licensor or franchisor), which will entitle him to be treated as a ‘registered user’. A registered licensee or franchisee has certain benefits which may enable him to protect his business interest much better, as compared to unregistered licensees or franchisees. An unregistered licensee or franchisee cannot file a legal proceeding in case an infringement takes place (he must rely on the licensor or franchisor to sue for infringement), which makes it extremely difficult for the licensee/ franchisee to enforce his rights. Under certain circumstances, the Registrar of Trademarks also has certain powers to cancel or modify or permit alteration of a trademark, which can be exercised on application by the trademark owner/ any other aggrieved person or of its own accord.  While alteration or cancellation of the trademark is likely to affect the rights of any licensees of the mark, an unregistered licensee is not required to be made a party to such proceedings.
On the other hand, a registered user can sue an infringer independently (without making the licensor or franchisor a party to the proceedings). Further, a trademark owner is required to make him a party in any legal proceeding that is initiated for modification or alteration of the trademark. These benefits help a licensee or franchisee to protect his business interest.
If the trademark owner applies to the Registrar for modification of the trademark, the licensee is not required to be made a party to the proceeding. These can seriously jeopardize the interest of a licensee.


Example: If a local manufacturer has started producing replicas of HCL tablets under the name ‘HCL 2.0’ (without obtaining permission from HCL), an unregistered licensee of HCL will not be able to initiate legal proceedings for trademark infringement, even if his commercial interest is being harmed. He will have to rely on HCL to initiate legal proceedings. If HCL is slow to act, or if it fails to pursue the infringer, he will not be able to take legal action.


For registration as a ‘registered user’, the licensee and the owner must jointly file Form TM-28 with a stamped copy of the agreement and an affidavit by the proprietor as per the Trademarks Rules. Broadly speaking, the agreement and the affidavit must contain details of the business relationship between the parties (e.g. agent-principal, holding – subsidiary relationship, etc.), any geographical limitations on the license, time period of the relationship, royalty payable, etc.

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