Assignment and licensing

Assignment and licensing

Assignment and licensing of trade marks

UK registered trade marks may be assigned for some or all of the goods or services covered by the registration, or in relation to use of the mark in a particular manner or locality.

EUTMs can be assigned in relation to some or all of the goods or services for which they are registered, but cannot be the subject of a partial assignment in respect of specific territories within the EU, as an EUTM as an object of property must be dealt with in its entirety.

A UK registered mark can be licensed in relation to all, or just some, of the goods or services for which it is registered. The licence can be limited to use of the mark in a particular manner or a particular locality. Similarly, an EUTM can be licensed for some or all of the goods or services for which it is registered, and for either the whole or part of the EU.

A contractual obligation to transfer a business is to be taken to include an obligation to transfer any registered trade mark, except where there is agreement to the contrary or it is clear in all the circumstances that this presumption should not apply.

Commercial considerations

Where, e.g., a business does not have the facility to manufacture and distribute products itself, has insufficient resources to meet the necessary costs of an advertising programme for a particular product or service, or does not have an overseas presence in a particular territory, it can make good commercial sense to allow further exploitation by way of licensing to third parties with the relevant expertise or resources.

On the other hand, an owner who no longer wishes to retain its rights in a trade mark may decide to sell the mark. For example, a business which intends to withdraw from a specific product market may wish to free itself of the ongoing costs of maintaining registration of the trade marks which relate solely to the discontinued products, while recouping the costs of acquiring and maintaining the registrations. In addition, a company which intends to sell part of its business where certain trade marks are integral to the value of the business will either have to accept a significantly decreased price or include the marks in the assets sold.

An outright sale will realise an immediate lump sum and will eliminate the administrative burden and expense of maintaining the marks. By contrast, a licence is more likely to mean that the financial return is spread over the duration of the licence in the form of royalties, with the owner retaining primary responsibility for maintaining the registrations and the integrity of the brand. In particular, the owner must protect the goodwill in, and reputation and value of its mark by controlling the licensee's use of the mark. It will need to impose conditions limiting and regulating that use: for example, by specifying the quality of the products on which the mark is used, and retaining the right to approve the products and their promotion and distribution. If the marks have not been well managed during the licence period, this will significantly reduce the value of those marks to the owner, either for their own use or as assets to be licensed once more.

Formalities for assignments

To be effective, an assignment of a UK registered trade mark (or application) must be in writing and signed by the assignor. An assignment of an EUTM registration or application must be signed by the assignor and the assignee.

In transactions which involve the transfer of trade marks in a number of countries, it is possible either for the parties to execute a global assignment which covers all the trade marks being transferred or to execute individual assignments for each. Where a global assignment is used, this will frequently need to be supplemented by further confirmatory documents in forms prescribed by (and, therefore, acceptable to) the registries in the countries in which the marks are registered.

In the UK, assignments are registrable transactions, but there is no statutory requirement to register them. However, it is desirable for an assignee to ensure that the transaction is recorded, since it will otherwise be ineffective against a third party acquiring a conflicting interest in the mark. In addition, if an assignment is not registered within six months of the date of the transaction, the assignee has no right to its costs relating to any infringements occurring in the period from the date of the transaction to the date of registration of the assignment.

It is also possible to register the assignment of an EUTM.

Formalities for licences

To be legally effective, a licence of a UK-registered mark must be in writing and signed by the licensor. There are no such required formalities for the licence of an EUTM.

Although licences, like assignments, are registrable transactions, there is no statutory requirement that they must be registered. As with trade mark assignments, there are drawbacks to not doing so, and these mirror those for assignments. For licensees, registration provides a statutory right (in the absence of any contrary agreement) to bring infringement proceedings in default of an action by the registered owner.

Similar provisions are in place for EUTMs.

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