Assignment of a trademark

The assignment of a trademark is an agreement by which the owner of a trademark, called the assignor, transfers the ownership of his right to a third party, called the assignee.

The latter will then be vested with all rights to the trademark that has been assigned to him.

The trademark is a distinctive sign that enjoys protection in the territory for which it is filed and then registered (principle of territoriality) and for the designated good(s) and/or service(s) (principle of speciality).

It is a title of intellectual property conferring a monopoly of exploitation to its owner.

The trademark is an intellectual property asset that by its very nature is constantly changing.

The life of a trademark can indeed evolve as much on its aspect (change of name or logo) as on its exploitation or its ownership (exploitation agreement, license agreement, assignment).

The transfer of a trademark can take place in various contexts:

Internal reorganization (which may result in particular from a change of business model) ;
In the context of a transfer of assets to third parties.

Within the framework of an internal transfer, it can be a transfer by the manager to his company, or a transfer to a company that will carry the group’s trademarks (e.g.: transfer to a holding company).

In the context of a transfer of assets to third parties, it may be a transfer of a branch of activity, or of entire activities, or even a transfer to investment funds which will often carry out an audit of the company’s assets.

In either configuration, it is necessary to be extremely precise and vigilant. The following cases should be considered:

First of all, it is necessary to verify that there are no other rights held on this sign, since, if they exist, it would be necessary ideally that the transfer of these other rights also takes place.

Thus, the transfer of a trademark is often accompanied (or should be accompanied) by a transfer of domain names, social network accounts, etc…

In addition, the question of territory and the possible coexistence of trademarks in several territories must be considered.

Indeed, if the assignment is granted only in France or in the European Union and the assignee retains rights in other countries, this may imply situations that will need to be foreseen (for example: will the sale of French trademark goods by a reseller in a territory retained by the assignee be considered as an act of infringement or not?)

Then, we must ask ourselves the question of the valuation of the trademark which, if it is exploited, constitutes an asset to be valued.

The value of the trademark will depend on several factors, notably the legal value of the trademark (linked to its availability and distinctiveness) and also its financial value, which is defined according to various criteria, notably those set out in the ISO 10668 standard – developments below.

For example, a trademark registration that is subject to cancellation (in an action for forfeiture, due to his loss of distinctive character or its absence of exploitation by its owner or in the context of a action for invalidity due to the existence of third party rights) will be weaker than a trademark with a strong distinctive character , thus benefiting from a high level of attractiveness to the public concerned.

Once the trademark is correctly valued, it will be necessary to define whether or not VAT is applicable to the transfer. If the assigned trademark is not exploited, the assignment will be subject to VAT. On the other hand, if the assigned trademark is used, it will be subject to the registration fees provided for in Article 719 of the General Tax Code.

Finally, it will be necessary to be vigilant on possible copyrights related to the trademark. Indeed, when the trademark is composed of figurative elements created by a third party (graphic designer, artist, etc.), it may be necessary to regularize a transfer of copyright in order to secure the trademark transfer.

The transfer by the owner of his rights on his trademark can be total or partial.

Although unregistered, a trademark application can perfectly well be the subject of such an assignment.

However, in the event that the trademark is ultimately not registered (rejection following a notification of irregularity or a third party opposition procedure), the assignment will automatically be cancelled as devoid of purpose.

This may imply further consequences if the third party purchaser was not explicitly informed of the risk.

It is therefore recommended to wait for the registration of the trademark before entering into such an agreement, or at least to insert a clause making the validity of the agreement conditional upon obtaining such registration.

The trademark assignment will have to be registered in the Trademark Register at the Trademark Offices (INPI, EUIPO, WIPO) in order to make it enforceable against third parties.

It will then be necessary to send to the Office the assignment document showing the information relating to the parties and the assigned trademark as well as the effective date of the assignment. The other articles of the agreement (in particular the confidential clauses) can be perfectly removed from the copy.

The assignment can be produced in full or in extracts to keep certain elements confidential (e.g. the assignment price).

It is recommended to foresee which of the transferor or the transferee will take charge of the payment of this formality. Indeed, the registration of an assignment can be costly, especially when it concerns several trademarks.

It is recommended to be assisted by a counsel (IPC) or lawyers specialized in intellectual property.

Indeed, a trademark transfer operation requires the mobilization of many complex notions, based on various legal documents (agreements, certificates, evaluations, etc.).

In addition, the assignment agreement should be drafted in an optimal manner and in clear terms in order to satisfy the interests of the signatories and to prevent any challenge to the assignment should one of the parties initiate proceedings to contest it.

Point of jurisprudence

The absence of registration of a trademark assignment in the National Trademark Register does not affect its validity but only its opposability to third parties (Paris Court of Appeal, April 13, 2021, n°19-12.849).

Point of jurisprudence

If intellectual property titles can be transferred free of charge, it is advisable to remain vigilant as to the subsequent formalities in the context of such a transfer, at the risk of having its nullity opposed.

In fact, article 931 of the Civil Code provides that “All deeds of donation inter vivos shall be executed before a notary in the ordinary form of contracts, and a copy of the deed shall be kept, under penalty of nullity.

The Paris Court, in a decision dated February 8, 2022, was able to establish that :

“the contract […] explicitly transfers ownership of the trademark and designs “free of charge”. It is therefore by definition a donation, not concealed, of intangible rights, which as such cannot be physically handed over. The deed, which should therefore have been executed before a notary, although it is clear that it was concluded privately, is null and void. ” (Paris Judicial Court, February 8, 2022, n°19-14.142).

Update on ISO 10668

The ISO 10668 standard, published in 2010, approved in France by AFNOR in October 2010 and completed by the ISO 20671 standard in 2019, is the first standard dedicated to the financial evaluation of trademarks.

It brings together all the principles to be followed and the existing good practices when valuing a trademark and lists the requirements relating to the modalities and methods for assessing its financial value.

To comply with the ISO 10668 standard, the expert must perform 3 types of analysis:

A marketing analysis, to know the strength of the trademark on the market (distribution strategy, differentiation etc..);
A legal analysis, carried out in particular through the conduct of an audit to know the extent of the rights relating to the trademark;
An ethical analysis, requiring the expert to carry out his valuation in a transparent manner: identification of the data used, communication of the working methods chosen for the valuation of the trademark (by the market price, by its revenues or by its costs).

The valuation date is very important because it allows us to have an estimate of the value of the trademark at a given period, taking into account the economic context, and to understand its evolution prospects.

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