A trademark, once registered, is a species of personal property. Like other forms of intellectual property, it is capable of being owned, transferred, mortgaged, licensed and dealt with in all the ways that the law permits in respect of movable property. The transfer of ownership of a trademark wholly or partially, with or without the business in which it is used, to one person or to several is called assignment. It is one of the most commercially significant transactions in trademark law and its proper execution has consequences that extend far beyond the immediate parties to the transaction, affecting the integrity of the register, the rights of third parties and the validity of the trademark itself.
In India, the law governing trademark assignment is contained in Sections 37 to 45 of the Trade Marks Act, 1999, supplemented by the procedural provisions of the Trade Marks Rules, 2017. These provisions define who may assign a trademark, what may be assigned, the conditions under which assignment is valid, the procedure for recording an assignment on the register and the consequences of failure to comply with the statutory requirements. The framework reflects a careful balance between facilitating the free transfer of commercial assets of which a trademark is one and protecting the trademark’s fundamental function as an indicator of origin and quality, a function that can be compromised if assignment is permitted without regard to the public interest.
This article examines the law of trademark assignment in India comprehensively from the legal nature of the transaction and the categories of assignment recognised by the statute, through the requirements for a valid assignment, the procedure for effecting and recording an assignment, the special rules governing assignments that might cause confusion or deception and the consequences of non-compliance. It also addresses the assignment of unregistered trademarks, the relationship between assignment and goodwill and the emerging issues in trademark assignment that arise from digital commerce and brand transactions in the modern economy.
The Legal Nature of Trademark Assignment
An assignment is a transaction by which the assignor transfers to the assignee the proprietary right in a trademark the entire bundle of statutory and common law rights that ownership of the mark confers. Following a valid assignment, the assignee stands in the shoes of the assignor they become the registered proprietor of the mark, entitled to all the rights and subject to all the obligations that registration entails and the assignor ceases to have any proprietary interest in the mark whatsoever, unless the assignment is partial, in which case the assignor retains the rights not transferred.
The distinction between assignment and licensing which was addressed in the article on trademark licensing is fundamental. In an assignment, the proprietary right passes permanently from assignor to assignee. In a licence, the proprietor retains the proprietary right and grants only a contractual permission to use the mark. A transaction described as a licence but structured as a permanent and irrevocable transfer of all rights in the mark may be characterised by a court as an assignment, with the different legal consequences that assignment entails.
The assignment of a trademark is to be distinguished also from the transmission of a trademark a term used in the Act to describe the passage of trademark rights otherwise than by assignment, such as by operation of law on the death of the proprietor or on insolvency. Section 2(1)(y) of the Trade Marks Act, 1999 defines “transmission” to include devolution on the personal representative of a deceased person and any other mode of transfer not being assignment. The procedures for recording a transmission on the register are broadly similar to those for recording an assignment, though the documentation required differs.
The Statutory Framework – Sections 37 to 45
Section 37 of the Trade Marks Act, 1999 is the primary provision authorising the assignment of registered trademarks. It provides that the registered proprietor of a trademark shall, subject to the rights of any other person appearing from the register to be interested in the trademark, have power to assign the trademark and to give effectual receipts for any consideration for such assignment. The qualification subject to the rights of any other person appearing from the register to be interested reflects the register’s function as a public record of all interests in a registered mark, including registered user entries, security interests and other encumbrances.
Section 38 addresses the assignment and transmission of unregistered trademarks, providing that an unregistered trademark may be assigned or transmitted with or without the goodwill of the business concerned. This provision extends the assignment framework to marks that have not been registered but are in use in trade and have established common law rights through use and goodwill.
Sections 39 to 42 address the restrictions on assignment and the circumstances in which an assignment will not be permitted or recorded, which are examined in detail below. Section 43 addresses the assignment of certification trademarks marks that certify the origin, material, mode of manufacture, quality or other characteristics of goods or services which are subject to additional restrictions reflecting their public certification function. Sections 44 and 45 govern the procedure for applying to register a person as proprietor following assignment or transmission and the Registrar’s powers in that process.
Who May Assign – Section 37
The power to assign a registered trademark is vested in the registered proprietor. A person who is not the registered proprietor for example, a registered user or a contractual licensee has no power to assign the trademark to a third party, because they have no proprietary right in the mark that is capable of assignment. A registered user may assign their rights under the licence agreement in the manner provided by the licence agreement itself, but that is an assignment of contractual rights, not an assignment of the trademark.
Where a trademark is jointly owned by two or more persons a situation that may arise where a mark has been created jointly or where it has passed to multiple beneficiaries on the death of the previous proprietor the consent of all joint proprietors is required for a valid assignment. Section 46 of the Act addresses the rights of joint proprietors and the principle that one joint proprietor cannot unilaterally assign the jointly owned mark without the consent of the other proprietors applies in the assignment context as it does in other dealings with the mark.
A body corporate a company or other incorporated entity may assign its trademarks in the exercise of its corporate powers, subject to any restrictions in its memorandum or articles of association and any requirements of company law applicable to the transaction. Assignments between group companies parent and subsidiary or between subsidiaries of the same parent are commercially common and are legally valid assignments, though their commercial rationale may be scrutinised in the context of anti-trafficking concerns discussed below.
Categories of Assignment – With and Without Goodwill
The most fundamental distinction in the taxonomy of trademark assignments is between assignment with goodwill and assignment without goodwill. The distinction has profound legal consequences and reflects the complex relationship between a trademark and the business in which it is used.
An assignment with goodwill is a transaction in which the assignee acquires not only the trademark but also the goodwill of the business in which the mark is used the reputation, the customer relationships, the business connections and the commercial magnetism that the mark has built up through use. The assignee steps into the commercial shoes of the assignor in relation to the mark and the goods or services with which it is associated. Following such an assignment, consumers will encounter the mark in use by the assignee and will, in the ordinary course, transfer their association of quality and origin from the assignor’s business to the assignee’s.
An assignment without goodwill sometimes called a bare assignment or, historically, an assignment in gross is a transaction in which the assignee acquires the mark but not the associated goodwill. The assignee is free to use the mark in relation to its own goods or services, building fresh goodwill in the mark through its own commercial activity. The assignor, having parted with the mark, is no longer entitled to use it the assignment transfers the proprietary right and any subsequent use by the assignor of the assigned mark would constitute infringement.
Section 42 of the Trade Marks Act, 1999 addresses the potential for confusion or deception that may arise from an assignment without goodwill. It provides that where an assignment of a trademark whether registered or unregistered is made otherwise than in connection with the goodwill of the business in which the mark has been or is being used, the assignment shall not take effect until the assignee has applied for directions from the Registrar as to the manner in which advertisement of the assignment shall be made and the advertisement has been made in the manner directed by the Registrar within six months of the directions being given or within such extended period as the Registrar may allow.
The advertisement requirement under Section 42 serves a critical public interest function. Where a mark is assigned without goodwill, the consumer public which has associated the mark with the assignor’s business needs to be informed that the mark is now used by a different commercial entity with no connection to the original proprietor. Without such notice, consumers may continue to purchase goods bearing the mark under the false impression that they originate from or maintain the quality standards of the original proprietor. The advertisement is the mechanism through which this public notice is given.
Partial Assignment – Section 40
Section 40 of the Trade Marks Act, 1999 permits the partial assignment of a trademark an assignment that transfers the proprietor’s rights in the mark in respect of some only of the goods or services for which it is registered or in respect of use in a particular geographical area. Following a partial assignment, both the assignor and the assignee are proprietors of the mark in respect of their respective shares the assignor retaining rights in the goods or services or territory not assigned and the assignee acquiring rights in those assigned.
The partial assignment mechanism is commercially valuable in a number of contexts. A proprietor who has built a business in multiple product categories under a single mark may wish to divest the trademark rights in one category selling the brand rights for, say, a range of food products while retaining the brand rights for a range of clothing. Or a proprietor with international registrations may wish to assign the mark in some countries while retaining it in others. Partial assignment enables these commercially rational transactions without requiring the proprietor to divest the entire mark.
However, Section 40 imposes a critical restriction on partial assignment it provides that no assignment shall be made of a trademark in respect of some of the goods or services for which it is registered and not others unless it can be shown that there will be no confusion on the part of the public as to the origin of the goods or services. This restriction recognises the consumer confusion risk inherent in a situation where the same mark is used by two different entities in relation to different goods or services consumers who associate the mark with the assignor’s goods may be misled into thinking that the assignee’s goods originate from the same source.
The assessment of whether a proposed partial assignment would cause confusion requires an examination of the relationship between the goods or services retained by the assignor and those assigned to the assignee, the nature of the mark itself and the likely perception of the relevant consuming public. Where the goods or services in the respective portions of the split registration are clearly distinct and unlikely to be associated by consumers, a partial assignment may be permitted without confusion. Where the goods or services are closely related and consumers are likely to assume a common origin for goods bearing the same mark, the partial assignment may be refused.
Restrictions on Assignment – Sections 41 and 42
Section 41 of the Trade Marks Act, 1999 imposes a further restriction on the assignment of both registered and unregistered trademarks. It provides that a trademark 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 the law of passing off or otherwise, exclusive rights in more than one of the persons concerned to use a trademark in relation to the same goods or services, identical or nearly resembling each other, which would be likely to deceive or cause confusion.
This provision addresses the specific risk of concurrent use confusion that may arise where an assignment results in the same or similar marks being used by different persons in relation to the same or similar goods or services. Such an outcome would fragment the mark’s origin-indicating function and mislead consumers who rely on it as a guarantee of consistent quality and origin. Section 41 prevents this outcome by prohibiting assignments that would create this kind of confusion it is a restriction that operates in the public interest, not merely in the interests of the parties to the transaction.
Where a proposed assignment would result in Section 41 restriction engaging, the Registrar will refuse to record the assignment on the register. The transaction itself may be void as between the parties or it may be valid as a contract but unenforceable as a trademark assignment to the extent that its recording is refused. Parties contemplating a transaction that might engage Section 41 should seek legal advice at the drafting stage to identify and address any confusion risks before the assignment is executed.
The Assignment of Unregistered Trademarks – Section 38
Section 38 of the Trade Marks Act, 1999 provides that an unregistered trademark may be assigned or transmitted with or without the goodwill of the business concerned. This provision recognises that unregistered marks marks that have acquired common law rights through use and goodwill but have not been formally registered are nonetheless valuable commercial assets capable of being transferred.
The assignment of an unregistered mark is governed by the common law principles applicable to the transfer of goodwill. Where an unregistered mark is assigned with the goodwill of the business, the assignment is effective to transfer the common law rights in the mark to the assignee, including the right to bring a passing off action against subsequent users of the mark. Where the assignment is without goodwill, the position is more complex the assignee acquires the mark but not the established goodwill and the practical effect of the transfer on the assignee’s ability to bring a passing off action will depend on whether the assignee can establish independent goodwill through subsequent use.
The Supreme Court’s analysis of the relationship between goodwill and trademark rights in passing off cases particularly the observations in Laxmikant V. Patel v. Chetanbhai Shah & Anr. ((2002) 3 SCC 65) is relevant to understanding the practical consequences of an assignment of an unregistered mark without goodwill. The Court’s emphasis on goodwill as the foundation of the passing off action underscores the importance of ensuring that any assignment of an unregistered mark is structured in a way that preserves or transfers the goodwill necessary to support the passing off right.
The Procedure for Recording an Assignment – Section 45 and Form TM-P
The procedure for recording an assignment of a registered trademark on the Register of Trade Marks is governed by Section 45 of the Trade Marks Act, 1999 and Rule 68 of the Trade Marks Rules, 2017. The recording of an assignment is not a condition of its validity a valid assignment takes effect between the parties from the date of the assignment deed, regardless of whether it has been recorded. However, recording the assignment on the register is essential for the assignee to be recognised as the registered proprietor and to be able to enforce the mark as such against third parties.
Section 45(1) provides that the assignee of a registered trademark may apply to the Registrar to register their title and the Registrar shall, on receipt of the application and on proof of title to his satisfaction, cause the name of the assignee to be entered as proprietor of the trademark in the register.
The application to record the assignment is made using Form TM-P under the Trade Marks Rules, 2017, accompanied by the prescribed fee. The application must be supported by documentary evidence of the assignment typically the original assignment deed or a certified copy, together with any supporting documents that establish the chain of title from the registered proprietor to the applicant.
The prescribed fee for filing Form TM-P varies depending on the number of trademarks being assigned and the number of classes involved. Where a portfolio of trademarks is being assigned in a single transaction, the application may cover all the marks in the portfolio, with fees calculated on a per-mark or per-class basis as prescribed.
Documentation Required for a Valid Assignment
A trademark assignment must be effected by a written instrument an assignment deed or agreement executed by the assignor and assignee. The deed must clearly identify the trademark or trademarks being assigned, the registration number or numbers, the classes of goods or services covered and the consideration, if any, payable for the assignment. It must be signed by the assignor or by a duly authorised representative of the assignor where the assignor is a body corporate and witnessed in accordance with applicable execution requirements.
Where the assignment involves consideration a purchase price, royalty or other payment the deed should specify the consideration clearly. Where the assignment is by way of a gift or intra-group transfer without consideration, the deed should state that it is made for no consideration or for nominal consideration, as applicable. The absence of consideration does not invalidate the assignment, but it may be relevant to the assessment of the transaction in the context of insolvency, tax or anti-trafficking considerations.
The deed should also address any conditions or restrictions applicable to the assignment including any agreement by the assignor not to use the assigned mark following the assignment, any representations and warranties given by the assignor as to the validity and ownership of the mark and any indemnities given in respect of prior use or prior infringement claims.
Where the assignment is part of a larger business transaction a merger, acquisition or business sale the trademark assignment provisions should be clearly identified in the transaction documents and separate trademark assignment deeds should be executed for each jurisdiction in which the marks are registered. A single global assignment document may not satisfy the formal requirements of individual national trademark registries and it is good practice to prepare jurisdiction-specific assignment instruments for each country in which marks are being transferred.
The Registrar’s Power to Call for Information – Section 45(2)
Section 45(2) of the Trade Marks Act, 1999 empowers the Registrar to call for such documents or other evidence as the Registrar may require to satisfy themselves of the title of the applicant before registering the assignment. This power enables the Registrar to investigate the authenticity and validity of the assignment and to ensure that the person seeking to be registered as proprietor has genuinely acquired the mark through a valid transaction.
In practice, the Registrar routinely calls for the executed assignment deed and may require additional documentation where the assignment involves a complex corporate structure, where the chain of title is not clear from the documents submitted or where there are indications that the transaction may not be bona fide. Where the Registrar is not satisfied with the documentation provided, they may decline to record the assignment and the applicant’s only recourse is to provide further evidence or to challenge the Registrar’s decision by way of appeal to the High Court.
The Consequences of Failure to Record
While the failure to record an assignment does not affect the validity of the transaction as between assignor and assignee, it has important practical consequences for the assignee’s ability to enforce the mark. An unrecorded assignee a person who has validly acquired a trademark but whose name has not been entered on the register as proprietor cannot bring infringement proceedings in their own name, because the register does not reflect them as the proprietor. They may need to join the registered proprietor as a party to any infringement action, which creates practical complications.
Section 45(3) of the Trade Marks Act, 1999 provides that until an application has been made to register the title of a person becoming entitled by assignment or transmission to a registered trademark, that person shall not be entitled to intervene in any proceedings relating to the trademark. This provision underscores the importance of prompt application to record the assignment a delay in recording may prejudice the assignee’s ability to participate in Registry proceedings, opposition proceedings or litigation concerning the mark.
The assignee is also at risk from the conduct of the recorded proprietor the assignor during the period before the assignment is recorded. An assignor who has parted with the mark but remains on the register as proprietor could theoretically take steps in relation to the mark executing further assignments, granting licences or permitting the registration of registered users that would bind the register and potentially affect the assignee’s rights. Prompt recording of the assignment eliminates this risk.
Anti-Trafficking Principle and Assignment
The anti-trafficking principle discussed in the context of trademark licensing in the preceding article applies with equal force to trademark assignment. Section 2(1)(y) of the Trade Marks Act, 1999 defines “transmission” in a manner that encompasses all dealings in a trademark and the policy against trademark trafficking runs through the assignment provisions as it runs through the licensing provisions.
An assignment that is designed not to transfer a genuine commercial asset in the context of a real business transaction but to enable the assignee to exploit the mark’s commercial value without any genuine connection to the goods or services in question without any quality control, any real use or any honest commercial purpose may be characterised as trafficking in the trademark. The courts and the Registrar retain the power to scrutinise assignment transactions and to refuse to record or to subsequently cancel, registrations that appear to reflect trafficking rather than genuine commercial dealings.
The anti-trafficking principle is particularly relevant in the context of defensive registrations where a mark is registered not for the purpose of genuine use but to block competitors and in the context of assignments of such registrations. An assignment of a mark that was registered without any genuine intention of use and that the assignee also intends to hold without genuine use serves no legitimate trademark purpose and may be challenged under the rectification provisions of Section 57 read with the non-use cancellation provisions of Section 47.
Assignment in the Context of Corporate Transactions
Corporate mergers, acquisitions, demergers and restructurings frequently involve the transfer of trademark portfolios of significant commercial value. In an acquisition of a business that owns registered trademarks, the trademarks typically pass to the acquirer as part of the business assets, either through a business purchase agreement that expressly includes intellectual property assets or through a scheme of arrangement sanctioned by the court under the Companies Act, 2013.
Where trademarks pass as part of a court-sanctioned scheme of arrangement, Section 44 of the Trade Marks Act, 1999 provides that a person claiming to be entitled to a registered trademark by assignment or transmission may apply to the Registrar to register their title and the Registrar shall register the person as proprietor on proof of title. In the context of a court-sanctioned scheme, the court order is typically treated as sufficient proof of title and the Registrar will record the transfer on production of a certified copy of the order.
In a private acquisition, the assignment must be effected by a separate trademark assignment deed and the Registrar must be satisfied by documentary evidence of the transaction. A business purchase agreement that includes a general assignment of intellectual property assets is not by itself sufficient to record the assignment on the trademark register a specific assignment deed identifying the individual marks and their registration numbers is required.
Corporate practitioners handling M&A transactions involving trademark portfolios should ensure that the trademark diligence process identifies all registered and unregistered marks included in the transaction, that separate assignment deeds are prepared for each jurisdiction in which marks are registered and that the recording process in each jurisdiction is managed promptly after closing.
The Delhi High Court on Trademark Assignment – Key Judicial Principles
Indian courts have addressed trademark assignment in a range of contexts and the judicial principles that emerge from this body of case law are an important supplement to the statutory framework. The Delhi High Court’s decision in Goenka Institute of Education and Research v. Anjani Kumar Goenka ((2009) 40 PTC 365 (Del)) examined the requirements for a valid trademark assignment and the consequences of an assignment that was not properly executed or recorded, confirming that an unrecorded assignment does not transfer the registered proprietor status and that the assignee cannot enforce the mark as a registered proprietor until the register is updated.
In Hindustan Unilever Ltd. v. Emami Ltd. ((2010) 44 PTC 257 (Del)), the Court examined a dispute arising from the assignment of a trademark in the context of a business sale, addressing questions of the scope of the assignment and whether the goodwill of the business had passed with the mark. The Court’s analysis of the relationship between the assignment deed and the surrounding commercial transaction confirms the importance of clear and comprehensive drafting in trademark assignment documents.
The principle that an assignor who has parted with a mark cannot continue to use it and that any post-assignment use by the assignor constitutes infringement was addressed by the Bombay High Court in Pidilite Industries Ltd. v. S.M. Associates ((2004) 28 PTC 193 (Bom)), where the Court held that following a valid assignment, the assignor’s continued use of the assigned mark was an infringement of the assignee’s registered rights, regardless of the history of prior use by the assignor.
Conclusion
The assignment of a trademark is among the most significant transactions in commercial intellectual property practice. It transfers the entire proprietary right in one of a business’s most valuable assets its brand identity and its proper execution has consequences for the parties, for third parties who deal with the mark and for the integrity of the public register. The statutory framework in Sections 37 to 45 of the Trade Marks Act, 1999 provides a comprehensive set of rules that govern the validity of the assignment, the procedure for recording it and the consequences of non-compliance.
For assignors, the framework imposes obligations to ensure that the assignment does not cause consumer confusion, does not fragment the mark in a way that deceives the public and complies with the advertisement requirements where goodwill is not transferred. For assignees, the imperative is to act promptly to record the assignment on the register, to ensure that the documentation is complete and the chain of title is clear and to take active steps to establish their own use and goodwill in the mark following the transaction. For practitioners, the assignment of a trademark demands the same rigour of drafting, diligence and execution as any other significant commercial transaction because the value of the asset being transferred and the consequences of getting it wrong, are commensurately significant.
References
- The Trade Marks Act, 1999, Sections 37–45 https://ipindia.gov.in/trade-mark.htm
- The Trade Marks Rules, 2017, Form TM-P https://ipindia.gov.in/writereaddata/Portal/IPOAct/1_68_1_Trade_Marks_Rules_2017.pdf
- Manual of Trade Marks Practice and Procedure, Trade Marks Registry https://ipindia.gov.in/writereaddata/Portal/IPOGuidelinesManuals/1_72_1_TM_Manual.pdf
- Laxmikant V. Patel v. Chetanbhai Shah & Anr., (2002) 3 SCC 65
- Goenka Institute of Education and Research v. Anjani Kumar Goenka, (2009) 40 PTC 365 (Del)
- Hindustan Unilever Ltd. v. Emami Ltd., (2010) 44 PTC 257 (Del)
- Pidilite Industries Ltd. v. S.M. Associates, (2004) 28 PTC 193 (Bom)
- Cadila Healthcare Ltd. v. Cadila Pharmaceuticals Ltd., (2001) PTC 300 (SC)
- Companies Act, 2013 https://www.mca.gov.in
- TRIPS Agreement, Article 21 https://www.wto.org/english/docs_e/legal_e/27-trips.pdf
- WIPO Transfer of Trademark Rights https://www.wipo.int/trademarks/en/
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