stamp duty on patent assignment

Due Diligence in Patent Assignment Agreements

Conducting thorough due diligence in patent assignment agreements is vital to validate the validity, enforceability, and marketability of the assigned patent rights. This involves verifying the chain of title, reviewing patent history and file wrappers, and conducting prior art searches to substantiate patent validity. It also includes evaluating jurisdictional scope, document format, and signature authentication, as well as reviewing potential liens, rights, and obligations. Additionally, financial and tax implications must be examined. By undertaking a meticulous due diligence process, parties can mitigate risks and guarantee a smooth transaction. Further investigation can uncover additional nuances and complexities that impact the assignment agreement.

Table of Contents

Patent Ownership Verification

A patent assignee must verify the chain of title to confirm that the assignor has the legal right to transfer ownership of the patent, as any break in the chain of title can invalidate the assignment. This verification process involves a thorough entity search to identify all previous owners and assignors of the patent. The search should cover all patent offices where the patent has been filed, including the United States Patent and Trademark Office (USPTO). The assignee should review all assignment documents, including those filed during the recordation process, to confirm that each assignor had the legal right to transfer ownership. Any discrepancies or gaps in the chain of title must be addressed and resolved before the assignment can be considered valid. A complete and accurate verification of the patent ownership chain is crucial to guarantee that the assignee acquires a valid and enforceable patent right.

Review of Patent History

When reviewing a patent's history, a thorough examination of the chain of title is crucial to verify that the assignor has the legal right to transfer ownership. Additionally, a review of the patent file wrappers can provide valuable insight into the patent's prosecution history, including any office actions, responses, and amendments. Moreover, a prior art search can help identify any potential validity issues that may impact the patent's enforceability.

Chain of Title

During the patent assignment process, a thorough review of the patent's history, known as the chain of title, is vital to verify the current owner's rightful possession and identify any potential issues that could affect the patent's validity or transferability. This review involves tracing the ownership hierarchy of the patent from its initial filing to the present day, validating that all title transfers have been properly documented and recorded.

A thorough chain of title review should include:

• Verification of all title transfers, including assignments, mergers, and acquisitions
• Identification of any potential gaps or breaks in the ownership chain
• Confirmation that all necessary documents, such as assignment agreements and recordation certificates, are properly executed and filed with the relevant patent offices

Patent File Wrappers

Review of the patent file wrapper, which contains the thorough history of the patent application and prosecution process, is crucial to uncover any potential issues or inconsistencies that may impact the patent's validity or enforceability. This review is essential to identify any errors, omissions, or irregularities that may have occurred during the patent prosecution process, such as incomplete or inaccurate disclosures, inconsistent claims, or unresolved objections.

A comprehensive patent file wrapper review involves a meticulous examination of all documents and communications related to the patent application, including office actions, responses, and amendments. This review helps to identify any potential issues that may affect the patent's validity, such as prior art rejections, enablement issues, or written description requirements. Moreover, it ensures that all necessary documents are properly filed and retained, adhering to patent organization and file retention best practices. By conducting a thorough review of the patent file wrapper, parties can identify and address potential issues early on, mitigating risks and ensuring a smooth patent assignment process.

Prior Art Search

Conducting a thorough prior art search is essential to uncover any existing patents, publications, or other relevant documents that may impact the validity or novelty of the patent being assigned. This search is a vital component of due diligence in patent assignment agreements, as it helps identify potential issues that could affect the patent's value or enforceability.

An exhaustive prior art search involves developing a search strategy that takes into account the patent's technology, industry, and relevant jurisdictions. This strategy should be tailored to identify the most relevant art, including patents, publications, and other documents that may be relevant to the patent's claims.

Some key considerations in a prior art search include:

• Identifying the most relevant keywords and classifications to use in the search
• Searching multiple databases and sources, including patent offices, academic journals, and industry publications
• Evaluating the art relevance of each identified document to determine its potential impact on the patent's validity or novelty

Validity and Enforceability Check

In the context of patent assignment, a thorough validity and enforceability check is vital to verify that the assigned patent rights are legally sound and can be effectively enforced. This involves a meticulous examination of various aspects, including the jurisdictional scope of the patent, compliance with document formatting requirements, and authentication of signatures on assignment documents. By carefully evaluating these factors, potential assignees can mitigate risks and guarantee a smooth transfer of patent rights.

Jurisdictional Scope Review

Within the context of patent assignment, a crucial aspect of due diligence is verifying the validity and enforceability of the patent rights across relevant jurisdictions. This involves a thorough review of the patent's jurisdictional scope to confirm that the assigned patent rights are enforceable in the desired geographic boundaries.

A meticulous jurisdictional scope review should consider the following key aspects:

• Forum Selection : Identify the appropriate forum for resolving potential disputes related to the assigned patent rights, taking into account the governing law, jurisdiction, and venue provisions in the assignment agreement.
• Geographic Boundaries : Verify the patent's territorial scope, validating that the assigned patent rights are valid and enforceable in the desired countries or regions.
• Jurisdictional Limitations : Determine any limitations or restrictions on the patent's enforceability in specific jurisdictions, such as exemptions or exceptions that may impact the patent's validity.

Let me know if you need further modifications!

Document Format Compliance

Beyond verifying the jurisdictional scope, a thorough due diligence process must also examine the document format compliance of the patent assignment to confirm the validity and enforceability of the assigned patent rights. This involves reviewing the patent assignment agreement to confirm it meets the required font requirements, margins, and formatting rules. Additionally, the agreement must be in a format that is acceptable to the relevant patent office or jurisdiction.

Signature Authentication Process

The signature authentication process is a critical component of the due diligence process, as it verifies the validity and enforceability of the patent assignment agreement by confirming that all parties have duly executed the document. This process confirms that the signatures on the agreement are genuine and binding, thereby preventing potential disputes or challenges to the agreement's validity.

To authenticate the signatures, the following measures should be taken:

• Validate compliance with E Signature Standards, such as the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA), to guarantee that electronic signatures are legally binding.
• Leverage Digital Certificates, which provide a secure and tamper-evident way to authenticate identities and confirm the integrity of electronic signatures.
• Conduct a thorough review of the signature process to confirm that all parties have properly executed the agreement, and that their signatures are properly attributed to their respective identities.

Existing Litigation and Disputes

Several pending lawsuits or ongoing disputes may be lurking in the shadows, waiting to cast a shadow over an otherwise promising patent assignment. It is imperative to uncover these potential landmines during the due diligence process to avoid inheriting unwanted litigation baggage. A thorough review of existing litigation and disputes is necessary to understanding the patent's legal landscape. This includes identifying ongoing lawsuits, threatened litigation, and potential disputes that may arise from contractual obligations or patent infringement allegations.

A well-planned litigation strategy is indispensable in resolving these disputes. The assignee must assess the validity and enforceability of the patent, as well as the likelihood of success in ongoing or potential litigation. Dispute resolution mechanisms, such as arbitration or mediation, should also be considered to minimize the risk of protracted and costly litigation. By conducting a thorough review of existing litigation and disputes, the assignee can develop a meticulous litigation strategy and dispute resolution plan, safeguarding that the patent assignment is executed with a clear understanding of the associated risks and liabilities.

Identifying Potential Liens

In addition to uncovering existing litigation and disputes, a thorough due diligence review should also involve a meticulous examination of potential liens that may be attached to the patent, as undisclosed encumbrances can substantially impact the assignee's rights and interests. A lien can notably limit the assignee's ability to exercise its rights under the patent, and failure to identify such liens can lead to costly surprises down the line.

To identify potential liens, the assignee should review:

• UCC financing statements and other public records to identify potential lien holders and the scope of their interests
• Patent office records to determine if any liens or security interests have been recorded against the patent
• Contracts and agreements related to the patent, such as license agreements or security agreements, to identify any potential lien priority issues

Rights and Obligations Analysis

A thorough rights and obligations analysis is vital to understanding the scope of the assignee's rights and the patent owner's residual obligations, particularly with respect to ongoing royalty payment commitments, territory restrictions, and field-of-use limitations. This analysis is key in determining the patent owner's ongoing responsibilities and the assignee's entitlements, clarifying that both parties are aware of their respective liabilities and duties. A detailed review of the assignment agreement should be conducted to identify any potential ambiguities or conflicts, and to verify that the terms align with the parties' intended assignment strategies. Risk allocation is a vital aspect of this analysis, as it determines which party bears the responsibility for potential risks, such as infringement claims or patent invalidity. By conducting a meticulous rights and obligations analysis, parties can mitigate potential risks and facilitate a seamless handover of patent ownership. This analysis also enables parties to negotiate and allocate risks more effectively, ultimately leading to more informed and strategic assignment decisions.

Financial and Tax Implications

Every patent assignment transaction carries inherent financial and tax implications that can substantially impact the assignee's and patent owner's bottom line, necessitating a thorough review of the economic and tax consequences of the assignment. Failing to examine these implications can lead to unintended financial burdens, tax liabilities, and even disputes between parties.

A detailed review of financial and tax implications involves:

• Tax Planning : Evaluating the tax implications of the assignment on both the assignee and patent owner, including capital gains tax, stamp duty, and other applicable taxes.
• Financial Projections : Analyzing the potential financial benefits and risks associated with the assignment, including projected revenue, expenses, and cash flow.
• Accounting Treatment : Determining the accounting treatment of the assigned patent, including the impact on the assignee's and patent owner's financial statements and reporting obligations.

Frequently Asked Questions

What is the ideal timeline for due diligence in patent assignment agreements?.

The ideal timeline for due diligence in patent assignment agreements depends on complexity, with a typical range of 30-90 days, allowing for Timeframe Flexibility across multiple Assignment Phases, facilitating thoroughness without delaying the transaction.

Can Due Diligence Be Performed Remotely or On-Site Only?

In modern transactions, due diligence can be effectively performed through a combination of virtual inspections and digital verification, allowing for remote assessment of patent-related documents and assets, while on-site visits may still be necessary for certain complex or sensitive cases.

Who Bears the Cost of Due Diligence in Patent Assignment Agreements?

In general, the cost of due diligence is typically borne by the assignee, as they seek to mitigate risks and verify the patent's validity, reflecting a risk-shifting approach to cost allocation in contractual agreements.

What Is the Role of Insurance in Mitigating Patent Assignment Risks?

In patent assignment transactions, insurance plays a vital function in mitigating risks by providing financial protection against potential losses. Through risk assessment and policy review, parties can identify and address potential liabilities, securing thorough coverage and minimizing financial exposure.

How Often Should Due Diligence Be Performed During the Agreement Term?

The frequency of due diligence performance during an agreement term should be determined by establishing recurring frequency intervals, such as quarterly or bi-annually, and milestone triggers, including significant changes or material events, to facilitate ongoing risk assessment and mitigation.

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Assignment Center has replaced the Electronic Patent Application System (EPAS) and Electronic Trademark Assignment System (ETAS). Assignment Center makes it easier to transfer ownership or change the name on your patent or trademark registration. 

See our how-to guides on using Assignment Center for   patents  and  trademarks . If you have questions, email  [email protected]  or call customer service at 800-972-6382.

Patents Assignments: Change & search ownership

Change of owner (assignment) and change of owner name.

During examination of a patent application or after the patent is granted, the owner of the patent may:

• Transfer ownership to another entity or party through an "assignment;" or
• Retain ownership but change their name.

The original owner should record the assignment or name change with the USPTO's Assignment Recordation Branch by going to Assignment Center and filing a Recordation Cover Sheet along with a copy of the actual assignment or proof of name change.

Change Ownership - Assignment Center

Use Assignment Center to file a Patent Assignment Recordation Cover Sheet and attach the supporting legal documentation as a black-and-white TIFF or PDF file. You may email questions about filing patent assignments to [email protected] .

Patent Assignment Search

Use  Patent Assignment Search  to search the database of all recorded Patent Assignment information from 1980 to the present (Patent Assignments recorded prior to 1980 are maintained at the National Archives and Records Administration). You may email questions about searching patent assignments to [email protected] .

For further information, you may contact the Assignment Recordation Branch Customer Service Desk at 571-272-3350 from 8:30 am – 5:00 pm Eastern Time.

Additional information about this page

Assignments overview and pitfalls to beware!

03 December 2012

Many patents will see a change in ownership at some stage in their lives. Assignments are commonplace and occur for a variety of reasons; for example, in the context of a business sale where a buyer purchases all of the assets (including intellectual property assets) of a business from the vendor. Another is in the context of intra-group reorganisations.

Assignments can also occur as part of settlement of a dispute. This article outlines some of the pitfalls of which you should be aware when assigning patents; many of which can be averted by careful drafting of the assignment agreement.

Unless the assignment is intra-group, there will usually be some distance between what the assignee wants (typically, a variety of representations, warranties and indemnities in respect of the assigned rights) and what the assignor is prepared to give. This is a commercial decision and hence no two negotiated patent assignments will be identical.

Consideration

Under English law, to be a valid contract there must be consideration which is either money or money's worth. This is often overlooked but a key point required for the assignment agreement to be legally binding. Whilst the acceptance of mutual obligations may suffice, it is simplest to have a sum of money (even if only for £1). An alternative is to execute the assignment as a deed, though there are specific formalities which must be followed for the agreement to be a deed. Of course, if the parties agree to nominal consideration (eg, £1), it is important that this small amount is actually paid to the assignor.

An assignment of a UK patent (or application) must be in writing and signed by the assignor. It used to be the case that an assignment of a UK patent (or application) would need to be signed by both parties, however the law was changed in 2005. In reality, both parties will usually sign the assignment agreement. Where one or both of the parties is an individual in their personal capacity or a foreign entity, special 'testimonial' provisions are required; for example the signature to the assignment may need to be witnessed.

The assignment

English law distinguishes two types of assignment: legal and equitable. To assign the legal interest in something means that you have assigned simply the title to that property and not the right to exercise the rights inherent in it. This is the equitable (beneficial) interest and if this is not also assigned with the legal title, this can result in a split in ownership. Unless the parties specifically agree otherwise, legal and beneficial ownership should always be assigned together. It is possible to have co-assignees (ie, co-owners) but the terms of the co-ownership will need to be carefully considered.

It is possible to assign the right to bring proceedings for past infringements in the UK, but not in some other jurisdictions. Where non-UK rights are involved, local advice may be required as to whether such an assignment would be enforceable as against a prior infringer. This potential uncertainty makes a robust further assurance clause even more desirable (see below), to ensure the assignor's co-operation after completion of the assignment.

The assignee will also typically argue for (and the assignor will typically resist) a transfer with 'full title guarantee', as this implies as a matter of law certain covenants: that the assignor is entitled to sell the property; that the assignor will do all it reasonably can, at its own expense, to vest title to the property in the assignee; and that the property is free from various third party rights.

In terms of European patents (EP), it is important to remember that ownership of an EP application is determined under by the inventor/applicant's local law, rather than under European patent law. This means that a formal, written assignment agreement should be executed to ensure that the applicant is entitled to ownership of the patent application, for example in cases where the work undertaken was done by a consultant or where local law dictates that the owner is the inventor(s). An assignment should include assignment of the right to claim priority, as well as the right to the invention and any patent applications. This need to obtain an effective assignment of the application (and right to claim priority) is particularly important where a priority application has been made in the name of the inventor. If such an assignment is not executed before applications which claim priority from earlier cases (for example, PCT applications) are filed, the right to ownership and/or the right to claim priority may be lost.

Don't forget tax

Currently, there is no stamp duty payable on the assignment of intellectual property in the UK. However, particularly for assignments which include foreign intellectual property rights, there can be considerable tax implications in transferring ownership of intellectual property rights in some countries and it is always prudent to check that the transfer will not result in excessive tax liabilities for you.

Update the register

Registered rights need to be updated at the patent offices. You will need to decide who pays for this: in the case of one patent, it is a simple process, however in the case of a whole portfolio, the costs can be considerable. Remember, if you ever need to take any action on a patent you own, you need to ensure you are the registered owner of that right at the applicable office.

In the UK, assignments can be registered but there is no statutory requirement to do so. In the case of international assignments, local offices may require recordal of the assignment. In any event, it is desirable for an assignee to ensure that the transaction is recorded. Section 68 of the UK Patents Act provides that an assignee who does not register the assignment within six months runs the risk of not being able to claim costs or expenses in infringement proceedings for an infringement that occurred before registration of the assignment, although recent case-law has reduced this risk somewhat.

Further assurance

The assignee will typically take charge of recordals to the Patents Offices; however they will often need the assignor's help in doing so. A 'further assurance' clause is a key element of the assignment from an assignee's point of view both for this purpose and for assisting in the defence and enforcement of patents or applications for registration. On the other hand, the assignor will typically seek to qualify its further assurance covenant by limiting it to what the assignee may reasonably require, and that anything done should be at the assignee's expense. An assignor should also require that recordals are done promptly to minimise their future correspondence from patent offices.

International transactions

In transactions which involve the transfer of patents in various countries, the parties can execute a global assignment which covers all the patents being transferred, or there can be separate assignments for each country. The former, global assignment, is usually preferred however this will frequently need to be supplemented by further confirmatory assignments in forms prescribed by the relevant international patent registries. As noted above, the preparation and execution of such assignments can be time-consuming and costly, hence the need to decide in advance who bears the cost of such recordals, and the assignee should insist on a further assurance provision.

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Koo Chin Nam & Co. Koo Chin Nam & Co.

Law Firm in Kuala Lumpur, Malaysia

March 26, 2015 by

Stamp Duty for Transfer or Assignment of Intellectual Property

I was just looking through the Stamp Act 1949 (Act 378), which you can download by clicking  here .

Under section 35, “The instruments appearing under the heading of “General Exemptions” in the First Schedule shall not be chargeable with duty.” This looks promising and I had a look.

Unfortunately, the words “intellectual property” never appear under the General Exemptions .

Then I kept reading. Under Item 32, which is related to “Conveyance, Assignment, Transfer or Absolute Bill of Sale”, there appears under the Exemptions :

“(d) Transfer or assignment on sale of any copyright, trade mark, patent or any similar right.”

That means that transfers, and assignments (pursuant to sale) of copyrights, trade marks, patents and “other similar rights”, which are generally known as “intellectual property rights (IPR)” would be exempted from stamp duty. At least, that’s how it looks like to me.

Incidentally, our Intellectual Property Corporation is pushing (and has established) a marketplace for various intellectual property. To visit the marketplace (called IPR Marketplace) please click the following link:

It stands to reason that if you, being an interested buyer or seller of intellectual property rights, happen to sell and transfer or assign your copyrights, trade marks, patents, and such other IPR’s, you’ll save on stamp duty.

Headquarters: Suites 2A&2C, PO Box 9, Wisma Pahlawan, Jalan Sultan Sulaiman, 50000 Kuala Lumpur. Tel: +603 22730688 / 2033 / 6033 Fax: +603 22738033 / 9033 e-mail: [email protected]

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• Concept of Intellectual property right

Intellectual Property Right Assignment Agreement

INTELLECTUAL PROPERTY RIGHT ASSIGNMENT AGREEMENT:

Concept of Intellectual property right:

Intellectual property refers to creations of the mind: inventions; literary and artistic works; and symbols, names and images used in commerce. I t legal rights granted with the aim to protect the creations of the intellect of either an individual or a group or an organization individually or collectively.

Intellectual property is divided into two broad classes: Industrial Property and Copyright. Industrial property includes patents, trademarks, industrial designs, and geographical indications; whereas copyright includes literary works, films, music, artistic works and architectural design and rights related to the same inclusive of rights of performers, artists, producers, and broadcasters.

Ipr Assignment Agreement:

In the era of commerce and trade intellectual property plays major role. Intellectual property includes industrial designs, Copyright, Patent, and Trademark. One of the most important challenges for businesses today is to remain profitable in a global economy. Increasingly, globalization dictates that companies must consider international markets and how best to leverage off the opportunities that emerging markets offer. With new opportunities come age old risks of how best to protect IPR whilst making the most of the existing brand reputation and good will.

The intellectual property assignment is a transfer of an owner's rights, title and interest in certain intellectual property rights. The transferring party ("assignor") transfers to the receiving party ("assignee") its property in intellectual property rights, such as patents, trademarks, industrial designs and copyrights.  Details of both the parties must be clearly stated including name, address etc.  Details of the assigned rights must be clearly stated. Description of rights must be included and whether the assignment is of all the rights or is partial in nature.

Duration of Assignment must be clearly stated in the agreement. The start date and period of assignment must be clearly stated.

All the other important information like previous assignments, infringement rights etc. must be clearly disclosed.

Confidentiality clause must form a part of the assignment agreement. It must clearly mention that the information relating to intellectual property right must not be disclosed to any third party does not form part of the agreement.

Advantages:

1.Assignment agreements for start-ups are a necessity. An intellectual property assignment agreement is a key legal document that investors look for when deciding whether to fund you.

2.Start-up founders should have complete ownership, in writing, of all intellectual property assets during the formation of the company. Not only is the legal ownership a requirement for most investors, but it can also keep patent trolls and companies that want to copy your products at bay.

3.In any case of dispute related to the Intellectual property, legal rights would easily be established only through the Intellectual property right assignment agreement.

Features Of Ipr Assignment Agreement:

Royalty:  Royalty amount received from assignee is one of the best source of income from intellectual property assignment.

Competition in Business: IPR assignment agreements are useful to assignor as well as assignee with the help of intellectual property like trademark and patent one can start and develop new business in the competitive business.

Trust of Customer: Due to the intellectual property the customer can easily distinguish the similar kind of goods. Intellectual property is the best tool to for attraction of customer.

Important Clauses Of Ipr Assignmnet Agreement:

Representations and Warranties: Assignor represents and warrants to Assignee that: Assignor exclusively owns all right, title, and interest in and to the Assigned Property; Assignor has not granted and will not grant any licenses or other rights to the Assigned Property to any third party; the Assigned Property is free of any liens, encumbrances, security interests, and restrictions on transfer; to Assignor’s knowledge, the Intellectual Property that is assigned as part of the Assigned Property does not infringe Intellectual Property Rights of any third party; and there are no legal actions, investigations, claims, or proceedings pending or threatened relating to the Assigned Property.

Severability: If one or more of the provisions in this Intellectual Property Assignment Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.

Indemnification:  Assignor will defend, indemnify, and hold harmless Assignee, and Assignee’s officers, directors, shareholders, successors, and assigns, from and against all losses, liabilities, and costs including, without limitation, reasonable attorneys’ fees, expenses, penalties, judgments, claims and demands of every kind and character that Assignee, its officers, directors, shareholders, successors, and assigns may incur, suffer, or be required to pay arising out of, based upon, or by reason of: the breach by Assignor of any of the representations or warranties made by Assignor under this Agreement; Assignor’s use of the Assigned Property prior to the date of this Agreement; or Assignor’s failure to perform its obligations under this Agreement.

Miscellaneous : Agreement including the exhibits, schedules and other documents and instruments reffered to herein, embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. This agreement supersedes all prior agreements and understanding between the parties with respect to such subject matter.

Registratioin And Stampp Duty:

Stamp Act, 1899 requires stamping of all the executed contracts. This stamp fee form part of the income of state governments. As stamp duty collection provides an added source of income they question the legal admissibility of an unstamped agreement. But in a recent verdict, the court has declared that stamping of any assignment agreement will not restrict anyone’s legal ownership of the IPR assignment contracts.

In most of the Indian states stamp duty payment is required in case an assignment agreement is executed, but in case of non-payment, the assignment cannot be invalidated.

Posted By: Snehal | Posted on: Apr 04, 2020 | Category: Intellectual Property Rights | Tag: Concept Of Ipr Origin And Development Of Ipr Intellectual Property Right Assignment Agreement Concept Of Intellectual Property Right Ipr Assignment Agreement Features Of Ipr Assignment Agreement Important Clauses Of Ipr Assignmnet Agreement long form of ipr what is Intellectual Property Right Assignment Agreement what are the Important Clauses Of Ipr Assignmnet Agreement

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Important Provisions of an IP Assignment Agreement

This article is written by Anurag Mawai, pursuing a  Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution  from  Lawsikho.com .

Table of Contents

Introduction

India is the seventh largest economy of the world with close to three trillion dollars’ worth in GDP and over a billion strong workforce. It has been regarded for a long time as the next industrial workhorse of the world. And in this Global Fifth Industrial Revolution, a new kind of right has come to dominate other aspects of business, i.e. a right to intellectual property. Intellectual property (“IP”) rights can be defined as the rights acquired by people over various creations and inventions derived by the faculties of their intellect and genius. These intellectual properties are usually classified as Trademark, Industrial Design Copyright, Trade Secrets, Patent etc. which are governed by different statutes promulgated by the respective legislatures. These laws tend to encapsulate different rights associated with these IPs; while some rights can be specific to those with registered IPs, some are available to all owners of IP. These rights which are derived from such IP are, in simple terms, a way to exploit them for commercial gains in terms of its different uses, modifications, enhancements, etc. If there is no written agreement, IP rights usually remain with the creator of the IP, even if they have been paid by another for creation of the said IP. However, there are some exceptions to this general rule e.g. where a joint venture is undertaken and there is no agreement between the parties to cooperate, both the parties can license the IP independently. It is the prerogative of an IP Attorney to safeguard the interest of their clients and to advise them to protect their respective IP rights through various agreements which provide for the safeguarding, selling, transferring or licensing of the said IP rights. One of such important agreements governing the rights and liabilities of Intellectual Property owners is an IP Assignment Agreement.

What is IP Assignment?

Assignment of intellectual property (IP) means the process by which ownership of some creative work made for a company/organisation/person by an innovator is transferred to the entity which commissioned the said work. This is usually done by making the inventor sign an agreement which details an explicit transfer of all rights and authority over the said commissioner IP made during the course of their engagement to the said commissioning company/organisation/person. In case of employees, this IP Assignment clause is usually attached with either a Confidentiality and Inventions Assignment Agreement (CIIAA) or a Proprietary Information and Inventions Assignment Agreement (PIIAA).

The process of intellectual property assignment consists of transfer of an owner’s rights, title and interest vested in the intellectual property rights. The transferring party (Assignor’) of the intellectual property rights may transfer all or part of his rights – e.g. the copyright owner could assign only some of his economic prerogatives. The transfer of intellectual property rights is made upon a payment of a lump sum or royalties. An IP Assignment Agreement is very crucial for any organisation in today’s time when everything is done through contract employment and in this scenario an independent contractor may be paid by the organisation to develop a program or to create a product and in case the organisation does not have an IP Assignment Clause in the said employment or consultant agreement all the IP rights to the said product will be vested with the said individual only. In this matter a landmark case of Preston Vs. Marathon Oil Co.  in the U.S. Court of Appeals is of immense relevance. The facts of the case could be summarized as follows. Yale Preston was an employee of a U.S Oil Company by the name of Marathon Oil Company (“Marathon”), he signed the employment agreements of Marathon. which assigned all intellectual property “made and conceived” during the term of the Agreement to Marathon. The dispute was about a methane extraction device for which Preston claimed to have devised plans before being employed by Marathon, while during the term of the Agreement, Marathon manufactured these devices, obtained a patent for them and deployed them at various plants. Preston contended the ownership and assignment of the device, arguing it to be a prior invention and not covered by the assignment Agreement. The U.S. Court of Appeals conclusively decided the matter on the basis of one simple argument, that the device/invention was not clearly conceived prior to the employment and only a rough idea was drawn, and the full working model was developed during the employment term and so was given in the IP Assignment Agreement which required the invention to be not only conceived but made before the term of the Agreement began. Hence not only do all employers need to have an IP Assignment contract with all employees but they need to have it drafted as astutely as possible to curb any loopholes which may in future cost them billions.

Types of IP Assignment Agreement

Assignment of copyright.

The Copyright Act, 1957 is the statute governing assignment of copyrights in India. According to Section 19 of Copyright Act, 1957 the deed of assignment shall specify the `rights assigned’, the duration as well as the territorial extent of the said assignment, and the royalty payable, if any. In case the duration of assignment is not specified, it shall be deemed to be for five years and in case the territorial extent is not specified, it shall be deemed to extend within the entire territory of India as confirmed in Delhi High Court judgement of Pine Labs Pvt. Ltd. vs Gemalto Terminals India Pvt. Ltd & Ors. FAO (OS) 635 & 636 of 2009 . It is mandatory for the assignor or his agent to give written assent, an oral agreement is invalid in this case. If the assignee fails to exercise any of the rights assigned to him within a period of one year of the assignment, the assignment is deemed to have lapsed unless a contrary provision is made in the Assignment Agreement.

Section 19A details provisions regarding dispute in Copyright Assignment . The section states that the assignor has the right to apply for revocation of the assignment with the Copyright Board, in case an assignee fails to sufficiently exercise the rights assigned to them and in the inquiry carried out by the board it the said failure is not attributable to any act or omission of the assignor. The section also makes the provision that the Copyright Board cannot revoke an assignment unless it deems the terms as too harsh for the assignor. And no such revocation shall be made within a period of five years from the date of assignment.

In some jurisdictions, a copyright assignment is even exempt from stamp duty (As provided in Article 25 of Schedule I of Bombay Stamp Act, 1958).

 For an application for changes in registration of Copyright provisions as laid down in Form V under Rule 16 of Copyright Act, 1958 shall be applicable. This application has to be delivered by hand or by post.

Assignment of Patents

The Statute governing patent assignment is Patents Act, 1970. This Statute provides for patents to be assigned in partial manner or complete manner in exclusive as well as non-exclusive. Section 68 of Patents Act, 1970 states that a patent assignment must be made in writing and thereafter it should be registered with the Controller to operate as a legally enforceable contract [ M/s National Research Development Corporation Vs Ineos ABS Ltd (2012) 5 CTC (IP) 8 ].

The controller shall ask to be presented with every document which gives effect to the assignment or it is an evidence of the transfer of the IP or it affects the proprietorship of the IP or creates an interest in the said IP along with two copies of the assignment deed and other ancillary documents certified to be true copies. The Controller may further call for such other proof of title or written consent as he may require.

Assignment of Design

An Assignment of Design can be obtained under provisions of Section 15 of Copyright Act, 1957 or under instrument of design as specified in Rule 37 of Designs Act, 2000. An application for registering the title shall be filed within six months of the execution of the instrument of assignment.

Assignment of Trademark

A Registered trademark can be assigned as per Rule 68 of Trademark Rules, 2003, by making a request under Form TM-23 or 24 depending if assignment is made to the assignee only or assignment is done to assignee along with the proprietor. This application should contain detailed particulars of the applicant’s claim to the trademark and a duly certified copy which has to be produced at the Registry for inspection during the time of application. 

An unregistered Trademark may be assigned or transmitted without goodwill to the business who has devised it as provided under Section 39 of Trademark Act, 1999.

Key Provisions of an Assignment Agreement

Object and scope of the agreement.

The Object and Scope Clause is a vital part of any assignment agreement. The Scope of an assignment clause identifies and specifies the exclusive rights with respect to the IP and the extent to which the assignor shall enjoy them. 

The Object of the IP Assignment defines and elaborates on the purposes for which the said assignment of IP can be used the assignor like in a patent assignment for its object i.e. use of patent in commercial use the additional know how of the patent is also deemed as transferred. It is important to know that the assignor can only transfer those rights which he possesses or shall possess in the future as specified in the agreement and so shall the scope be defined.

Where the Assignor is the innovator of the patent as specified in Annexure to the Agreement and specified in reference in this Agreement.

And whereas the Assignor has agreed to assign, sell and transfer the said patent to the assignees for the use and purposes as laid down under the Agreement.

The Assignment Clause  

The main assignment clause which specifies the transfer or conveyance of ownership of rights over the IP is the keystone to an IP Assignment Agreement.

If a clear outline of the scope of ownership and the procedure of such transfer is not laid out, then the entire IP Assignment Agreement would collapse. 

An IP Assignment clause also details the manner in which such transfer over the right is shifted from the assignor to the assignee e.g. if any particular permission is to be taken and only after such process laid down in the assignment clause is completed does the contract become effective. 

“In pursuance of the Deed/Agreement and in consideration of the payment of consideration in the Agreement, and other good and valid consideration the receipt and validity of which is hereby acknowledged. Assignor hereby conveys, transfers assigns, delivers, and contributes to Assignee all of the Assignor’s right, title, and interest of whatever kind in and to the patent, together with:

• the goodwill of businesses related to the products, services in respect of which the patents are used and for which they are registered.
• all income, royalties and damages hereafter due or payable to Assignor with respect to the patent including damages and payments for future infringement or misappropriations.”

Term of Assignment

Term of an IP Assignment Agreement specifies the time period for which the said assignment over the rights of the IP will operate. This Assignment can be indefinite or for a definite period of time. The Term Clause should also specify the procedure of renewal of the said Agreement, mostly IP Assignment Agreements have an auto renewal clause which states that unless the parties agree to terminate the agreement in writing, it shall renew perpetually for the same term. An assignment can be perpetual in nature or for a fixed definite period of time. 

Territory of Assignment

The territory clause of an IP Assignment Agreement specifies the territorial limits within which said IP ownership operates. The Assignment Agreement shall clearly lay down the areas and boundaries within which the assignor surrenders his proprietary rights as they will not be surrendered till the Agreement is terminated and territorial boundaries can add the specificity to operation of the IP Assignment especially for commercial ventures.

The Clause for Term and Territory is usually drafted together for e.g.:

“Thus as per the conditions laid down in this Agreement, the Assignor hereby makes the patents an absolute property of the Assignee starting from the Execution Date of this Agreement. This Assignment would operate on a worldwide basis and the Assignees shall be empowered to take all necessary actions to effect the registration of this Agreement in the Registrar’s office of the appropriate jurisdiction.”

Future Transfers

Usually in perpetual IP Assignment Agreements right to make any future transfers is also included and parties should specify and clarify their intentions in writing regarding these future rights. In a fixed term assignment future transfer rights are very restricted and practically withdrawn. Any future transfer of right by the assignee is limited to the right acquired by him in the Assignment Agreement only as well as limited to the scope and territory within which such assigned right operated in the original assignment agreement.

An Example of Future Transfer Rights Clause in a limited Assignment Agreement:

“Assignee shall not transfer or assign any right, title or interest in the Intellectual Property, or any ancillary rights derived from them, to any third party without the Assignor’s prior written consent. Any purported transfer or assignment in violation of this Clause shall be deemed as null and void.”

Representations and Warranties

These clauses lay down clear aspects of the Assignor’s liabilities and specify the aspects on which the Assignee can lawfully and easily terminate the Assignment Agreement without much financial hassle.

“The Assignment Agreement should have clear laid out warranties from the Assignor stating various aspects like:

• Assignor represents and warrants to Assignee that: Assignor exclusively owns all right, title, and interest in and to the Assigned Property;
• Assignor has not granted and will not grant any licenses or other rights to the Assigned Property to any third party;
• The Assigned Property is free of any liens, encumbrances, security interests, and restrictions on transfer; 
• To the best of Assignor’s knowledge, the Intellectual Property that is assigned as part of the Assigned Property does not infringe Intellectual Property Rights of any third party; and there are no legal actions, investigations, claims, or proceedings pending or threatened relating to the Assigned Property.”

Confidentiality

A Confidentiality Clause not only serves the Assignor’s interests while the Agreement is in operation but proves to be a vital safeguard in case of termination of Agreement as well. A well drafted confidentiality clause being part of the saving clause in an agreement can prevent losses to Assignor and prevent unauthorized access, use or disclosure of sensitive proprietary information which can prove to be fatal for an enterprise. Confidentiality Clauses paired with a Non-Disclosure Agreement also prove to be an asset in litigation as all the rights which need to be safeguarded are put under the shield of Non-Disclosure and an injunctive order in case of breach is quickly received from the courts.

“The Parties, its agents, employees shall hold and maintain in strictest confidence all Confidential Information, and shall not disclose the said information to any third party, except when necessary for the performance of its obligations under this Agreement, or requested by a statutory, government, or regulatory authority. Notwithstanding the foregoing, Confidential Information shall not include information in public domain or which comes to the knowledge of the public through no fault of the Parties. The Parties agree to enter into a Non-Disclosure Agreement the terms of which shall supersede and which shall survive termination of this Agreement.”

Indemnification

An Indemnification Clause is essential to protect the Assignee from any future losses or litigation expense which they might have to incur on account of any misrepresentation in the Assignment Agreement. Or any other breach of warranties by the Assignor himself or by his officers, shareholders, successors, partners or assigns. The Indemnification clause protects the Assignee from any expense, judgements, penalties, claims or demands which may be imposed on the Assignee through no fault of his and hence a vital protection against fraud or breach. 

“Assignor agrees to indemnify, defend and hold harmless Assignee and its employees, officers, directors, representatives, and agents against any claim, loss, damage, settlement, cost, expense, or other liability including without limitation attorney’s fees arising or relating to:

• Assignee’s actual or alleged breach of any obligations in this Agreement.
• Any actual or alleged infringement of any intellectual property rights of any third party’s rights infringed by the Assignor or its employees, representatives, agents, directors or employees.

Assignor shall use a counsel reasonably satisfactory to the Assignee to defend each indemnified Claim, if at any time Assignee should reasonably determine that any indemnified Claim might adversely affect the Assignee, he may take control of the defense at its expense.”

Further Assurances

In a Further Assistance Clause, the Assignor assures the Assignee to assist in any further procedural clearances or regulatory permissions which may include registration of documents, defense of any judicial opposition or any other proceedings to effectuate and fully complete the ownership of the IP rights for their complete use and enjoyment Assistance. This clause also enables the Assignee to complete the transfer procedure to use the IP rights seamlessly and make effective use instead of being entangled in legal or procedural hurdles.

“The Assignor further covenants that on the request of the Assignee, it will execute all documents, papers, forms and authorization that may be necessary for securing, completing or vesting in the Assignee full right, title and interest in the Patent.”

Power of Attorney

Power of attorney is also one of the vital clauses for seamless transfer of the assigned IP rights supposedly if at any time after the assignment agreement is executed Assignee is unable to secure Assignor’s signature on any letters patent, copyright, or trademark assignments or applications for registrations, or for filings relating to the Assigned Property, the assignor can appoint assignee and his authorized officers or agents as his agents, to act for and on its behalf and stead to execute and file any and all such applications, registrations, and other documents with their authorisation having the same legal force and effect as if executed by Assignor himself.

“The Assignor hereby appoints as their true and lawful attorney-in-fact who may for Assignor and in their name, place and stead, and for their use and benefit, may sign acknowledge, swear to, deliver, file or record at the appropriate public offices, any and all documents, certificates, and instruments as may be deemed necessary or desirable by the Assignee to carry out fully the provisions of this Agreement and the law, in accordance with the terms laid down hereunder. This power shall survive the death, dissolution or legal incapacity of the Assignor, and shall be valid for all obligations of the Assignor as laid down in this Agreement.”

Remedy Provisions

A clause providing for an Injunctive relief/Specific relief or liquidated damages detailing the right of parties under certain conditions to approach the court of law can provide a boon in time of litigation as it would reduce the burden on the parties and reduce time for getting a court order at the time of breach of the Agreement. The Remedy Clause can be adjusted to provide for injunctive remedy as well as liquidated damages as per the finally negotiated remedies between the parties.

“Assignor agrees that any material breach of this Agreement or breach of [imp. Clauses can be added] would cause Assignee irreparable injury hence in addition to any other remedies under the law, Assignee shall have the right to bring to court a suit for specific performance of this Agreement.”

We are all living in the golden age of IP, with close to 3.3 billion patents being filed in the year 2019 alone, these patents would require suitable and adequate legal documentation in order to successfully commercialize and give any benefits to their owner because any innovation without adequate safeguards is a treasure trove for infringers which disrupts the genuine claims of the rightful owner of the IP and causes loss of value to the economy.

Hence, a clearly drafted agreement which leaves no room for misinterpretation is a must for every organisation as well as individuals who venture in the field of innovation and discovery as seen in the Marathon Case, because in the end it can prove to be the only shield for protecting rights worth millions.

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Trading Trademarks – Assignments, Mergers, and Transmissions

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:

• Changes due to assignment/transmission .
• 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.

• Company A sells its trademarks to Company B.

This is a straightforward case of trademark assignment.

• 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.

• 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.

• 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:

• 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.
• 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

Have questions about trademark transfers in India? Drop us a message.

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Raja Selvam

Founder & Managing Attorney, Selvam & Selvam | Practice areas include Trademarks, Patents, Domain names & Business law. Visiting faculty, Department of Journalism, Madras University where I teach copyrights & trademarks law. Passionate about entrepreneurship, start-ups, stocks, farming, technology and law.

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Recent amendments made to the stamp duty payable on various instruments in Tamil Nadu

• June 10, 2024

Please  click here  to download the Prism as PDF.

The Government of Tamil Nadu (“ GoTN ”) had passed an amendment act i.e., the Indian Stamp (Tamil Nadu Amendment) Act, 2023 (“ Amendment Act ”), wherein the stamp duty payable in relation to certain instruments are revised. The revised stamp duty are effective from May 3, 2024.

In addition to the above, the explanation of the word ‘family’ as set out in Article 55 is also amended to include “the legal heirs of a deceased family member, if any”. Further, the amended explanation of the word ‘family’ is also extended to articles 45(b), 46(b) and 48.

The Amendment Act is a significant revision to the stamp duty levied on various instruments to the prevailing times, which was otherwise levied on obsolete duty. Also, the extension of the definition of the word ‘family’ to other instruments will promote innovative and unique structures in Estate Planning and Real Estate Transactions.

This Prism has been prepared by:

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• Tags JSA , JSA Prism , Leading Law Firm , Leading Lawyers , Legal Updates , Real Estate , Stamp Duty , TAMIL NADU

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What Is the Stamp Duty for Trademark Assignment?

Trademark assignment requires the transfer of trademark ownership from a single party to the next. This could happen for numerous reasons like company acquisitions, mergers or merely the purchase of a trademark. An essential component of this is the payment of stamp duty that the government levies on legal papers. Let us discuss what stamp duty is, why it is essential in trademark projects, and also how it’s estimated and paid out in India?

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What is Stamp Duty?

Stamp duty is tax paid on specific legal documents. This tax was created to make these documents legally binding. Without paying the appropriate stamp duty, documents are not legal under the law. When it comes to trademark transfer, stamp duty can make the transfer of trademark registration rights permissible.

Why Stamp Duty Matters in Trademark Assignment?

If a trademark is given to the next party, the new proprietor utilizes the trademark for their services or products. This can be a substantial change, particularly in case the trademark is recognizable and has a good reputation. Stamp duty is paid out on the assignment document to record this transfer of rights legally. Additionally, it protects both parties in the transaction through legal evidence of the assignment.

Types of Trademark Assignment

Prior to discussing stamp duty details, understand the kinds of trademark assignments:

Partial Assignment

This is transferring just part of the trademark rights to someone else. For instance, a business might appoint the right to work with a trademark for particular services or products but keep the rights for various other uses.

Complete Assignment

Here the whole trademark along with associated rights are assigned to the new owner. The assignee can subsequently use, sell and receive royalties from the trademark.

Assignment with Goodwill

Goodwill is the mark of the trademark’s reputation and brand name worth. An assignment with goodwill means the new owner receives a good track record and consumer loyalty related to the trademark too.

Assignment Without Goodwill

Here only the trademark is transferred (no brand value is transferred). The initial owner may still use the trademark for various other businesses however the new owner is authorized to put it to use for the agreed upon purposes.

How To Apply for Trademark Assignment in India?

There are numerous steps in applying for trademark assignment in India. This is a simplified guide to explaining the process:

Prepare the Assignment Agreement:

This document defines the terms and conditions associated with the trademark transfer. It should specify who’s involved, what trademark is being assigned and if the assignment is goodwill.

Calculate Stamp Duty:

The precise amount of stamp duty due depends upon the valuation of the trademark and also the nature of the assignment. Stamp duty is normally a proportion of the worth of the trademark. This is typically 5% of the transaction value in India.

Execute the Agreement:

Both need to sign the assignment agreement. Have the document notarized as a further legal validation.

Send the Agreement to the Trademark Registrar:

The assignment agreement has to be submitted with the Trademark Registrar within 6 weeks from the assignment date. It is possible to do this online with the Trademark Registrar of India site.

Pay Stamp Duty:

Stamp duty is usually paid by electronic stamping, physical stamp papers or franking. The fastest and most typical technique would be e-stamping.

Receive the Registration Certificate:

After the Trademark Registrar verifies the assignment agreement and stamp duty continues to be paid out, a brand new registration certificate is issued in the assignee’s name. This certificate is evidence of trademark assignment.

Detailed Calculation of Stamp Duty

Stamp duty might be calculated differently depending on the assignment. The way it’s typically calculated is shown below:

Trademark Value:

To begin with, figure out the worth of the trademark. This could be based on things including market value, earnings from the trademark, and brand popularity.

Percent of Stamp Duty:

India’s stamp duty rate on trademark assignments is 5% of the trademark value. However this rate could differ by state regulations and assignment specifics.

Consideration Amount:

Consideration amount is the cost paid for the trademark assignment. From this amount stamp duty is computed.

Extra Charges:

There could be extra fees or charges for paying stamp duty. They might include e-stamping service fees or notary fees.

The Benefits of Registering a Trademark Assignment

The registration of a trademark assignment and also the payment of stamp duty provides several benefits:

• Legal Protection: Makes sure the assignment is legally recognized and enforced in court.
• Clear Ownership: Gives evidence of the new ownership and decreases risk of disputes.
• Value of Brand: Helps maintain and possibly improve brand value related to the trademark.
• Market Expansion: Allows the assignee to enter new markets utilizing a recognized trademark or to expand existing markets.
• Financial Benefits: Allows the original owner to profit from the trademark leading to financial returns.

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Anyone who transfers trademark rights should know about stamp duty for trademark assignment. Follow these steps and pay the proper stamp duty to help make the assignment legal and protected. This protects both parties and helps keep the trademark integrity and value. 

Regardless of whether you’re a business person delegating a trademark or a person purchasing one, knowing the assignment and stamp duty procedure can help you deal with this area with confidence.

What is the stamp value assigned to a trademark?

The stamp value for trademark assignment is normally 5% of the trademark transaction value. This rate might differ by state regulations and the terms of the assignment agreement.

What is the stamp duty for trademark assignment deeds in Delhi?

The stamp duty for any trademark assignment deed is 5% in Delhi. Nevertheless, talk to local authorities for up-to-date rates.

Is stamp duty payable on a deed of assignment of IP rights?

Yes, stamp duty is levied on a deed of assignment of IP rights (including trademarks). The precise amount depends upon the IP value and state-specific regulations.

What are the requisites for trademark assignment?

The requirements for Trademark assignment are a signed assignment contract, payment of appropriate stamp duty, submission of the agreement to the trademark Registrar and updating the trademark registry with the new owner’s details.

How much does trademark assignment cost?

The cost of Trademark assignment includes stamp duty (5% of the transaction value) and filing charges by the trademark Registrar. There might also be legal fees related to drafting and notarizing the assignment deed.

What is the difference between trademark licensing and assignment?

Trademark licensing enables the licensee to use the trademark in specified conditions while ownership stays with the licensor. Trademark assignment is an entire transfer of trademark ownership to the assignee.

Ankit Pal is a content writer with a keen interest in law and legal research. A graduate of HNLU, Raipur, he has contributed numerous papers published in reputed journals, showcasing his expertise and dedication to delivering high-quality work.

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What is the Stamp Duty For Trademark Assignment?

• Post author: D. Lalitha B.com B.L (Hons)
• Post published: June 6, 2024
• Post category: Intellectual Property / Trademark

Last Updated on June 6, 2024 by D. Lalitha B.com B.L (Hons)

Trademarks are important to businesses because they foster customer loyalty and memorability. They envelop names, logos, or particular images that separate an organization’s contributions from those of others in a particular industry.  Trademark assignment  is the most common way of moving brand name ownership starting with one entity then onto the next.

Kinds of Trademark Assignment:

There are four methods available for assigning a trademark. They’re:

• Partial Assignment:
• The new owner receives only a part of the rights, title, and interest in the trademark.
• The current owner retains some rights, like the authority to use it in particular markets or with specific goods/services.
• Complete Assignment:
• All rights, titles, and interests in the trademark are transferred from the current owner to the new one.
• The new owner becomes the sole owner, assuming all associated rights and duties of the trademark.
• The assignment with goodwill:
• Both the business associated with the trademark and its ownership rights are transferred.
• This occurs when a business is sold, and the new owner wishes to obtain the related trademark in addition to the business.
• The assignment without goodwill:
• Only the ownership rights of the trademark are transferred.
• Business or goodwill associated with the trademark is not included in the transfer.
• Employed when the trademark owner wishes to sell the trademark separately from the business.

Why is trademark Assignment Important?

• Financial gain for the assignor:
• Selling the brand name can generate revenue for the business owner.
• The funds can be applied to retirement or other companies.
• Asset acquisition for the assignee:
• Acquiring the trademark provides a valuable asset for establishing and growing the business.
• Increasing efficiency in business processes:
• Facilitates brand consolidations, strengthening identities and marketing effectiveness.
• Resolves legal issues related to trademark ownership, saving time and money.
• Safeguarding brand value:
• Ensures the trademark is used according to the original brand vision.
• Gives reassurance about the brand reputation and usage.

Requirements of the Trademark Assignment Deed:

• The assignment deed must only be submitted in writing.
• The trademark that is being issued should be identified.
• The parties must both complete the assignment deed.
• The purpose of the assignment deed should be money motive.
• Whether the assignment is with or without goodwill should be included in the assignment deed.
• In accordance with the Indian Stamp Act, the assignment deed must be stamped.

Applying Trademark Application:

Here’s the process of applying for a trademark online in India

• Create a profile with the Trademark Registrar:
• Register on the Trademark Registrar’s website.
• Provide necessary information:
• Identify goods and services.
• Provide company name and type of mark filing.
• Submit the required documents:
• Drawing of the proposed mark.
• Affidavit of use or intent to use the mark in commerce.
• Proof of ownership of the mark.
• Pay filing fee:
• Submit the required fee for trademark application processing.
• Send in an authentic, verified signature:
• Authenticate the application with an authenticated copy of the signature.
• Application review:
• The application is sent to an examiner for review.
• Examiner’s decision:
• The examiner makes a decision about, to allow the mark to be put into use.
• Approval and registration:
• If approved, receive a registration certificate with the symbol ® and identifying information.

Fees and Payments:

Here’s the breakdown of the fees necessary for applying for a registered trademark online in India:

• ₹9,000 for electronic filing.
• ₹10,000 for filing in person with the Trademark Registrar.
• ₹4,500 for e-filing.
• ₹5,000 for filing by hand.
• 5% of the application or assignment value, as per the Stamp Duty Act, is payable per trademark application or assignment submitted.

Forms of Identification:

Here are the options for submitting forms of identification when applying for a registered trademark:

• Submit a filing affidavit signed by the owner or owner’s representative.
• The affidavit must be scrutinised by a competent individual.
• Include brand logo, description, and date of first use.
• List names and addresses of all owners or rights holders.
• Submit an application containing documents establishing brand ownership.
• Include a copy of the registration of the trademark certificate or a statement from the entity claiming ownership.
• Provide a statement confirming the applicant’s consent to use the mark.
• Provide contact information for authorised delegates.
• Submit an application containing extracts from earlier submission documents.
• Include a statement confirming the copying of copyrighted material without permission.

What does the “Stamp Duty” entail?

Here’s an overview of stamp duty and its significance:

• Stamp duty is imposed by state governments.
• It applies to different sorts of business endeavours, like real estate transactions,  insurance policy  administration, and financial transactions.
• Mandated by the Indian Stamp Act of 1899 Section 3.
• Ensures legal completion and validity of documents.
• State governments collect revenue from stamp duty.
• Rates are determined based on document type and transaction amount.

What is Stamp Duty for trademark Assignment?

Here’s a summary of stamp duty for trademark assignment, including relevant rates:

• Stamp duty is payable on a deed of IP rights assignment, except for copyright assignments, which are exempt.
• Imposed by state law, governed by the Indian Stamp Act of 1899.
• For trademark transfer deeds and related paperwork to be legally enforceable in India, they must be stamped.
• The amount of stamp duty for trademark assignment is based on the assigned trademark’s market value.
• State governments determine market value, which varies from state to state.
• Utilized to initiate registration requests for an individual’s title following an assignment.
• Mumbai (Maharashtra): 3%
• Kolkata (West Bengal): 5%
• Ahmedabad (Gujarat): 5%

The Key role of Stamp Duty in the context of trademark assignment:

Here’s the key role of Stamp Duty in trademark assignment:

• Legal documents, including trademark transfer deeds, must be duly stamped in accordance with the Indian Stamp Act of 1899.
• Non-payment of stamp duty can render the deed invalid, unenforceable, and, or not valid in the court.
• Stamp duty acts as a source of revenue for the government.
• The generated revenue is contributing to funding various public benefits initiatives, like social welfare, education, and infrastructure development.

Conclusion:

All in all, consideration should be given to stamp duty while assigning a trademark. To ensure a consistent and hassle-free assignment of trademarks, it is advisable that you get the advice of a lawyer who can direct you through the stamp duty payment method and assist you with consenting to whatever legal criteria are still there. To ensure the viability of a trademark assignment in India, it is important to fathom the stamp duty guidelines and fulfil the associated requirements.

• Could you explain the concept of a trademark assignment?

A trademark assignment, otherwise called a trademark transfer, alludes to the most common way of transferring the ownership of a brand, starting with one party and then onto the next. It includes the total transfer, with all rights, title, and interest in the brand.

• Can a trademark assignment be partial?

Yes, it can be partial. It is possible to transfer only a part of the rights, title, and interest in a brand name as long as both parties agree and the terms are clearly stated in the assignment agreement.

• Why Notarising a Trademark Assignment is Important?

The assignee benefits from the assignment being notarised. In order to prove that there’s not a possibility of deliberate document fraud pertaining to the assignment, notarising is also vital. The assignment consequently, it must be notarised with the appropriate stamp duty. Moreover, the assignor needs to give a notarised affidavit verifying the way that the brand name is really theirs.

• Is trademark assignment possible before registration?

Yes, you can do it by submitting the TM – M form with the prescribed fees.

• What if the registry raises a query on an assignment?

If the registry issues a notice on your request for an assignment, you can reply to it by submitting a letter in the prescribed format.

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What Is the Stamp Duty for Trademark Assignment?

The application process of obtaining a trademark and assignment of a trademark as an individual entrepreneur can be seen as daunting due to the number of documents one needs to take care of, and it's often tricky to find information about the proper procedure. However, with this blog article, you'll know everything about the stamp duty for trademark assignment.

 Stamp Duty for Trademark Assignment:   Trademark assignment is the process of handing over trademark rights to someone else in order to use the same trademark. Sometimes, this switch can help your firm increase or improve its perspective and market share.

Table of Contents

Types of Trademark Assignment:

Partial assignment:.

Partial trademark assignment is when the trademark owner assigns part of the trademark to another business. It allows the business to receive legal protection until it becomes a complete trademark and ownership transfer happens. The retailer may use both pieces of information in advertisements to promote their company and verify that they are not breaking any laws.

Complete Assignment:

In a complete assignment, the assignee owns every right to sell, and earn royalties on the trademarks assigned to them.

With goodwill trademark assignment, the power of a registered trademark is assigned to someone else. The party that receives the assignment is named as the assignee on the trademark registration. Once a trademark is assigned with goodwill, it may be transferred or used by anyone. 

Without Goodwill:

Under these trademark assignments, only the trademark is transferred and not the brand value. And the assignor must use the trademark for any of their other businesses.

Applying Trademark Application

To apply for a trademark online in India, you need to create an account with the Trademark Registrar. After creating your account, you will need to identify your goods and services and provide relevant information such as the name of your company and the type of mark you are filing for. The Trademark Registrar offers a variety of documents to support your application, such as a drawing of your proposed mark, an affidavit of use or intent to use the mark in commerce, and proof of ownership of the mark. You will also be required to pay a filing fee and submit a verified original signature. Once your application is filed, it will be sent to an examiner who will decide whether to allow your mark into circulation. If your application is approved, you will receive a registration certificate that includes the symbol ® and identifying information.

Fees and Payments

To apply for a registered trademark online, you’ll need to pay the applicable filing fee and send in your application. Here’s a breakdown of what you’ll need to pay: 

• If you are not a start-up, small enterprise, or individual you will have to pay ₹ 9,000 for lodging an application electronically and ₹10,000 if you file in person with the Trademark Registrar.
• Individuals, small enterprises, or startups must file with the TM application by paying a fee of ₹ 4,500 for e-filing or ₹5,000 for filing by hand
• Based on the type of TM applied as per the stamp duty act, one needs to pay 5% stamp duty per TM application or assignment submitted

Forms of Identification

When applying for a registered trademark, it is important to have the appropriate forms of identification ready. There are a few different options available, and each has its own set of requirements:

• The first option is to submit a filing affidavit with your application. This document must be signed by the owner or owner’s representative and verified by an independent expert. The affidavit must include information such as the trademark’s logo, description, and date of first use. In addition, you must list the names and addresses of all owners or holders of rights to the mark.
• Another option is to submit an application containing only documents that establish trademark ownership. This document must include a copy of the registration of trademark certificate or a declaration from the entity claiming ownership that it is the true owner of the mark. The application must also include a statement from the applicant confirming that he or she is authorized to use the mark. Finally, you must provide contact information for any authorized representatives.

If neither of these options meets your needs, you can submit an application containing only extracts from previously filed documents. This document must include a statement confirming that you are copying copyrighted material without permission.

Benefits of Trademark Registration:

The benefits of trademark ownership can vary greatly depending on individual needs. Registering your mark, however, will help protect your financial and intellectual property rights. For beginning business owners that are not already familiar with trademark law, the process may seem a bit complicated and confusing to begin with.

If you are looking to apply for a registered trademark online and understand the fees involved, this article explains it all in detail. The process is relatively easy. Just go to the Trademark Registrar, fill out an application form, and pay the applicable fees. You will then need to send in citations of where your mark is currently being used, as well as additional documents if requested by the Trademark Registrar. Once the application is complete, you will be given details on when to send in your trademark registration certificate. 

Also, Read:

• How Are Trademarks Selected and Ownership ?
• Document Required for Assignment of Trademark
• How Do I Assign a Registered Trademark ?

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Importance of Assignment Agreements under Intellectual Property Laws in India

This article was published in Journal of Intellectual Property Rights on November 2009

Sindhura Chakravarty [**] Hidayatullah National Law University, HNLU Bhawan, Civil Lines, Raipur, Chhattisgarh 492 001

Received 20 August 2009, revised 29 October 2009

A well-established statutory, administrative and judicial framework exists in India to safeguard intellectual property, relating to patents, trademarks, copyright or industrial designs. [1]  An important aspect of these laws deals with assignment agreements. An assignment agreement is an intellectual property (IP) transaction that deals with the ownership and disposition of intellectual property rights as well as with the control over the use of or access to intellectual property. This paper attempts to briefly explain assignment agreements in general terms as well as the essential requirements for assignment agreements under the Indian Contract Act, 1872, and the Indian Stamp Act, 1899. It discusses in detail the sections pertaining to assignment agreements in the legislations on Intellectual Property Law in India. It also provides information regarding the forms through which assignment of the intellectual property can be registered. The Madrid protocol and the rules regarding assignment of trademarks in the international forum have also been discussed.

Assignment Agreement, Contract Act, copyrights, patents, trademark, geographical indications, designs, semiconductor integrated circuit layout design, plant varieties, biological resources, Stamp Act, recordal procedure.

Assignment Agreements

Assignment agreements pertain to the transfer of intellectual property rights from the owner of the rights to another person or organization. An Intellectual Property Agreement (IP Agreement) or an Intellectual Property Assignment Agreement is a written and enforceable contract that consummates and formalizes an agreement between two companies for the purchase and sale of intellectual property rights. The intellectual property being purchased can consist of copyrights, trademarks and/or patents. [2]  Assignment agreements differ from license agreements on the grounds that an assignment agreement actually transfers the ownership of that intellectual property from the assignor to the assignee whereas a license agreement only permits the licensee to use the intellectual property for a given period of time.

An assignment agreement cannot be compared to a negotiable instrument because in case of negotiation, the transferee can get better title than transferor, which can never happen in assignment/transfer.

For example, if A assigns to B, the assignment is stolen by C and assigned to D who takes it in good faith and for value without any notice of the defect in C’s title, D will have no rights against A. However if A draws a cheque (negotiable instrument) in favour of B, the cheque is stolen by C and negotiated to D, who takes it in good faith and for value without any notice of the defect in C’s title then D will be entitled to value of cheque. [3]

Intellectual property created by students in a University Research and Development (R&D) programme can be assigned by the student in the absence of an agreement as the student is the owner of the intellectual property created. Most universities, however, have policies requiring students to sign pre-invention agreements regarding the same.

An assignment agreement may involve a complete and exclusive sale of the rights, thus giving the assignee complete ownership to exploit the intellectual property rights in whatever way, shape, or form it likes, and this is, however, subject to any limitations listed in the agreement. Partial assignments are also possible as specified in Section 18 of the Indian Copyright Act. Usually the assignee will pay the assignor cash or stock consideration in exchange for these rights. [4]

Essential Requirements of an Assignment Agreement

Requirements under the indian contract act, 1872.

As per Section 2(h) of the Indian Contract Act, 1872, any agreement that is legally enforceable by law can be called a contract. An assignment agreement to be valid must satisfy the requirements of the Indian Contract Act, 1872. Therefore, it has to be made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object and also has to be made in such a manner that it is not declared void under Section 10 of the Indian Contract Act, 1872. For instance in the case of Alexander v Rayson, [5]  P let a flat to R of $1200 a year. To reduce the municipal tax he entered into two agreements with R. One, by which the rent was stated to be $450 only and the other by which R agreed to pay $750 for services in connection with the flat. In a suit filed against R to recover $750, it was held that the agreement was made to defraud the municipal authority and was void and A cannot recover the money.

In contract law, the term ‘assignment’ means a transfer or making over to another of the whole of any property, real or personal, in possession or in action, or if in estate or in right therein. [6]  To simplify, it refers to an agreement by means of which the rights or obligations of one party can be transferred to another party. Though not specifically mentioned in the Indian Contract Act, 1872, assignments have been inherited from English Contract Law. [7]  Assignment agreements in the context of intellectual property law refers to the transfer of a specific kind of rightsintellectual property rights, which are personal, movable property. This is considered a lawful object.

To be a valid and legally enforceable contract it must be ensured that the consideration provided is also lawful and the contract itself is lawful. An agreement stating that a person would work for another person for two years in return for Rs 100 and in case of default would have to pay an exorbitant interest and principal at once was held to be indistinguishable from bonded labour and was thus held void. [8]  Assignment can only be made from free consent of both parties. The parties to the agreement must also be competent to contract- thus neither can be a minor or of unsound mind according to Section 11 and 12 of the Indian Contract Act, respectively. It is interesting to note at this point that as per English law, a minor can dispose of a copyright in the same way as an adult subject to the rules of infant contracts. [9]

The Indian Contract Act, 1872 does contain certain provisions which indirectly refer to assignment yet it does not specify what assignments are or are not good in law. [10]  The courts have however made certain guidelines regarding the same. For instance, it has been determined by the Madras High Court that an agreement regarding the publishing of a book between an author and a publisher is personal to the individuals entering it and the benefit received from this cannot be assigned. [11]  It has also been determined by the High Court of Lahore that a copyright cannot be assigned for a non-existing work. [12]

Both Section 37 and Section 40 of the Indian Contract Act, 1872 allude to the enforceability of assignments by laying down that subject to certain exceptions, a contract in the absence of a contrary intention, express or implied, will be enforceable by and against the parties and their legal heirs and legal representatives including assignees and transferees. [13]  Section 40 of the Indian Contract Act, 1872 specifies that a contract which the promisor is required to perform personally is not capable of assignment. [14]

Assignment agreements are thus a form of contract and must therefore satisfy the requirements that are mentioned under the Contract Act. It is only then that the assignment agreement can be enforced by filing a suit for damages under Section 73 of the Indian Contract Act, 1872.

Requirements under the Indian Stamp Act, 1899

The Stamp Act is a fiscal measure enacted to secure revenue for the state on certain classes of instruments. [15]  As per Section 2(14) of the Indian Stamp Act, 1899, an instrument includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended extinguished or recorded. An assignment agreement involves the transfer of intellectual property rights and hence it would fall under the purview of the definition of the term ‘instrument’ as per the Act. As per the schedule, depending on whether the assignment pertains to ‘conveyance’, ‘transfer’ or ‘transfer of lease’ different stamp duty is to be charged. As per Section 23 on ‘conveyance’ in the Indian Stamp Act, 1899, an assignment of a Copyright is exempted from Stamp Duty. Therefore, in a Deed of Assignment, assigning copyright along with some other property, say trademarks, it is advisable to state as to what part of consideration is towards the assignment of copyright, thereby exemption from stamp duty can be sought on that portion of the assignment. In Bihar, however, the above-mentioned exemption of copyright assignments has been deleted by the Amendment made by the State Act with effect from 31st March 1958 as a result of the examination of exemptions suggested by the Taxation Enquiry Committee. [16]  In Uttar Pradesh, the exemption is restricted to assignment of copyright in musical works. [17]

In a recent case regarding trademarks, [18]  it was determined that Section 35 of the Indian Stamp Act, 1899 prohibited the courts from admitting into evidence documents not duly stamped merely to ensure Stamp duty collection and could not be used as a means of denying a person rightful ownership. Thus, it can be seen that though Stamp duty is applicable on assignment of intellectual property (except Copyright) in most States of India, the non-payment of this cannot invalidate the assignment.

Assignment of Intellectual Property

Assignment of copyrights.

Copyright is often referred to as the ‘Cinderella of Intellectual Property Law’. [19]  This is because it was once over-shadowed by the twin sisters- Franchise Law and Patent Law but it now plays a very important role in the IP regime. It provides protection to authors, composers and other artists against unauthorized reproduction of their work. [20]  The exact meaning of the term with respect to India is given in detail in Section 14 of the Copyright Act, 1957.

Copyrights are personal, moveable property and can be transferred though assignment agreements from one person to the other. In India, Sections 18, 19 and 19A of the Copyright Act, 1957 govern the assignment of copyrights. Section 18 of this Act gives every copyright holder the right to transfer his copyright to an assignee by means of an assignment agreement.

Section 19(1) of the Copyright Act, 1957 clearly states that no assignment of the copyright in any work shall be valid unless it is in writing signed by the assignor or by his duly authorized agent. Thus, no particular form of assignment is required under Section 19 of the Copyright Act, 1957 and it will suffice if the assignment can be culled out in writing from some document. [21]  Oral assignment of copyright is neither permissible nor valid. [22]  In a case, [23]  the Supreme Court held that an existing and future right of a music composer and lyricist is capable of assignment, subject to the conditions that the assignment shall take effect only when the work comes into existence and the assignment is required to be in writing, signed by the assignor or his duly authorized agent. A deed of assignment of copyright is not compulsorily registrable. [24]

Section 19A of the Copyright Act, 1957 makes provisions in the case of disputes arising with respect to a transaction. It states that any such complaint will be dealt with by the Copyright Board. The Board cannot pass any order to revoke the assignment unless it is satisfied that the author is the assignor and that the terms of assignment are harsh to the assignor. In any event, no order of revocation of assignment can be made within a period of five years from the date of assignment. [25]

The term copyright encompasses a bundle of rights, one of which is a ‘moral right’. This constitutes certain specific rights that the author of an original literary, dramatic, musical or artistic work and the director of a film enjoy in their creation. It can only be exercised by the creator himself and these rights are not assignable as per English law. [20]  The Law of the United States of America does not protect these rights conclusively. [26]  Moral Rights of an author has been acknowledged under Section 57 of the Copyright Act, 1957. This states that even after the assignment of the copyright, the author of a work shall have the right to claim authorship of the work; and to restrain or claim damages in respect of any distortion or other act in relation to the said work which is done before the expiration of the term of copyright which brings the author into disrepute. [27]

The primary function of copyright law is to protect the fruits of a man’s work, labour, skill or test from annexation by other people. [28]  This requires for the copyright owner to possess several rights including the right to transfer the intellectual property, if he chooses to do the same. Assignment agreements are integral to copyright law as it helps the copyright owner to implement this right. [29]

Assignment of Patents

A patent is a monopoly right granted to a person who has invented a new and useful article or an improvement of an existing article or a new process of making an article. During the term of the patent, the patentee can prevent any other person from using the patented invention. [30]  Patent law recognises the exclusive rights of the patentee to gain commercial advantage out of his invention. [31]  In India, patent law is covered by the Patents Act, 1970 which has been extensively amended vide the Patents (Amendment) Act, 1999, Patents (Amendment) Act, 2002 and Patents (Amendment) Act, 2005.

Patent law gives every inventor a reason to exercise his creative faculties by protecting his efforts and ingenuity from imitation. It has been held by the Supreme Court of India that the object of patent law is to encourage scientific research, new technology and industrial progress. Grant of exclusive privilege to own, use or sell the method or the product patented for a limited period, stimulates new inventions of commercial utility. [32]

In patent law, assignment refers to the act of the patentee by which the patent rights are wholly or partially transferred to the assignee who acquires the right to prevent others from making, using or exercising or vending the invention. The assignment can either be exclusive or non exclusive. The exclusivity can be further limited, for example exclusivity to a territory or market or line of products. There are three main types of assignments in patents, each of which have been discussed briefly as follows:

Legal Assignments

An assignment of an existing deed is a legal assignment. A patent which is created by deed can only be assigned by a deed. [33]  A legal assignee entitled to be registered as the proprietor of the patent and acquires all the rights thereof.

Equitable Assignments

A document agreeing to transfer a patent or a share of a patent with immediate effect is an equitable assignment. This affects proprietorship, but does not directly change it. The man to whom it is equitably assigned gets the right in equity to have the ownership of the patent altered in law.

A mortgage is a document through which patent rights are transferred to the assignee in return for a sum of money. Once the assignor repays the sum, the patent rights are restored to him. [30]  The term assignee as per Section 2(1) of the Patents Act, 1970 includes in its meaning the legal representative of a deceased assignee. Section 70 of the Patents Act, 1970 confers inter alia the right on a grantee to or proprietor of the patent to fully or partially assign his patent to another or others. As per the Patents (Amendment) Act, 2005 which replaces Section 68 of the Patents Act, 1970 an assignment of a patent shall not be valid unless the same were in writing and the agreement between the parties concerned is reduced to the form of a document embodying all the terms and conditions governing their rights and obligations and duly executed.

Section 69 of the Patents Act, 1970 describes the registration of those assignments. It is necessary for the agreement between the parties concerned to be reduced to the form of a document embodying all the terms and conditions governing their rights and obligations and the application for registration of such document ought to be filed in the prescribed manner with the Controller. The time-limit under the earlier law requiring ‘the application for registration of such document filed in the prescribed manner with the Controller within six months from the date of execution of the document’ has been omitted by the Patents (Amendment) Act 2005. Section 68 does not stipulate any time-limit for registration. [34]

As per the Law of the United States, the applicant for a patent must always be an individual. A corporation or a partnership, or other legal entity cannot properly be an inventor in an American Patent. [35]  The government can own an invention, however. [36]  This was reiterated in the case of Wright v US. [37]  A corporation may be made an assignee to a patent through an assignment agreement.

Patents are a very important branch of intellectual property, as life saving drugs and other essentials come within its sphere. Thus assignment agreements of such rights must be couched in clear and concise terms to ensure that no controversy arises as to its interpretation.

Assignment of Trademark

Consumers all over the world seek quality. Brand consciousness is a very common method of achieving this end. Trademarks are the means by which consumers distinguish between brands. A trademark is any word, name, symbol, device or any combination thereof used by a manufacturer or retailer of a product, in connection with that product, to help consumers identify that product and to distinguish it from the products of competitors. [38]  For example, the LEVI v-shaped stitching on the back pocket Levi’s blue jeans can be called a trademark. [39]  The main purpose behind protecting trademarks is because it is of use both to the manufacturer and the consumer. For the merchant, the trademark serves as an advertising tool, facilitating repeated sales and successful marketing of new products. [40]  Trademarks foster competition and the maintenance of quality by securing to the producer the benefits of a good reputation. [41]

In India, trademarks are protected by the Trademarks Act, 1999. Assignment is an important aspect of the Act. As per the Section 2(1)(b) of the Trademarks Act, 1999, assignment has been described as an assignment in writing by act of the parties concerned. Thus, this clarifies that for the assignment of trademarks it is necessary for the agreement to be in writing and to be an act of the assignor and the assignee of their own volition and not a third party. In Section 2(1)(zc) of the above-mentioned Act, assignment has been differentiated from other forms of transmission. Section 6 of the Trademarks Act, 1999 allows for the notification of assignment of trademarks which have been registered. Section 31 of the same Act states that registration of trademark and notification of assignments will act as prima facie evidence of the existence of a trademark.

Chapter V of the Trademarks Act, 1999 deals in depth with the transfer of trademark by means of assignment and transmission. Section 37 of the Act clearly states that only the registered proprietor has the right to assign a trademark. He is also subject to the rights conferred to him by registration. Section 38 of the Trademarks Act, 1999 provides the assignment of a registered trademark. Trademarks in India can be assigned with or without goodwill. In a marked change from the previously valid Trade and Merchandise Mark Act, 1958, Section 39 of the Trademarks Act, 1999 provides the assignment of an unregistered trademark. These Sections are subject to Section 40 and Section 41 of the Trademarks Act, 1999.

Section 40 of the Trademarks Act, 1999, prevents the occurrence of a situation wherein exclusive right of a trademark resides in more than one person. This is because if assignments and transmission lead to the creation of multiple exclusive rights in more than one person this may lead to deception and confusion. [42]  The proprietor of a registered trademark who proposes to assign it may submit to the Registrar in the prescribed manner a statement of case setting out the circumstances and the Registrar may issue to him a certificate stating whether, having regard to the similarity of the goods or services and of the trademarks referred to in the case, the proposed assignment would or would not be invalid under Section 40(1). The certificate is subject to appeal. It will also be conclusive as to the validity or invalidity under Section 40(1), of the assignment in so far as such validity or invalidity depends upon the facts set out in the case. A certificate in favour of complete validity of assignment/transmission can be given only if application for the registration is made under Section 45 of the Trademarks Act, 1999 of the title of the person becoming entitled is made within six months from the date on which the certificate is issued as per Section 40(1).

Section 41 of the Trademarks Act, 1999 prohibits the assignment of a trademark whether it be registered or unregistered which may result in different people using trademark in different parts of the country. If an assignor retains exclusive right over trademark even after the assignment agreement, then the assignment will be void as per Common Law. [43]

Chapter V of the Trademarks Act, 1999 refers to the concept of ‘goodwill’ as previously mentioned, in Section 38, however the Act does not define the term. In Churton v Dogules, [44]  it was determined that goodwill must mean every advantage that has been acquired by an old firm by carrying on its business, everything connected to the premises and the name of the firm, and everything connected or carrying with it the benefit of the business. There was a time when the law in UK considered goodwill to be inseparable from trademark. [45]  This was subsequently changed. [46]

Section 42 of the Indian Trademarks Act, 1999 further provides for means by which a sale of trademark not in connection with goodwill must occur. It has to be registered before the expiration of six months from the date on which the assignment is made or within such extended period, if any, not exceeding three months in the aggregate, as the Registrar may allow. Thus the assignee applies to the Registrar for directions with respect to the advertisement of the assignment, and advertises it in such form and manner and within such period as the Registrar may direct.

Section 43 of the Trademarks Act, 1999 deals with certification trademarks, it states that the assignment of certified trademarks would not be possible without the consent of the registrar which was to be applied for in writing. Section 44 of the Trademarks Act, 1999 states that associated trademarks must be assigned or transmitted together and not separately. This provision is intended to ensure that the marks associated under Section 16 of the Trademarks Act, 1999 are not assigned separately to different persons entailing confusion and deception as a result of simultaneous use of same or similar mark by a different person in respect of the same goods or description of goods or same services or description of services. [47]  Section 45 of the Trademarks Act, 1999 discusses the registration of assignments or transmissions in detail. Thus the significance of assignment agreements in Trademark law is amply clear from its exhaustive treatment in the Trademarks Act, 1999.

Assignment of Geographical Indications

Geographical indications have been defined under Section 2(e) of the Geographical Indications of Goods (Registration and Protection) Act, 1999. It basically pertains to an indication that is used to identify agricultural, natural or manufactured goods originating from a specific geographical territory having a special quality or reputation.

Section 24 of the Geographical Indication of Goods Act, 1999 clearly indicates that assignment, transmission, licensing, pledge, mortgage or any such agreement is prohibited by law. Hence there is no way in which the right over a geographical indication can be passed to another person except on the death of the authorized user. In case of which the geographical indication shall devolve to his successor. This is mainly because a geographical indication is a public property belonging to the producers of the concerned goods which cannot be used to describe another good as it is indicative of the reputation and quality of another product. [48]

Assignment of Designs

When we admire the sleekness of the cellular phone model or the cut of a formal shirt or even the shape of a new car, we are actually referring to its aesthetics or design. The object of the Designs Act, 2000 is to protect new or original designs so created to be applied or applicable to particular article to be manufactured by industrial process or means. It provides the creator of a design with the security that his aesthetic look will not be applied by others to their goods. [49]

This effort can be protected from imitation by seeking protection under the Design Act, 2000. As per Section 2(d) of the Designs Act, 2000 ‘design’ means only the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article whether in two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye; but does not include any mode or principle of construction or anything which is in substance a mere mechanical device. Section 11 of the of the Designs Act, 2000 clearly states that a copyright upon design can last for 10 years from date of registration and can be extended to a maximum of 15 years.

Section 30 of the Design Act, 2000 read with Rules 32, 33, 34 and 35 of the Design Rules, 2001, recognizes the contracts relating to assignment of designs and provides procedure for the recordal thereof. Section 30(1) of the Design Act, 2000 states that where a person becomes entitled by assignments, transmission or other operation of law to the copyright in a registered design he may make application in the prescribed form to the Controller  [50]  to register his title. Section 30(3) of the Design Act, 2000 makes it clear that for an assignment to be valid it must be in writing and the agreement between the parties concerned has to be reduced to the form of an instrument embodying all the terms and conditions governing their rights and obligation and the application for registration of title under such instrument is filed in the prescribed manner with the Controller within the stipulated time- that being within six months from the execution of the instrument. Section 30(4) of the Design Act, 2000 states that the absolute right to assign the design rights lie with the person registered as proprietor of the design.

The Copyright in the design is only protected if the same is statutorily recognized under the provisions of the Designs Act, 2000. Similarly, the rights acquired by third parties by way of assignments or licenses are only made effective if the same is duly registered in accordance with the provisions of the Act and the Rules framed there-under. There is no concept of common law license under design law. [51]

Assignment of the Semiconductor Integrated Circuits Layout Design

Semiconductor integrated circuit is an electronic circuit manufactured on the surface of semiconductor material. [52]  Integrated circuits are used in almost all electronic equipment in use today and have revolutionized the world of electronics. The sheer number of electronic appliances we use on an everyday basis is a clear indication of how important semiconductor integrated circuits or chips are in the modern world.

The manner of arrangement or the lay-out of the chip is what enables it to perform a particular function. Thus there was a need to protect the investment of the chip-designer by way of a separate enactment. [53]  This protection is to be provided by the means of the Semiconductor Integrated Circuits Layouts Design Act, 2000 in India. This was enacted in keeping with India’s obligation under the TRIPS Agreement. [54]

Assignment as per Section 2(b) of the Semiconductor Integrated Circuits Layout-Design Act, 2000 has been defined as ‘an assignment in writing by act of the parties concerned’. Registration of the design as well as all subsequent assignments will act as prima facie evidence of the validity thereof as per Section 19 of the Act.

Chapter V of the Semiconductor Integrated Circuits Layouts Design Act, 2000 deals with Assignments and Transmissions. Section 20 of the Semiconductor Integrated Circuits Layouts Design Act, 2000 allows the proprietor of a layout-design the power to assign the layout-design, and to give effectual receipts for any consideration received for such assignment. This is subject to the provisions of the abovementioned Act and to any right appearing from the register to be vested in any other person. Section 21 of the Semiconductor Integrated Circuits Layouts Design Act, 2000 makes a registered layout-design assignable and transmissible with or without the goodwill of the business concerned. As per Section 22 of the Semiconductor Integrated Circuits Layouts Design Act, 2000, when an integrated circuit layout is assigned without goodwill then the assignment shall not take effect unless the assignee, not later than the expiration of six months from the date on which the assignment is made or within such extended period, if any, not exceeding three months in the aggregate, as the Registrar may allow, apply to the Registrar for directions with respect to the advertisement of the assignment, and advertises it in such form and manner and within such period as the Registrar may direct. Section 23 of the Semiconductor Integrated Circuits Layouts Design Act, 2000, states that the assignee must register the title with the registrar. Section 24 of the Semiconductor Integrated Circuits Layouts Design Act, 2000 prevents the assignee from using the registration as proof of title if the matter is still before the registrar or an appeal from an order there-from is pending.

Assignment of Plant Varieties

A need was felt in the latter half of the 20th century to provide for the establishment of an effective system for the protection of plant varieties, farmer’s rights and plant breeders, in order to encourage the development of new varieties of plants. [53]  The Protection of Plant Varieties and Farmer’s Rights Act, 2001 was enacted by India under the obligation created by the TRIPS Agreement it had ratified in 1994. [55]  India through the Protection of Plant Varieties and Farmer’s Rights Act, 2001 implemented a sui generic [56]  system of protection. [57]  It is essentially [but loosely] modelled on the Union for the Protection of new Varieties of Plants, 1978. [53]

Assignment agreements are permissible under the Plant Varieties and Farmers Rights Act, 2001. A plant breeder may through an assignment agreement transfer his right of ownership upon the plant strain he created to another person in return for pecuniary gain. Section 16(1)(c) of the Plant Varieties and Farmers Rights Act, 2001 acknowledges the legal validity of assignment agreements by stating that any person being the assignee of the breeder of the variety in respect of the rights to make such application, can apply for registration under Section 14(a) of such genera and species as specified under Section 29(2) or an extant variety or a farmers’ variety.

The Plant Varieties and Farmers Rights Act, 2001 provides some safeguards to ascertain the legitimacy of the assignment in the form of Section 18(3). The Section states that in case an application for registration is made by virtue of an assignment of the right to apply for registration, there shall be furnished at the time of making application, or within such period after making the application as may be prescribed, a proof of the rights to make the application. Thus the validity of the transfer of the intellectual property is gauged at the time of registration itself.

Assignment of Biological Resources

The Biological Diversity Act, 2002 was created in a bid to conserve, use sustainably and equitably distribute benefits accruing from use of biological resources and the traditional and contemporary knowledge associated therewith. [58]  It prevents anyone claiming an intellectual property right (IPR), such as a patent, over biodiversity or related knowledge, without permission of the Indian Government. It contains measures for sharing of benefits from the use of biodiversity, including transfer of technology, monetary returns; joint R&D and joint IPR ownership. [59]

Section 4 of the Biological Diversity Act, 2002 states that the previous approval of the National Biodiversity Authority is necessary to transfer the results of any research relating to any biological resources occurring in, or obtained from, India for monetary consideration or otherwise to any person who is not a citizen of India, or is a non-resident [60]  or a body corporate or organization which is not registered or incorporated in India or which has any non-Indian participation in its share capital or management. Collaborative research efforts and papers for the dissemination of knowledge are made exceptions to this definition of transfer. [61]

There is no specific provision in the Biological Diversity Act, 2002, dealing with Assignment Agreement. Assignment is also a form of transfer which under specific circumstances is permitted. It can be inferred that assignment agreements are not per se prohibited by the Biological Diversity Act, 2002 provided the assignment does not contravene any other rules of the Act.

Recordal Procedure with respect to Transfer of Trademark under Madrid System

Recordal or recordation [62]  refers to the process or action of recording of any transfer. [63]  The term came to the fore in the international forum with respect to trademarks after the advent of the Madrid Agreement. The Madrid Agreement was signed in 1891, yet it was only after the creation of the Madrid Protocol in 2004 that the concept of international registration became plausible. The Madrid Agreement and the Madrid Protocol jointly form the Madrid System that provides a centrally administered system of obtaining a bundle of single jurisdiction trademark registrations based on an ‘international registration’, and therefore provides a mechanism for obtaining trademark protection in many countries around the world. [64]

The Madrid System amongst other innovations suggested that the recordal of assignment agreements in an international register. India is in process of making amendments to its trademark law regime to streamline its trademark law and to make it consistent with evolving international trademark law regime and is also contemplating accession to the Madrid System.

The applicant for an international registration is required to file only one application, pay one fee in local currency, and is not required at least initially, to submit foreign powers of attorney. Renewals, assignment recordals, changes of name and/or address of an international registration may be effected by filing one document with the International Bureau. [65]

The Trademarks (Amendment) Bill, 2007 incorporates the changes necessitated by the Madrid Protocol. [66]  Section 36F of this Bill states that from the date of the international registration of a trademark where India has been designated or the date of the recordal in the register of the International Bureau about the extension of the protection resulting from an international registration of a trademark to India, the protection of the trademark in India shall be the same as if the trademark had been registered in India. The bill is yet to be presented before the Lok Sabha and has no legal binding-ness as of now. However, there is a lot to suggest that the recordal system put forth by the Madrid Protocol will be implemented in India in the near future, thus the process for recordal of change of ownership [including assignment] has been analysed as follows:

Rule 25 of the Common regulations of the Madrid Agreement and Protocol explains the means by which transfer of ownership can take place. [67]  First of all, a request for change in ownership through request for recording shall be presented to the International Bureau on the relevant official form, in one copy, where the request relates to a change in the ownership of the international registration [including assignment] in respect of all or some of the goods and services and all or some of the designated Contracting Parties. The request for the recording of a change in ownership may be presented through the Office of the Contracting Party, or of one of the Contracting Parties, this must comply with conditions of Article 2 of the Madrid Protocol [68]  as Section 2(a)(iv) of rule 25 reiterates. The contents of the request must include the number of registration, the name of the holder, the name of the new holder their addresses and other specifications given in Rule 25 Section 2 of the Common Regulations of Madrid Protocol. [67]

As per Article 9 of the Madrid Protocol, the International Bureau shall record in the International Register any change in the ownership of that registration, in respect of all or some of the contracting parties in whose territories the said registration has effect and in respect of all or some of the goods and services listed in the registration, provided that the new holder is a person who, under Article 2(1), is entitled to file international applications.

Article 9sexies (1) also states that where, with regard to a given international application or a given international registration, the Office of origin is the Office of a State that is party to both this Protocol and the Madrid (Stockholm) Agreement, the provisions of this Protocol shall have no effect in the territory of any other State that is also party to both this Protocol and the Madrid (Stockholm) Agreement.

Assignment agreements are of considerable importance in IPR since they allow the intellectual property owners to transfer their intellectual property for commercial returns, ensuring that the intellectual property can be used for monetary gain. Intellectual property that is created is utilized and exploited by the Assignment Agreement, where the purchaser or assignee takes benefit of the assignment rights that are created. These assignment agreements give rise to legal and equitable rights in law and purport many issues if they are not carefully constructed as required by law.

Issues relating to ownership of IPR must be carefully considered where employees may be creating IPR outside the scope, time and available resources of the company that they work for. Companies who own valuable IP rights should execute non-disclosure agreements with their employees, agents, or other third parties and make sure to define the term ‘confidentiality’ and the obligations of the parties not to disclose it. It is prudent to include Assignment Agreement clauses which address issues relating to governing law, jurisdiction, Alternative Dispute Resolution [ADR] to seek speedy resolution of disputes. Intellectual Property Assignment Agreement is a legal contract and required to be in compliance with existing Laws.

It is important, in the field of intellectual property, to define transparent criteria for terms and conditions under which the institution/organization would be the owner of the IPRs and the situation in which the inventor or creator would have the right or privilege to be the owners of the IPRs that they created. [69]  The enforceability of assignment agreements act as an incentive to these individuals to create new inventions which ultimately benefits society.

It is also essential to define the ownership of created intellectual property with relation to employeremployee agreements and contract for service to encourage innovation.

IPR legislations in India provide specific rules, regulations and procedure when dealing with assignment agreements. The Rules/Acts make provisions for registering the assignment agreements and their respective schedules also provide for forms through which parties can register their assignment agreements. In order for an assignment agreement to be valid and enforceable it is essential that the assignment agreement be recorded as prescribed by the Acts and relevant Rules.

In addition to abiding by the Rules, to avoid ambiguity it is essential to ensure that the agreement clearly defines which person the ownership rests with. The assignment must be concrete and also clarify the tenure for which the individual would be the owner of the intellectual property. This would provide a precaution in case of a potential dispute on the ownership of the intellectual property.

The position of an Assignment Agreement in the intellectual property law of India is one of great consequence despite being a private transaction between the assignor and the assignee. One of the reasons for this is that the law is required to protect the owner of the intellectual property from being defrauded. It must be noted, however, that though the law does provide certain safeguards, the onus of creating a suitable assignment agreement is upon the parties concerned. A valid assignment agreement and one that benefits all parties involved can only come into being if the fundamental issues, some of which have been discussed above, are addressed.

*Edited by Dr Sudhir Ravindran, Solicitor-England & Wales, Patent & Trademark Agent and Attorney with Altacit Global, Altacit Global, Creative Enclave, III Floor,#148-150, Luz Church Road, Mylapore, Chennai 600 004. Email:  [email protected] **Email: Corresponding author:  [email protected]

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• The Controller of Designs as per Section 3(1) of the Designs Act, 2000 refers to The Controller General of Patents, Designs and Trade Marks appointed under sub-Section (1) of Section 4 of the Trade and Merchandise Marks Act, 1958.
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• Article 27(3)(b) TRIPS Agreement, 1994.
• Means ‘self generating’ or any system a country decides on, provided it grants effective Plant Breeders’ Rights Protection.
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Is stamp duty payable on an assignment of intellectual property rights?

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Kedar Naniwadekar   --> 29 October 2015

Calculation of stamp duty for trademark assignment deed

What is the stamp duty for Trademark Assignment Deed and how is the stamp duty calculated for the same? Also what is the procedure for registration of Trademark Assignment Deed? I have been given 2 different advices 1) the stamp duty shall be 0.1% of the total value if the value is below Rs. 10 Lakhs and 0.2% if the total value is above Rs. 10 Lakhs; and 2) the stamp duty shall be 3% of the total value.

 1 Replies

Priyanka Kulkarni (Advocate and Intellectual Property Attorney Solicitor (England and Wales) (NP))     --> 30 October 2015

Being lawyer, first you need to check the relevant jurisdiction and decide which stamp Act applies e.g. Maharashtra Stamp Act (previously Bombay Stamp Act) and then read the relevant provision.

You may contact me at [email protected]

Priyanka Kulkarni

IP Attorney and Solicitor of England and Wales( NP)

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