Author: Zeinab Farhat, Progressive Legal
Author: Zeinab Farhat, Progressive Legal
Trade marks form a valuable asset of any business, and contribute to its overall goodwill. If you are in the process of considering whether to transfer a trade mark, you should ensure that you understand how this process occurs in order to minimise potential issues subsequently arising and ensure the transfer is completed seamlessly.
This article will consider, how to transfer a trade mark, assignment vs licence, transferring an unregistered trade mark, how to commercialise trade marks and key takeaways.
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The transfer of a trade mark refers to where ownership of a trade mark moves from one person/ entity to another person/entity. The transfer of a trade mark can be either full or partial (see below for a explanation on this distinction).
Where the transfer of a registered trade mark has occurred, you are required to notify IP Australia of this transfer through the completion of the required forms. In doing so, you will be required to attach certain documentation, such as a deed of assignment. You can find those forms here:
When planning to transfer a trademark, it’s crucial to approach the process with thoroughness and precision. Begin by conducting due diligence to ensure all aspects of the transfer are clear and legally sound.
Subsequently, it’s essential to draft a deed of assignment. This document should outline the agreement’s terms, confirming the transfer of title from the assignor to the assignee. It should also specify the scope of the transfer, detailing whether the assignment is full or partial.
A full assignment encompasses a complete transfer of both ownership title and all associated goods and services. In contrast, a partial assignment might involve a complete or partial transfer of ownership, coupled with a limited transfer of goods and services.
A trade mark can be transferred via a deed of assignment.
A deed of assignment is a formal document executed between the party assigning the trade mark (“assignor”) and the party receiving ownership of that mark pursuant to the deed of assignment (“assignee”).
Part 10 of the Trade Marks Act 1995 (Cth) (“the Act”) covers assignment of a trade mark. Section 106(1) of the Act provides that a registered trade mark, or trade mark whose registration is being sought, may be assigned or transmitted in accordance with s 106.
Section 106(2) provides provision for partial assignment, but provides that it cannot be “partial in relation to the use of a trade mark in a particular area”.
If you file a trade mark application in the wrong name (i.e. in your personal capacity rather than in the name of a company), it is important to note that you may face difficulties in addressing this defect in ownership.
In Pham Global Pty ltd v Insight Clinical Imaging Pty Ltd  FCAFC 83, it was held that if a trade mark application is filed in the wrong name, then any defects later arising in registration cannot be cured though the execution of assignment as an attempt to rectify that deficiency.
This is because of two reasons. Firstly, at the time an application is filed the owner’s claim to ownership is assessed at the time of filing. Secondly, only the owner of a trade mark is able to assign the trade mark.
In other words, if an application or registration is filed in the name of the wrong owner, the trade mark may be vulnerable to opposition or cancellation proceedings. In such circumstances, you may want to consider filing a new application in the true owner.
If a company is deregistered, it no longer owns its assets. As such, the trade mark is incapable of being assigned. Where a company has assets such a registered trade mark, it is vital to ensure that all assets are distributed prior to deregistration. Where this does not occur, the assets vest within the jurisdiction of ASIC.
When considering whether to transfer your trade mark, it is also important to note the distinction between an assignment and a licence.
The former is a permanent irrevocable transfer and represents a formal transfer of ownership. In relation to the latter, the owner of the intellectual property retains ownership and provides a licence to another party to use that IP.
For example, Party A (the Licensor), is the registered owner of trade mark X and provides a licence to Party B (the Licensee) to use that mark as licensee.
You can transfer an unregistered trade mark via a deed of assignment. However, it is important to note that an unregistered trade mark has to be transferred alongside the goodwill of a business. In contrast, a registered trade mark can be transferred with or without the goodwill of a business.
A registered trade mark is a valuable asset when it comes to selling, licensing and expanding a business.
For example via assignment, licensing, franchising or entering into a merger and acquisition with a larger company. It is essential to prove to a licensee or franchisee that you own all the trade marks in your brand.
Having a registered trade mark gives you, as the owner, the right to allow others to use your trade mark. If you don’t have a registered trade mark, this will ring alarm bells with a potential licensee and franchisee – why should they trust and invest in you if you have not secured the right protection?
Intangible assets, such as trade marks, increase investor estimates of a company’s value. Trade marks signal the seriousness of a company especially at specialising in a niche market – where the company’s brand has been protected.
Registering trade marks overseas indicates that your company is serious about expanding internationally – which can attract significant investment.
There can also be significant value in reputation and goodwill attached to a brand.
Once a deed of assignment has been entered into, payment should be received as part of the sale.
Royalty payments are received when a licensee begins selling their product or service. Depending on the agreement, milestone payments may be received before sales begin.
Depending on the arrangement, a franchising company may expect an upfront fee, training equipment and business advisory fees along with ongoing royalties as a percentage of operation.
Sale of Business / Mergers and Acquisitions
In situations where a company’s trade marks are highly valuable, larger companies may pay a premium to acquire or merge with the smaller company. However, this process is most common for start ups that hold valuable patents and other intellectual property in addition to trade marks.
Instagram and WhatsApp were smaller companies that Meta (then Facebook) acquired. The cost of Instagram’s acquisition was $1 billion and the cost of WhatsApp’s acquisition was $19 billion.
When transferring a trade mark it is important to understand the process associated with effecting such a transfer. In doing so, you ensure that ownership is rightfully transferred from the assignor to the assignee.
It is equally important to ensure that you have also considered other issues such as ownership of the trade mark and whether it has been filed in the name of the correct owner.