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Trademark licensing and Trademark Assignment are two different and very confusing concepts but both perform one main objective that is enabling the proprietor of a registered trademark to authorize a third party.
But there exist very subtle but crucial differences between the two. So it becomes important to understand in which situation we shall opt for Trademark licensing or Assignment.
Trademark Assignment is a permanent transfer of ownership from the proprietor a registered trademark to another person in lieu of a consideration.
Whereas, Trademark licensing is just an authorized use by the third party, it is basically defined as permitted use in Trademarks Act.
The proprietor of a trademark may license to use its trademark to a third party by virtue of trademark licensing.
Trademark licensing is beneficial in case the proprietor wants to opt for brand expansion without being actually giving away the right to ownership of the trademark to any of the person.
Apart from the above mentioned benefit, trademark licensing is a tool to effectively expand the brand name with the powers vested to owner of brand to prevent brand dilution. Trademark assignment gives a broader scope to owner in order to dictate the terms of usage of the brand name, brand quality measures, revenue or royalty terms generated by the brand also the strict termination clauses.
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Now apart from having the freedom to make a favorable terms and conditions, there is also a freedom to not to register the licensing agreement.
Even if a licensing agreement is not registered on record with trademark registry it will still be valid, as it has to be legally executed agreement between the parties in accordance to Indian Contact Act.
But it is always an edge in case you get the licensing agreement recorded at the Trademark registry, as than even the permitted user may initiate the infringement proceedings easily.
The relevant sections that deal with permitted users in trademark act are section 49- section 54 of the act. In order to get the licensing deed and name of parties involved in execution of the agreement, the licensor and the licensee both shall after the execution of agreement or licensing contract within 6 months from the date of execution shall make a request to take the licensee on record as a permitted user.
Now the next question that will come to one’s mind is, that it is clear how we can take the permitted user on record, but how to remove the name of permitted user from record, in event things to do go well or agreement is coming to an end etc.
This can also be done, Section 50 of the trademark act states about the procedure for cancellation of as registered user.
The scope section 50 is quite wide and hence cancellation by either party is not an issue. In our next blog we will discuss about how to initiate the cancellation of registered user, what are the grounds, timeline and procedure to be followed.
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