ip assignment agreement stamp duty

IP Assignment Agreement

Jump to section, what is an ip assignment agreement.

An IP assignment agreement is an agreement that designates the ownership of intellectual property. Companies often use IP assignment agreements to secure their inventions and developments but also to transfer ownership of intellectual property as needed. These assignment agreements are used for transferring intangible property like a copyright, a trademark, or company trade secrets.

Sometimes referred to as an IP transfer agreement, the IP assignment agreement also ensures that when an employee helps develop an intangible creation on behalf of a company that the company can retain the rights to the creation.

Common Sections in IP Assignment Agreements

Below is a list of common sections included in IP Assignment Agreements. These sections are linked to the below sample agreement for you to explore.

IP Assignment Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.1 3 v476437_ex10-1.htm EXHIBIT 10.1 , Viewed October 13, 2021, View Source on SEC .

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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]

Branch Office: 21-1-1, Jalan Medan Putra 3, Medan Putra Business Center, Bandar Manjalara, Kepong, 52200 Kuala Lumpur. Tel: +603 62752511 / 2588 Fax: +603 62758511

Are you transfering the complete ownership of your intellectual property?

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IP Assignment Agreement

IP Assignment Agreement is a written agreement between two parties in which a property owner (known as assignor) transfers the complete ownership in a subject matter to another party (known as assignee).

All subject matters of the intellectual property rights, such as music, design, artwork, photograph, video, sound, etc. can be assigned by the owner of such material.

The terms of the transfer have to be clearly captured in the agreement to avoid any ambiguity.

Contents of IP Assignment Agreement

A well drafted IP Assignment Agreement contains the following:-

- Details about the subject matter being transferred

- Mode of payment

- Representation and warranty

- Indemnification

- Limitation of liability

- Grounds of termination

- Severability

- Other legal clauses

Laws governing IP Assignment Agreements in India

The different laws which govern various aspects of IP Assignment Agreements in India are as follows:

• The Indian Contract Act, 1872
• Copyright Act, 1957
• Trade Marks Act, 1999
• Design Act, 2000
• Patents Act, 1970
• Competition Act, 2002
• Stamp Duty Act (State specific)

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• Senior Expert Lawyers : We will get your document drafted/reviewed by Expert Senior lawyers, skilled in Intellectual Property Laws. You can track the progress of your document on our platform at all times.
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Frequently Asked Question

What is the difference between licensing and assignment.

The primary difference between the two is that a License allows the Licensor to maintain their rights and interest in their IP, whereas an Assignment transfers all of the Assignors rights to their IP and assigns it to the Assignee.

Would I retain any right in the property after assigning the same?

No, under Assignment, you will trasnfer all your rights in the subject matter in favour of the assignee.

I want to earn royalty payments through my intellectual property. Should I execute this Agreement?

No. In that case, you should execute Licensing Agreement.

Does this Agreement require to be stamped?

The document has to be stamped according to relevant Stamp Duty Act (which is state specific).

Can I revoke the transfer afterwards?

No. You cannot revoke the transfer unless you include a provision to that effect in the IP Assignment Agreement.

Can an IP assignment agreement be terminated?

The termination of an IP assignment agreement depends on the terms outlined in the contract. In most cases, once the assignment has been executed and the IP rights have been transferred, the agreement cannot be easily terminated. However, the agreement may include provisions for termination under specific circumstances, such as a breach of contract or the failure to meet certain conditions. It's essential to carefully review and negotiate the termination clauses in an IP assignment agreement to protect your interests.

Does an IP assignment agreement transfer all rights associated with the IP?

The scope of rights transferred in an IP assignment agreement depends on the specific terms of the contract. In most cases, an assignment agreement transfers all ownership rights in the specified IP from the assignor to the assignee. However, the agreement may include certain limitations or reservations of rights, such as the assignor retaining a license to use the IP for specific purposes

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Decoding Indian Stamp Duty Requirement for IP instruments

Musharaf khan.

• July 20, 2023

As per the Indian Law, stamp duty is payable on every instrument [1] . It is an indirect tax paid to the government. The Indian Stamp Act, 1899 (2 of 1899) was enacted to consolidate and amend the law relating to stamps. It extends to the whole of India.

The Indian Stamp Act, 1899 (2 of 1899) is a fiscal statute prescribing the rates of Stamp Duty as specified in Entry 91 of List-I (Union list) of the Seventh Schedule to the Constitution of India List (viz. Bills of Exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts)  The States are empowered under Entry 63 of List-II (State list) of the Seventh Schedule to the Constitution of India to prescribe the rate of stamp duty on instruments other than the instruments specified in Entry 91 of Union list.

The Indian Stamp Act, 1899 is a Central enactment and the state have the powers to adopt the Indian Stamp Act, 1899 with amendment to same, to suit the transaction peculiar to each state. Accordingly certain states have introduced Schedule 1 to the Indian Stamp Act, 1899 being the stamp duty payable in each state. State such as Maharashtra (The Bombay Stamp Act, 1958), Gujarat (The Gujarat Stamp Act, 1958), Karnataka (The Karnataka Stamp Act, 1957), Kerela (The Kerela Stamp Act, 1959) and Rajasthan (The Rajasthan Stamp Act, 1998) have their separate Stamp Act, while many State follows the Indian Stamp Act, 1899 [2] .

There are mainly two types of stamp paper.

• Judicial stamp papers: As the name suggest, it is used for Court proceedings.  It is called Court fees.
• Non-Judicial stamp papers: This is used for contractual kind of activities between the parties e.g., contracts, agreements, registration of documents, entering leases /sale purchase transactions etc.

Stamp duty serves as a legal requirement for certain types of transactions to be considered valid and enforceable. For example, a sale agreement for a property must be executed on a stamp paper of appropriate value and stamped according to the relevant state’s stamp duty laws. Failure to pay the appropriate stamp duty on a transaction can result in penalties or fines and may render the document invalid in a court of law.

Stamp Duty payable on instruments specified by the statute is fixed or on ad valorem basis i.e., on basis of value of property. The stamp duty charges are mainly based upon the values which are mentioned in the documents.  e.g., Articles of Association, Mortgage deed etc. However, for few documents e.g., Affidavits, Power of Authorization, indemnity bond, the stamp duty payable is always fixed regardless of the value which is mentioned in the document or the instrument. For certain other instrument, stamp duty is based on the consideration value mentioned in the document or the market value, whichever is higher. e.g.  Conveyance, Sale Agreement, Partnership Deed etc

The payment of Stamp Duty is mostly done before the execution of the document.   Failing to make the necessary payment will result in penalty charges.  Documents which are inadequately stamped are not admitted as evidence in the court.  The stamp papers are to be purchased in the name of one of the parties to the transaction. The validity of a stamp paper is six months from the date of purchase.

Patents, trademarks, and other forms of intellectual property are included within the meaning of movable property under the stamp laws. As such, state specific stamp laws are applicable for the IP rights.  Stamp Duty pertaining to IP rights is levied at various stages of registration, licensing and transferring.

In general, stamp duty is applicable on various types of instruments, including;

• POWER OF ATTORNEY (POA):   – If an application for trademark/patent/design or any other Intellectual property rights, is filed in India by a person other than the Applicant, it is mandatory to submit a duly stamped Power of Attorney.  The POA can be signed by the Authorized Signatory of the Applicant. The Stamp duty payable being state specific may approximately be up to 10 USD. There is no requirement for notarization and/or legalization.
• AFFIDAVITS:   In various proceedings, be it at Court or Registry level it is required to file an Affidavit. Basically, an affidavit is a sworn statement put in writing. With respect to trademark, if the Applicant claims prior use of the mark, in such case it is a mandatory requirement to submit the Affidavit of use. The Applicant shall file an affidavit testifying to such use along with supporting documents. [3] .  The Stamp duty payable being state specific, may be up to 5 USD for Affidavit. The Affidavit of use must be duly notarized.
• ASSIGNMENT AGREEMENT : Assignment refers to actual transfers of ownership of intellectual property from the assignor to the assignee.  In this, the rights of the assignor is permanently transferred. It is an absolute transfer.  Such transfer of Intellectual Property rights is carried out by way of an assignment deed. It is pertinent to note that payment of stamp duty is not required for the assignment of Copyrights. Stamp duty is payable on the monetary consideration stated in the assignment deed.  Stamp duty payable varies in each State. The Assignor and Assignee can check for the stamp duty rates in its particular state and thereby execute a assignment deed in which the lower stamp duty is applicable.  The applicable stamp duty rates in India varies from 3% to 7% of the consideration amount, depending on the state wherein it is executed.
• LICENSING AGREEMENT (REGISTERED USER AGREEMENT ): – In a Licensing agreement, the IP holder (“licensor”) licenses its IP rights to any third party and allows a third-party to use the said rights for a limited time period.  A licensing agreement is subject to stamp duty. Stamp duty is paid by the licensee to the licensor. 
• BUSINESS AGREEMENTS  (e.g., Non-disclosure Agreement, Endorsement Agreement, memorandum of Understanding, Master Service Agreements, Franchise Agreement etc.) Stamp Papers are not mandatory for all the agreements but are necessary only for a few kinds of or instruments or agreements as specified by the State government.  Generally, no stamp duty is payable on MOUs or NDA’s.  However, as a general practice, people are putting it on stamp paper to make it enforceable in the Court of Law.  A document which is stamped acts as valid evidence in a court of law.

Please feel free to consult us at  [email protected]   for drafting and advising and representing any commercial transaction.

[1]  “Instrument” includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or record;”

[2]  https://www.e-stampdutyreadyreckoner.com/faq-stamps-duty.php

[3]  Rule 25 of Trade Marks Rule, 2017- Statement of user in applications— (1) An application to register a trademark shall, unless the trademark is proposed to be used, contain a statement of the period during which, and the person by whom it has been used in respect of all the goods or services mentioned in the application.

In case, the use of the trademark is claimed prior to the date of application, the applicant shall file an affidavit testifying to such use along with supporting documents.

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Intellectual Property Assignment Agreement

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Intellectual Property Assignment Agreement is an agreement between two parties in which a property owner transfers the complete ownership of an intellectual property to another party. Various types of Agreements are including but not limited to; Software IP Transfer Agreement, Employee IP Assignment Agreement.

Any subject matters of the intellectual property rights, such as music, design, artwork, photograph, video, sound, etc. can be transferred by the owner of such material.The terms and conditions of the transfer have to be clearly captured in the agreement to avoid any ambiguity.  

Details about the subject matter being transferred

•  Mode of payment
• Representation and warranty
• Indemnification
• Limitation of liability
• Grounds of termination
• Severability
• Other legal clauses

Laws Governing Agreement

• The Indian Contract Act, 1872
• Copyright Act, 1957
• Trade Marks Act, 1999
• Design Act, 2000
• Patents Act, 1970
• Competition Act, 2002
• Stamp Duty Act (State specific)  

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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

06 February 2017

Stamp Duty issues in slump sale transactions

by Rohit Subramanian

Slump sale is a commonly used method of business acquisition wherein an undertaking as a “going concern” is transferred from one entity to another. The term ‘ slump sale ’ incorporated under the Income Tax Act, 1961 [See End Note 1] (“IT Act”) has been defined to constitute the following elements: (a) sale of an undertaking/business activity [See End Note 2] taken as a whole – lock, stock and barrel ; (b) sale shall be for a lump sum consideration; and (c) no separate values shall be assigned to individual assets and liabilities.

However, specific values can be assigned to individual assets or liabilities for the sole purpose of payment of stamp duty, registration fees or other similar taxes or fees. This is because the assets constituting the business in a slump sale transaction may include movable property (tangible and intangible, including intellectual property), immovable property (land, buildings, plant & machinery that are permanently fixed or embedded to the earth), unsecured loans, advances/deposits, human resources and contracts, and stamp duty chargeability and registration requirement for each type of asset/liabilities shall vary. In order to give effect to the transaction, the parties typically enter into a Business Transfer Agreement (“BTA” or “Agreement”), which inter alia records the following terms and conditions: 

• The assets of the business undertaking to be transferred to the Purchaser are listed in the schedule to the Agreement;
• The lump sum consideration for sale is specified ( sale price is generally based on a business valuation report );
• The BTA shall specify the date (“Closing Date”), prior to which all necessary approvals, permissions, documents to consummate the transaction are obtained;
• Typically, the seller shall make requisite representations and warranties with respect to the legal status and financial health of the business undertaking as on the Closing Date;  
• Upon obtaining all requisite documents and approvals, the transfer of business takes place on the Closing Date.

Stamp Duty chargeable on BTA

Stamp duty is a duty payable upon the execution of certain instruments or documents specified in the Indian Stamp Act, 1899 (“IS Act”) or the relevant state Stamp Act as the case maybe. In absence of any State stamp legislation, the IS Act applies. The general principle with regard to stamp duty is that duty has to be determined with reference to an instrument, not in reference to a transaction.[See End Note 3] Therefore, to understand the stamp duty liability for a specific transaction, it is important to understand the instruments involved in the transaction and the subject-matter of the instrument.[See End Note 4]

It is common practice for a BTA to be structured as an “ agreement to sale ”. In such cases, the Agreement provides a general framework pursuant to which the business undertaking is transferred on the Closing Date. BTA in itself may not contemplate any transfer and can mandate the execution of a deed of “ conveyance ”[See End Note 5] on or before the Closing Date to effectuate the transfer. However, there are instances where the Agreement contains recitals with respect to the payment of consideration, handing over of the possession of property along with title deeds of such property. In such cases, the BTA assumes the color of a “conveyance” and stamp duty is levied accordingly.

Since the transfer envisaged under the Agreement is the sale of a business undertaking as a whole, it cannot be specifically equated with the sale of movable or immovable property. The IS Act as well as State Stamp Acts do not contain specific provisions levying duty on an agreement relating to the transfer of “business” as such. Therefore, it is imperative that each asset proposed to be transferred to the purchaser vide a BTA is individually identified for the purpose of stamp duty as movable or immovable. The levy of stamp duty depends on the State in which the Agreement is executed. For better clarity, let us examine the stamp duty implications on a BTA under Central and certain State legislations.

Positon under the Indian Stamp Act, 1899

On perusal of the definition of “conveyance” under the IS Act, it is understood that no distinction is made between moveable and immovable property.[See End Note 6] Tangible moveable property can be sold by delivery to the purchaser on receipt of the price without an actual conveyance, but if a conveyance in writing comes into existence, it is chargeable to duty as such. Intangible movable property such as actionable debt or goodwill has to necessarily be transferred under a written instrument and chargeable as conveyance. Whereas land/buildings are immovable property, machinery installed in a factory premises (fixed to the ground) can be considered as an immovable property, depending on the degree and permanency of the attachment, and the purpose of installing and attaching the machinery. For instance, the sale of a fertilizer plant as part of a slump sale along with land and building, would be considered as immovable property if it was always intended that the plant remains permanently affixed to the land and building being transferred.[See End Note 7]

Article 5 to the Schedule of the IS Act prescribes the stamp duty chargeable on an “ Agreement or Memorandum of an Agreement ”. Article 5 further sub-classifies several categories on the basis of the subject-matter of an agreement prescribing specific duty applicable to a particular instrument. A residuary provision is provided under Article 5(c) wherein all such agreements not specifically provided for are classified and duty payable is separately prescribed.

If a contract does not intend to operate as an immediate transfer of the sale of property, such instrument is required to be stamped as an agreement rather than a conveyance. An agreement to sell a business undertaking with its assets including goodwill, would not amount to conveyance but would be merely a contract to sell, although the parties intended that when the transaction was completed, it should take effect from the date of the agreement and although in order to effect the contemplated sale, no actual deed of conveyance was prepared subsequently with regard to goodwill and movables (a sale deed being executed only in respect of immovable property).[See End Note 8]

Therefore, under the IS Act, a BTA not evidencing a transfer of property shall be duly stamped as an agreement under Article 5(c), thereby requiring deed of conveyance to be executed on or before the Closing Date. Whereas the execution of a conveyance deed for the purpose of immovable property is absolutely necessary to establish title and ownership, transfer of ownership of movable property can be made by delivery of such property. In the event the BTA records the transfer of both movable and immovable property without the requirement of executing a conveyance deed, the BTA shall be construed as a conveyance and stamp duty as prescribed under Article 23 would be leviable on the said instrument.   

Position under the Bombay Stamp Act, 1957 (“BS Act”)

The BS Act follows a scheme similar to the IS Act, wherein Article 5 of its Schedule prescribes stamp duty to be levied on an instrument which is an “ Agreement or its records or Memorandum an Agreement ”. It is to be noted that Article 5(h)(A)(iv) specifically identifies an agreement that: (a) creates any obligation, right or interest; (b) has monetary value; and (c) is not covered under any other provision of the BS Act.

The stamp duty chargeable may extend up to two rupees for every thousand rupees of the monetary value stated in the Agreement. An agreement in the nature of a BTA squarely falls under Article 5(h)(A) of the BS Act. Despite the generic nature of the description in Article 5(h)(A), the BS Act has retained a residuary provision under Article 5(h)(B) which prescribes stamp duty of only INR Hundred (100) with respect to agreements not otherwise provided for. Given that Article 5(h)(A) describes the instrument more specifically, a BTA executed in the State of Maharashtra should be duly stamped under Article 5(h)(A) rather than Article 5(h)(B).

Article 25 of the BS Act prescribes the stamp duty payable on an instrument of conveyance with respect to movable and/or immovable property, as the case may be. However, the BS Act specifically states that if an agreement to sell an immovable property effectuates the transfer of possession of such property before or after execution, the same shall be deemed to be a conveyance and stamp duty shall be levied accordingly. The BS Act also provides an exemption in case the ‘ agreement to sale ’ is deemed as a conveyance. That is, in case the BTA itself effectuates the transfer of movable and immovable property constituting the business, resulting in such instrument being duly stamped as conveyance under Article 25 of the BS Act, the stamp duty paid on such agreement shall be adjusted towards the total stamp duty leviable on the conveyance deed.

Position under the Karnataka Stamp Act, 1957 (“KS Act”)

The KS Act deviates from the BS Act as well as the IS Act, in light of specific provisions dealing with the transfer of movable and immovable property under Article 5 of KS Act. Article 5(e) of the KS Act prescribes the stamp duty chargeable on an agreement relating to sale of immovable property with part-performance of the contract being made. In the event possession of the property is delivered or agreed to be delivered prior to execution of conveyance, the stamp duty prescribed is the same as the duty prescribed with respect to a conveyance deed as specified in Article 20. Similar to the BS Act, the KS Act also provides for set-off of the stamp duty against the duty paid on the conveyance deed. In the event possession of the property is not delivered, the stamp duty liability on such agreements shall be restricted to INR twenty thousand.

Similarly, Article 5(g) of the KS Act prescribes the stamp duty payable with respect to an agreement relating to the sale of movable property. In the event possession of movable property is delivered or agreed to be delivered without executing a conveyance deed, the stamp duty prescribed on such agreement is three percent (3%) of the consideration or the market value of the property, whichever is higher. In the event the possession of the property is not delivered, the stamp duty liability is restricted to INR twenty thousand. Apart from these provisions, a residuary clause under Article 5(j) of the KS Act provides that any agreement not specifically provided for in Article 5 shall be duly stamped for INR two hundred. Therefore, the stamp duty payable on a BTA executed in the State of Karnataka shall depend upon the structure of the BTA, whether conveyance deed is proposed to be executed by the parties with respect to the movable properties forming part of the business undertaking and whether a business undertaking purported to be transferred under a BTA can be equated to a movable property or an immovable property.

Word of caution

BTA typically comprises of numerous items of transfer, which may include all kinds of tangible, intangible, contracts, movable property and immovable property. While a slump sale transaction is the preferred mode of business acquisition from an income-tax perspective, given the complexities involved in the determination of stamp duty on the instrument of transfer, it is recommended that the parties should approach the relevant stamp authority for adjudication of stamp duty [See End Note 9] and seek the opinion of the District Officer with respect to the determination of the duty chargeable on the instrument, if there is any ambiguity in the concerned Stamp Act. It is always necessary and beneficial for the parties to treat stamp duty aspects very carefully to avoid any penalties, which can be as high as ten times the actual stamp duty payable. 

[ The authors are Associate and Joint Partner, respectively in Corporate Practice, Lakshmikumaran & Sridharan, Bengaluru ]

• Section 2(42C) of the Income Tax Act, 1961
• Explanation 1 to Section19AA defines “ undertaking ” to include any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole , but does not include individual assets or liabilities or any combination thereof not constituting a business activity.
• Swadeshi Cotton mills Co, in Re AIR 1932 All 29.
• Section 2(14) of the IS Act defines “ Instrument ” to include every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded.
• In terms of the IS Act, the term “conveyance” has been defined in an exhaustive manner to include any instrument or conveyance on sale, by virtue of which any property (moveable or immovable) is transferred inter vivos and which is not specifically provided in the schedule to the IS Act.
• "Immovable property" includes land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth and “movable property” includes any property except immovable property.
• Duncans Industries Ltd v. State of UP, AIR 2000 SC 355.
• In Re, Swadeshi Cotton Mills Co 1932, ALJ 394: AIR 1932 ALL 291 (SB) and others.
• Section 31 of the IS Act, BS Act and the KS Act.

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April 11, 2019

The dos and don’ts of licensing intellectual property in India

• What is licensing of intellectual property (”IP”)? An owner of IP can grant another person the right or permission to make, use or sell property or items embodying or covered by this IP by means of a contractual license. A license may apply to any type of IP – trademark, patent, copyright, design and/or know-how. Under the license, the licensor maintains title in the IP and the licensee is authorized to make use of the IP only in accordance with the terms and conditions of the license.
• What is a licensing agreement? A license agreement is a document, executed between two or more parties, evidencing the terms and conditions of such contractual license.
• Does a license agreement have to be in writing? Once an entity/individual has taken the decision to license its IP, it is imperative that the terms of the license be captured in writing and explicitly agreed between the parties. Provisions of several acts governing different types of IP such as trademarks, copyrights, patents and design state that the license agreement should be in writing. Know-How as an IP has no specific legislation and though not required to be in writing by statute, it is recommended that license of any know-how be in writing as well to avoid ambiguity.
• A license agreement should be in writing with the relevant terms clearly defined. But if the parties execute a term sheet, would that suffice as a valid license agreement? For a valid license, not only must the license terms be set out in writing but should also be in the form of a binding definitive document. A non-binding term sheet would not constitute a license agreement as held in the case of PVR Pictures Limited vs. Studio 18 by the Delhi High Court in 2009.
• Definition of Licensed Property;
• Exclusivity;
• Right to grant sub-licenses; and
• Revocability.
• What is an exclusive license and a non-exclusive license? An exclusive license excludes the use of the licensed rights for anyone but the licensee. It must be clear whether that is meant to exclude the licensor itself from making use of the intellectual property. A non-exclusive license can be granted as often by the licensor to as many licensees as desired. Most commercial software licensed today is licensed on a non-exclusive basis.
• Difference between exclusive license of IP and assignment of IP? There are numerous instances where the licensor has granted an exclusive license and the licensee has claimed that the same is an assignment of the IP. An exclusive license is not an assignment, when you license IP, you are granting the licensee permission to use your IP in a particular way while still retaining an interest in the IP being licensed. When assigning IP to another, there is a transfer of ownership from the assignor to the assignee. This is a permanent arrangement, and you cease to hold an interest in the IP once it is assigned. The terms of the license must explicitly state that it is a license (whether exclusive or non-exclusive) and define the mutual obligations. Most importantly, the clause on royalty payment should be drafted in a manner that does not give rise to implications that any downright payment is towards assignment of the IP.
• What is royalty? One of the goals of licencing is to enable the proprietor of IP to receive quantifiable sums of money based on a licensee’s use of such licensed IP. The royalty is the consideration amount to be provided to the owner/licensor of the IP for the grant of the license. The consideration may be a lump sum payment or a continuous periodic fee payment, also known as royalties or a combination of lump sum fee and periodic payments.
• A single up-front payment;
• A pre- determined amount that is paid periodically;
• A charge based on units of manufacture or sales; and
• On early stage technology, royalties can be based on development costs.
• Who owns any improvements, enhancements and modifications to the licensed IP? A person may create and design an improvement of an existing technology or a feature that enhances the use or functionality of the technology. The new invention may come about as a result of an idea that relates to the use of the licensed IP, or it may actually be the result of modification of that IP in order to produce any enhancement. An ”improvement” in the context of IP licenses, usually means a development within the field of the licensed technology that enhances the usability, functionality, efficiency, performance or other characteristic of the original IP. A license agreement must spell out what constitutes an improvement and who owns such improvement and all IP that vests in the same. The license agreement also needs to provide for ownership of IP if there is any joint development.
• Is stamp duty payable on license agreements? Stamp duty refers to a tax on a transaction which is paid to the government and the tax is levied on the instrument recording the transaction. Stamp duty is payable on license agreements and the rate of stamp duty payable varies in each State. Prior to the execution of a license agreement, it is important to understand if the benefit of executing the license agreement in a particular state and availing lower stamp duty rates(if possible).
• What are the consequences of not paying stamp duty? Under the Indian Stamp Act, 1899, if adequate stamp duty has not been paid on a document, such document cannot be admitted in evidence for any purpose nor can it be acted upon, registered or authenticated.
• Patents – The Patents Act, 1970 states that a license agreement must be registered and that a licensee should apply in writing to the Controller of Patents for registration of his title.
• Trademark – The Trade Marks Act, 1999 does not make registration of a license agreement mandatory, however it does provide for the concept of ‘registered user’. Provisions have been set forth to register any person other than the registered proprietor as the registered user for the use of the mark in commerce. The act provides that registered user can file infringement proceedings in his own name.
• Copyright – The Copyright Act, 1957 does not make registration of the license agreement mandatory.
• Design – The Designs Act, 2000 requires that an application for registration of title under a license agreement is filed with the Controller within six months from the execution of the license agreement. A license agreement in respect of which no entry has been made in the register cannot not be admitted in evidence in any court in proof of the title to copyright in a design or to any interest therein, unless otherwise directed by the court.

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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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Gayatri P Man (Not Applicable)     --> 24 August 2016

Stamp duty for assigning/licensing ipr

 7 Replies

adv.bharat @ PUNE (Lawyer)     --> 25 August 2016

What kind of assignement deed it is?

As per my knowledge ther is no such stamp duty for IPR.

For license agreemnt there is stamp duty & registration charges it is calculated as Total rent+ Deposit X 0.025.

If u like my solution then give THANKS on my profile.

Ms.Usha Kapoor (CEO)     --> 02 September 2016

Dear Client,

                    As  far as copy right is copncerned  stamp duty is  completely exempted according to Article 25 of Schedule 1 of Bombay stamp Act. Regarding Patents and Trade Marks the stamp duty payable depends on the amopunt of consideration exchnged bwetween th eseller and buyer of  the sale/purchase of Patent/Trade Mark.Regarding Licence Agreements of IPRs you contacxt the concerned District Collector  as to applicable rates of stamp duty for Licensing Agreements of IPR transactions.

                    As  far as copy right is copncered  stamp duty is  completely exempted according to Article 25 of Schedule 1 of Bombay stamp Act. Regarding Patents and Trade Marks seller and buyer/Assignor/ Assignee of  the sale/purchase of Patent/Trade Mark.Regarding Licence Agreements of IPRs you contacxt the concerned District Collector  as to applicable rates of stamp duty for Licensing of IPR transactions.

                    As  far as copy right is copncerned  stamp duty is  completely exempted according to Article 25 of Schedule 1 of Bombay stamp Act. Regarding Patents and Trade Marks the stamp duty payable depends on the amount of consideration exchnged bwetween the /Assignor/Assignee seller and buyer of  the sale/purchase of Patent/Trade Mark.Regarding Licence Agreements of IPRs you contact the concerned District Collector  as to applicable rates of stamp duty for Licensing Agreements of IPR transactions.

Ms.Usha Kapoor (CEO)     --> 24 September 2016

Assignment of copyright

Assignment of copyright has to be in writing and signed by the assignor or by his duly authorised agent. Copyright consists of a bundle of different rights in the same work, which can be assigned either as a whole to one party or separately to different parties.

· The deed of assignment must specify the `rights assigned’, the duration and territorial extent of assignment, and the royalty payable, if any. When duration of assignment is not specified, it is presumed to be for five years and when territorial extent is not specified, it is presumed to extend within India. (Section 19, Copyright Act, 1957)

· An assignment of a Copyright is exempted from Stamp Duty. (Article 25 of Schedule I of the Bombay Stamp Act, 1958).

The above provisions apply both to registered and unregistered copyright. Apart from the above requirements, in case of registered copyright, the following additional steps also have to be taken.

Registered Copyright

Assignee has to make an application for registration of changes in the particulars of copyright entered in the Register of Copyrights in Form V under Rule 16 of Copyright Rules, 1958 to be delivered by hand or registered post. Attested copies of the deeds of assignments should be enclosed with the application.

Assignee has to make an application for registration of changes in the particulars of copyright entered in the Register of Copyrights in Form V under Rule 16 of Copyright Rules, 1958 to be delivered by hand or registered post. Attested copies of the deeds of assignments should be enclosed with the application..If you appreciate this answer please click the Thank you button on this forum./

Gayatri P Man (Not Applicable)     --> 01 March 2017

@  adv.bharat @ PUNE and  @ Ms.Usha Kapoor Thanks for your reply.

I am looking for the stamp duty on  the licensing agreement for licensing patent-rights in Maharashtra.

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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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