Can a trademark be transferred?

A trademark is a valuable asset for a business. It gives the owner the right to use the trademarked item only for its business, preventing other businesses from doing the same. Obtaining an exclusive right to certain assets, like a trademark, should be part of the overall aim of every business, especially for those that want to build a reputable organization.

Consider for a moment that Nike allows every footwear brand to use the “Swoosh” mark on their footwear. Nike’s originality would have been compromised by now because even those producing inferior footwear would be allowed to use the mark, destroying Nike’s hard-earned reputation. With a trademark, however, Nike can sue anyone who attempts to jeopardize their brand by using their mark without their permission.

But then, are there ways in which a brand can be allowed to legally take ownership of a trademark? Can a trademark be transferred from one brand to another?

There are numerous examples of reputable brands whose appearance in a product elicits the feeling of “I want this” rather than “I want that.” Some of these companies have spent millions of dollars developing and fine-tuning their trademarks to ensure they are consistent with their overall business objectives. McDonald’s is among them, as are Apple, Google, Microsoft, and many others. The mere presence of a package causes the mind to race.

These businesses did not spend millions of dollars on the most expensive trademark; rather, they recognized its significance. So, what happens if a reputable company, such as Nike, decides to transfer its trademark to another organization? Is it even legal to transfer a trademark in this manner? This question and many others have been thoroughly addressed in the sections that follow.

Can A Trademark Be Transferred?

Trademarks can be transferred from one organization to another via a legal process known as “trademark assignment.” The exclusive right to a trademark can be relinquished to another brand through this process, and a contractual agreement must be drafted with clear terms and conditions to guide the use of the trademark after it has been transferred. The trademark transfer contract is between two parties: the assignor (owner of the existing trademark) and the assignee (the person to whom the trademark is being transferred).

It’s highly advisable that before a transfer of trademark takes place, the assignee should consider the following critical factors:

1. The value of the trademark
   
   This is one of the most important elements in the transfer of a trademark. Nobody wants to be associated with a worthless trademark or a trademark with a negative association. An assignor must consider the value of the trademark to be able to determine in clear terms whether to assign it. Similarly, the assignee should consider the impact the trademark would have on its business.
   
2. The contracts covering the use of the trademark.
   
   As a legal agreement, it’s imperative to detail the right of usage and make provisions for unforeseen circumstances that may arise in the future. Transferring a trademark is like selling a business, and you may not want the business you started to be involved in activities that may not contribute to the public good. So, ensure that the document covers the pros and cons of the trademark.
   
3. The legal formalities of the trademark
   
   This is another important aspect to be considered before transferring a trademark. Trademarks are registered based on “classes of trademark,” and you may want to consider the class or classes under which the trademark was registered and ensure it aligns with your overall business objective. A trademark registered for a class of clothing lines can’t be used for beverages unless the trademark was also registered in that particular class.
   Also, trademarks are territorial, meaning that the right to a trademark is only covered within a particular country. So, you may want to consider the country in which the trademark was registered to know if it’s the country you want to do business with or begin to make plans to trademark it in another country.

Trademark Assignment

Recall that a trademark can only be transferred through a contractual term known as “trademark assignment.” This assignment is subdivided into smaller particles with different responsibilities and rights. The types of trademark assignment are:

• Complete assignment: A complete assignment is the total transfer of all the rights associated with the trademark to a third party. This includes the right of the third party to reassign the right to another brand that may be interested in the trademark. It also covers the right of the third party to collect royalties for the trademark.
• Partial assignment: In this type of trademark transfer, the parent company (assignor) retains the right to the intellectual property of the trademark but assigns the trademark for use by an assignee for a specific product or service.
• An assignment with goodwill: This term in trademark assignment means that the trademark rights are transferred to the assignee for the sole purpose of manufacturing a particular product and nothing more.
• An assignment without goodwill: This is the direct opposite of an “Assignment with Goodwill.” It means that the trademark rights are transferred for use on a product that differs from the assignor’s product. This type of assignment is not allowed in all countries.

The Process of Trademark Transfer

As stated above, trademark transfer is facilitated by a process known as trademark assignment. For this process to take effect, the agreement between the assignor and the assignee must be documented and a copy deposited with the respective authority—the trademark registration office. In the US, a copy of the document is deposited with the US Patent and Trademark Office.

The agreement must contain the type of assignment and all other important factors. Also, the process will require the payment of a fee, otherwise known as the “assigned rights fee,” the registration number of the trademark, and the rights assigned to the assignee.

Once the above requirements have been fulfilled, signed, sealed, and deposited with the respective department, you’ll be required to pay a filing fee. The fee varies from country to country. Once this is actually done, the document will be processed within a few days.

Final Thought

Trademarks can be transferred from one owner to another through an agreement known as “Trademark Assignment.” Once the agreement’s requirement is fulfilled, the assignee has the right to use the trademark to do business. And when transferring a trademark, you must ensure that the trademark’s value, contractual obligations, and legality are considered.