A Brief Introduction of Trademark Transfer Agreement
A trademark transfer agreement is an agreement through which the owner of a trademark transfers it to another person. This transfer can be achieved in two ways – assigning the trademark or licensing the trademark.
Assignment means all the rights, title, and ownership of the trademark are transferred to the assignee in perpetuity, whereas a license means certain rights in the trademark are transferred to the licensee for a limited period of time (ownership rights are not transferred in a license).
A question may arise as to how to license a trademark? This is done through a trademark license agreement, which will mention the period for which the trademark is being licensed to the licensee and the purpose for which it can be used.
The agreement must be created every time a trademark is transferred to a third party, and it contains all the details of the trademark transfer.
Who Takes the Trademark Transfer Agreement?
A trademark transfer agreement is entered between the owner of the trademark and the person to whom the trademark is assigned (known as the assignee) or the person to whom it is licensed (known as the licensee).
Purpose of the Trademark Transfer Agreement
The purpose of a trademark assignment agreement is to transfer the trademark to the assignee. The agreement also serves as evidence of the trademark being sold, and the subsequent trademark purchase. Selling a trademark means the ownership of the trademark is transferred to the new owner, and such a new owner has the complete right to use the trademark as he wishes.
It is important to create a written agreement whenever intellectual property rights such as trademark & copyright are transferred, as otherwise there will be no record as to who is the current owner of such intellectual property rights is. In such a situation, it can be very difficult for a person to prove that he is the owner of a particular trademark. An oral transfer of a trademark is not considered to be legally binding.
Contents of the Trademark Transfer Agreement
The agreement must state who the current owner of the trademark is, i.e., the assignor. It will then include details about the assignee, who is to be the new owner of the trademark. The date on which the trademark will be legally transferred to the assignee must be clearly mentioned.
The contract must contain details of the trademark, including a detailed description of the mark and its registration number. This helps to identify the trademark clearly. The assignment fee, i.e., the amount that is being paid by the assignee to purchase the rights in the trademark, is an important component of the agreement.
The agreement must also talk about how any future disputes between the parties will be handled. The representations and warranties of both parties must be a part of the contract.
How to Draft the Trademark Transfer Agreement?
The following are the steps to follow while drafting the agreement:
- The assignor and the assignee will decide on all the important aspects of the transfer.
- Once all the terms have been agreed upon, it is important to create a written agreement that encapsulates all such terms.
- The agreement must be such that it covers all the important particulars that are required to make it a legally binding one.
- The agreement must be reviewed by both parties and signed thereafter.
- Details of the assignment will have to be submitted and recorded online on the Electronic Trademark Assignment System (ETAS).
Negotiation Strategy
- The negotiations in a trademark transfer will mainly revolve around the fee for which the trademark is being transferred.
- The assignor must be adequately compensated for the trademark and the goodwill attached to it.
Benefits and Drawbacks of the Trademark Transfer Agreement
The following are the benefits and drawbacks of the agreement:
- This agreement is necessary to record who the new owner of the trademark is.
- If this agreement is not created by the parties, they will be no record of the transfer of ownership to the assignee.
- If it is a license agreement, it can be used as proof of the purposes for which the trademark can be used by the licensee. It thus protects the licensor from unauthorized use of the mark.
What Happens in Case of Violation?
This agreement will have a clause that details the remedies that will be available in case of a breach of the terms or a breach of the warranties or obligations of either party. Parties prefer to insert a mandatory arbitration(1) or negotiation clause in the contract. This means that if there is any dispute with respect to the terms of the contract, or there is a violation, the dispute will be solved by arbitration or negotiation.
An arbitration clause will detail the manner in which the arbitration proceedings will take place, i.e., venue of arbitration, the language in which the proceedings are to be conducted, and the method by which the arbitrators are to be appointed(2).
This ensures that the parties reach an amicable settlement, and the dispute is resolved within a specified time frame.
This agreement is extremely important, and it is one of the primary documents needed to transfer a trademark. It contains all the details of the transfer and hence serves as a complete record of the transaction. An oral transfer of a trademark is not considered valid. Hence the parties will mandatorily have to execute this contract.