Assignment and Transmission of Trademarks (Sections 37–45)

A trade mark is property. Like other species of property, it can be bought and sold, mortgaged, gifted, and bequeathed. Sections 37 to 45 of the Trade Marks Act, 1999 codify the rules under which the property in a registered or unregistered trade mark may pass from one person to another. The architecture distinguishes two transactions — assignment, which is a voluntary transfer by act of parties, and transmission, which is an involuntary or operation-of-law transfer (devolution by death, by court order, by insolvency or by amalgamation). It also distinguishes two regimes — assignment with the goodwill of the business and assignment without the goodwill of the business — each subject to its own conditions and consequences.

The principle that a trade mark is a property right capable of transfer was settled long before the 1999 Act, and the property is acquired in the first instance through the procedural route in Sections 18 to 24 on the procedure for registration. The Bombay High Court in Consolidated Food Corporation v. Brandon & Co. AIR 1965 Bom 35 held that a trader acquires a right of property in a distinctive mark merely by using it on or in connection with his goods, irrespective of the length of the user. Property in a trade mark exists independently of registration; registration merely affords further protection under the statute. Sections 37 to 45 supply the statutory framework within which that property may be transferred.

Statutory anchor — Sections 37 to 45

The nine sections perform distinct functions. Section 37 is the substantive enabling provision: the registered proprietor of a trade mark has, subject to the provisions of the Act, power to assign the mark and to give effectual receipts for any consideration. Section 38 deals with the assignability and transmissibility of registered marks — these may be assigned and transmitted, with or without the goodwill of the business concerned, and in respect either of all the goods or services in respect of which the mark is registered or of some only of those goods or services. Section 39 governs unregistered marks — an unregistered trade mark may be assigned or transmitted with or without the goodwill of the business concerned. Section 40 imposes restrictions where the assignment without goodwill would create exclusive rights in different persons in different parts of India in respect of the same or similar goods or services. Section 41 addresses cases that would result in different persons becoming entitled to use the mark in different parts of India through importation or sale into the same area. Section 42 relates to assignments otherwise than in connection with the goodwill of a business — notice of intended publication is required. Section 43 prohibits assignment of certification marks except with the consent of the Registrar. Section 44 prohibits assignment of associated marks except as a whole. Section 45 governs registration of assignments and transmissions.

Section 37 — proprietor's power to assign

Section 37 supplies the foundational rule: the registered proprietor of a trade mark has, subject to the Act and to any rights appearing on the register to be vested in any other person, the power to assign the trade mark and to give effectual receipts for any consideration for the assignment. The provision is the statutory recognition of the proprietary character of the trade-mark right. Two qualifications attach. First, the power is subject to other provisions of the Act — most notably the restrictions in Sections 40 and 41 against assignments that would fragment the mark across geographies in a manner likely to deceive the public. Second, the power is subject to rights appearing on the register to be vested in any other person — for example, registered users, mortgagees, or persons holding registered interests under Section 45.

The Allahabad High Court in BD Ltd. v. State of U.P. & Karam Chand Thapar 21 IPLR 93 (All) confirmed the supremacy of the agreement relating to the trade mark, whether the agreement is for assignment or for licence. In that case, BD Ltd. had acquired trade-mark rights from Cwick Shanak & Co. Ltd. for three trade marks in respect of liquor, with goodwill of business, in relation to applications then pending registration. The assignor had earlier entered into a separate agreement with a third party, Karam Chand Thapar, in 1989 in respect of the same brands for five years with an optional renewal clause. The court held that the rights were governed by the terms of the agreements and that the option to renew, not having been exercised in favour of the assignee, did not survive. The terms and conditions of the agreement relating to the transfer of an industrial-property right in trade marks are supreme. The same principle was applied by the Delhi High Court in Modella Woollen v. Modella Knitwear 21 IPLR 179 (Del), where the court held the parties to the bargain they had struck.

Section 38 — assignability and transmissibility of registered marks

Section 38 declares that, notwithstanding anything in any other law to the contrary, a registered trade mark shall, subject to the provisions of the Chapter on assignment, be assignable and transmissible. The assignment may be (a) with or without the goodwill of the business concerned, and (b) in respect of either all of the goods or services in respect of which the trade mark is registered or some only of those goods or services. The operative significance of Section 38 is that it confirms the divisibility of the trade-mark right — the proprietor may carve up the right by class of goods or services, transfer one slice and retain another. The provision is the statutory rejection of any rule that a trade mark must be transferred entire and indivisible.

Section 39 — assignability of unregistered marks

Section 39 extends the scheme to unregistered marks. An unregistered trade mark may be assigned or transmitted with or without the goodwill of the business concerned. The provision is a substantial change from the older common-law position that an unregistered mark could only be transferred along with the goodwill of the underlying business. The 1999 Act therefore allows the assignment of an unregistered mark in gross — a position that has been adopted to align Indian law with the modern international consensus that trade marks are independent items of property.

The corresponding common-law constraint — that an assignment of a mark severed from the goodwill must not, on the facts, deceive the public — survives as a rule of practice. An unregistered mark transferred in gross may, if the assignee uses it on goods or services that are not in fact connected with the business in which the mark acquired its reputation, become open to attack as a deceptive use under the general law of passing off, or as a basis for refusal of any subsequent registration application on absolute grounds.

Section 40 — restrictions on assignment without goodwill creating geographic fragmentation

Section 40 imposes a substantive restriction on the proprietor's freedom under Section 38(2). Where the assignment of a registered or unregistered trade mark, without the goodwill of the business concerned, would result in exclusive rights in more than one of the persons concerned to the use, in relation to (a) the same goods or services, (b) the same description of goods or services, or (c) goods or services associated with each other, of trade marks nearly resembling each other or of identical trade marks, and the use of those marks would be likely to deceive or cause confusion, the assignment is not effective unless the assignee obtains a direction from the Registrar that the proposed assignment is not invalid.

The Registrar's direction is the safety valve. The Registrar may refuse the direction or grant it on conditions. The rationale is the public-interest dimension of trade-mark law: the right is granted to indicate origin in trade, and an assignment that would put two identical marks in the hands of two different proprietors with overlapping markets would defeat that origin-indicating function. Section 40 therefore couples the freedom to assign with a public-interest filter operated through the Registrar.

Section 41 — restrictions on assignment creating multiple use in different parts of India

Section 41 addresses the parallel situation where an assignment, without the goodwill of the business, would result in exclusive rights in more than one of the persons concerned to the use of trade marks in different parts of India in respect of the same goods or services or goods or services of the same description. Such an assignment shall not be valid unless the assignee obtains the direction of the Registrar to the effect that the proposed assignment is not invalid by reason only of the fact that the use of the trade marks in different parts of India would result.

The two provisions — Sections 40 and 41 — together police the principal risks that arise when a trade mark is split among different proprietors: confusion among consumers in the same market — risks closely cognate to those addressed by the relative grounds for refusal under Section 11 — and confusion among consumers in different parts of the same country. Both risks are addressed through prior recourse to the Registrar; both can be cured through conditions imposed in the Registrar's direction.

Section 42 — notice and publication where assignment is without goodwill

Section 42 imposes a procedural safeguard on assignments without goodwill. Where an assignment of a trade mark, whether registered or unregistered, is made otherwise than in connection with the goodwill of the business in which the mark has been or is being used, the assignment shall not take effect unless the assignee, not later than the prescribed period after the date of the assignment, applies to the Registrar for directions with respect to the advertisement of the assignment, and advertises the assignment in such form and manner and within such period as the Registrar may direct.

The publication is a notice-to-the-world device. It puts third parties — particularly the consuming public, competitors, and persons potentially holding inconsistent rights — on notice of the change of proprietorship. Failure to publish within the prescribed period invalidates the assignment. The provision reflects the public-interest character of the trade-mark right: a transfer of property in the mark is permitted, but it must be made transparent to those whose interests may be affected.

Section 43 — certification trade marks: special restriction on assignment

Section 43 deals with the assignment of certification trade marks. A certification trade mark — defined in the Section 2 definitions as a mark capable of distinguishing the goods or services certified by the proprietor in respect of origin, material, mode of manufacture, quality, accuracy or other characteristics — performs a special public-interest function. Its proprietor is, by definition, not a trader in the certified goods or services but an independent body that vouches for their characteristics. Section 43 therefore provides that a certification mark shall not be assignable or transmissible otherwise than with the consent of the Registrar.

The Registrar's consent operates as a check against the certification mark falling into hands that would dilute or commercialise the certification function. The provision interlocks with the Chapter on certification marks — see our chapter on collective marks and certification marks under Sections 61 to 78 — under which the proprietor of the certification mark must lodge regulations governing its use and the Registrar exercises a continuing supervisory jurisdiction.

Section 44 — associated trade marks: assignment as a whole

Section 44 governs the assignment of associated trade marks. Where two or more registered trade marks are by reason of identity or near resemblance of each other associated under the Act, the marks shall be assignable or transmissible only as a whole and not separately. The reasoning is identical to the public-interest reasoning underlying Sections 40 and 41 — separate ownership of associated marks would generate exactly the kind of consumer confusion that the association rule was designed to prevent in the first place. The remedy is to require that associated marks travel together: a transfer of one is valid only as part of a transfer of all.

Section 45 — registration of assignments and transmissions

Section 45 governs the registration of the change of proprietorship on the register. Where a person becomes entitled by assignment or transmission to a registered trade mark, he shall apply in the prescribed manner to the Registrar to register his title; and the Registrar shall, on receipt of the application and on proof of title to his satisfaction, register him as the proprietor of the trade mark in respect of the goods or services in respect of which the assignment or transmission has effect, and shall cause particulars of the assignment or transmission to be entered on the register.

Two consequences flow from registration under Section 45. First, the entry on the register is prima facie evidence of the matters entered. Second, until the application for registration of title is made, the assignee or transmittee is not entitled to the benefits of the registered proprietorship — for example, the right to sue for infringement under Section 29 on infringement of registered trademarks. The proviso to the section recognises a discretion in the Registrar in cases of dispute, but the general rule is that the assignee must put his title on the register before he can exercise the proprietor's statutory remedies.

Goodwill: with or without?

The choice between assignment with goodwill and assignment without goodwill is the most consequential single decision in any trade-mark transaction. The two regimes differ in three principal respects.

Continuity of use. Where the mark is assigned with the goodwill of the business, the assignee steps into the shoes of the assignor and continues the same business under the same mark. Where the mark is assigned without the goodwill, the assignee acquires the mark severed from the underlying enterprise and may apply it to a different business. Section 38 expressly permits the latter for registered marks; Section 39 permits it for unregistered marks.

Public-interest filters. An assignment with goodwill ordinarily raises no public-interest concern of the kind underlying Section 30 on limitations on the effect of a registered trademark — the consuming public continues to receive goods or services from what is in substance the same source. An assignment without goodwill raises the public-interest concern policed by Sections 40 and 41 and the publication requirement in Section 42. The assignor's freedom is wider when goodwill goes with the mark.

Risk of deception. An assignment without goodwill carries the risk that the assignee may apply the mark to goods or services unrelated to those in which the mark acquired its reputation. The risk is statutorily managed for registered marks through the Registrar's direction under Sections 40 and 41 and through the Section 42 publication requirement; for unregistered marks the risk is managed only through the general law of passing off and through the absolute-grounds bar in Section 9 on registrability against deceptive marks.

Assignment distinguished from licence

Assignment must be sharply distinguished from licence. An assignment transfers title in the mark — the assignee becomes the proprietor on the register. A licence (governed in Indian law by the registered-user provisions in Sections 48 to 53) merely permits the licensee to use the mark, with title remaining with the proprietor. The distinction has practical consequences: the assignee can sue infringers in his own right, can re-assign the mark, and can deal with it as property; the licensee can only do what the licence permits, cannot in general re-assign the right, and may institute infringement proceedings only in the limited circumstances allowed by Section 52.

The Allahabad High Court in BD Ltd. v. State of U.P. & Karam Chand Thapar recognised the supremacy of the agreement in both contexts — assignment and licence — and held that the bargain struck between parties governs their inter se rights. The same approach was confirmed by the Supreme Court in Gujarat Bottling Co. v. Coca Cola (1996) IPLR 201 (SC) in the licensing context. The transactional autonomy of parties to define the terms of the transfer is, within the limits set by Sections 40 to 44, the dominant principle.

Transmission — operation of law

Transmission is the involuntary counterpart of assignment. The mark may pass on the death of the proprietor by testamentary disposition or under the law of intestate succession; on the insolvency of the proprietor, to the official assignee or trustee in insolvency; on the amalgamation or restructuring of a corporate proprietor, to the successor entity; or on a court order in execution proceedings. In every such case, the transmittee must apply under Section 45 to record his title on the register, supported by appropriate proof.

Effect on registered users and other interests

Where the mark is the subject of registered-user entries, mortgages, or other registered interests under Section 45, an assignment is subject to those interests appearing on the register, and the assignee remains exposed to the temporal-bar effect of Section 33 on acquiescence and genuine use in respect of any later mark that the senior proprietor had ceased to oppose before the assignment. The assignee takes the mark cum onere — burdened with the prior recorded interests. The registered user's right to use the mark on the terms recorded continues unaffected by the change of proprietorship, until and unless the registration of the user is varied or cancelled under Section 50.

Practical drafting and procedural points

Three practical points dominate the drafting of trade-mark assignment deeds. First, the deed must identify the marks assigned, the registration numbers, the classes of goods or services covered, and (where the assignment is partial) the precise scope of the goods or services in respect of which the assignment operates. Second, the deed must state expressly whether the assignment is with or without the goodwill of the business; silence on the point is litigation waiting to happen. Third, where the assignment is without the goodwill and falls within Section 40, Section 41 or Section 42, the deed should provide for the parties' respective obligations to apply for the Registrar's direction and to procure the prescribed publication.

Procedurally, the assignee must apply to the Registrar under Section 45 for registration of his title. The deed of assignment must be produced; the Registrar may require evidence of payment of any consideration; and on satisfaction the change of proprietor is recorded. Until that recording, the statutory benefits of registered proprietorship — including the right to sue for infringement and the procedural advantages provided in suits — do not accrue to the assignee.

Practical and exam takeaways

For state judiciary mains, CLAT PG and SEBI Legal Officer papers, Sections 37 to 45 are most often tested through:

1. The structure of the regime — Section 37 (power to assign), Section 38 (assignability of registered marks), Section 39 (assignability of unregistered marks), Sections 40 and 41 (restrictions on assignment without goodwill), Section 42 (notice and publication), Section 43 (certification marks), Section 44 (associated marks), Section 45 (registration of title).
2. The distinction between assignment with goodwill and assignment without goodwill, and the public-interest filters applicable to the latter.
3. The Allahabad High Court's holding in BD Ltd. v. State of U.P. & Karam Chand Thapar that the agreement governing assignment of trade marks is supreme.
4. The distinction between assignment and licence, and the consequence that licensees cannot deal with the mark as property.
5. The Section 45 requirement that an assignee record his title on the register before he can exercise the statutory remedies of the registered proprietor.

The two recurring errors are (a) treating assignment without goodwill as freely available — it is, but only subject to Sections 40, 41 and 42 — and (b) confusing assignment with licence, with the consequence that the rights and remedies attaching to title are conflated with the much more limited rights of the licensee. A prudent answer always states the structural map of Sections 37 to 45, identifies the public-interest filters, and locates the transaction in the right slot. For the wider context of how the trade mark is acquired and maintained on the register, see also our chapters on duration, renewal and removal under Section 25 and on the exclusive right under Section 28.

Frequently asked questions

Can a trade mark be assigned without the goodwill of the business?

Yes. Section 38(2) of the Trade Marks Act, 1999 expressly permits assignment of a registered mark with or without the goodwill of the business concerned, and in respect of all or some of the goods or services for which the mark is registered. Section 39 extends the same freedom to unregistered marks. The freedom is, however, subject to public-interest filters: Section 40 requires the Registrar's direction where the assignment without goodwill would create exclusive rights in identical or closely similar marks in different persons in overlapping markets; Section 41 imposes a similar safeguard against geographical fragmentation; and Section 42 requires advertisement of any assignment without goodwill in the form and within the period directed by the Registrar.

What is the difference between assignment and transmission?

Assignment is a voluntary transfer of the trade-mark right by act of parties — typically by deed of assignment for consideration. Transmission is an involuntary or operation-of-law transfer: devolution by death (testamentary or intestate succession), by court order in execution, by insolvency to the official assignee or trustee, or by corporate amalgamation. Both routes are recognised in Section 38 and Section 39 ("assigned and transmitted"). Section 45 requires the assignee or transmittee in either case to apply to the Registrar to record his title on the register before he can exercise the statutory rights of a registered proprietor.

Can a certification trade mark be assigned freely?

No. Section 43 specifically restricts the assignment and transmission of certification trade marks: such marks shall not be assignable or transmissible otherwise than with the consent of the Registrar. The restriction reflects the special public-interest character of certification marks — they are held by an independent body that vouches for the certified characteristics, and they are governed by lodged regulations of use under the Chapter on certification marks. The Registrar's consent operates as a filter against the certification function being commercialised by transfer to a trader in the certified goods.

Why are associated trade marks assignable only as a whole?

Section 44 requires that associated trade marks — that is, two or more registered marks that are associated by reason of identity or near resemblance — must travel together on assignment or transmission. The reasoning is the same as that underlying Sections 40 and 41: separate ownership of nearly identical marks in the same trade would generate the very consumer confusion that the original association rule was designed to prevent. The remedy is to insist that the associated marks be transferred as a single bundle. Partial assignment of one of an associated set is invalid.

When does an assignee acquire the right to sue for infringement?

Strictly, only after he has applied under Section 45 to record his title on the register and the Registrar has registered him as the proprietor. Until that recording is complete, the assignee holds equitable title under the deed of assignment but has not yet stepped into the shoes of the registered proprietor for the purposes of the Act's statutory remedies. A prudent assignee files the Section 45 application immediately after the assignment is executed; an unwise delay can leave the mark vulnerable to infringement actions that the assignee is not yet competent to bring under the Section 29 scheme.