Difference Between Assignment and License of Trademark

This blog briefly explains the difference between assignment and license of trademark, including their benefits, to help you choose which option may be relevant to your business requirements. Let’s explore the differences.

What is Trademark Licensing?

Trademark licensing is a legal process between the owner of the trademark or licensor and a third party or licensee. This process enables the trademark owner to permit a third party with the trademark rights to access his trademark, either partially or completely. The ownership rights still belong to the trademark owner.

This license agreement is signed by both – the licensor and licensee, and the allowed trademark rights are valid for a specific period and geographical areas, limited to particular products and services only. Trademark licensing is mostly used when business owners are concerned about expanding their business or are willing to step into new markets with full potential.

Benefits of Trademark Licensing

• Financial Benefit: Trademark licensing provides financial benefits to both parties i.e. Licensor and Licensee. The licensee pays a royalty amount to the licensor for using the trademark rights. The Licensor who is unable to utilize their trademark due to a lack of resources or other difficulties now can get more profits through the Licensee’s resources by allowing them the license. The Licensee also receives their percentage of the gained profits.
• Increase Trademark’s Popularity: When the trademark is displayed to a large number of customers, it becomes popular. This popularity helps attract more sales, gains huge profits, and assists in further trademark licensing.
• Business Expansion: Licensing of a trademark helps the owner in the business expansion, and ultimately its reach spreads to different regions. The business is no longer limited to a specific area as the Licensee uses his skills and experience for the expansion of the business.
• Brand Recognition: The Licensee utilizes their resources and skills to promote the trademark extensively and put efforts into making it a popular brand in those territories where it was previously unknown.
• Reduce Workload: The workload of the Licensor is usually reduced as the licensee acts as a partner and improves and maintains the quality of products and services associated with the trademark.

Trademark License Agreement

A trademark license agreement is a formal contract between the licensor and the licensee. This agreement defines the terms and conditions upon which the license agreement is confirmed. The agreement includes various points –

• Scope of use (for what products, or which geographical areas the licensee will access the trademark)
• Terms and conditions (time duration of the agreement)
• Royalty amount (what amount the licensee will pay to the licensor for accessing the trademark)

A trademark license agreement is crucial as it ensures the rights and responsibilities of both parties.

What is Trademark Assignment?

Trademark assignment is a legal process of transferring trademark ownership rights from one person (assignor) or company to another person (assignee). It is a permanent transferring process and on completion of the process the owner does not hold any rights over the trademark, and the other person becomes the sole owner.

Trademark Assignment is completely different from trademark licensing as the trademark no longer belongs to the original owner.

The assignor of a trademark drafts a legal document i.e. Trademark Assignment Agreement. This agreement defines the terms and conditions of the ownership transfer and also assures that the new owner can move with the trademark and register it in their name at the relevant trademark office.

Benefits of Trademark Assignment

• Trademark assignment permits the trademark owner to take advantage of the value of their business brand.
• The other party or assignee takes benefits from the assignment as they receive the trademark rights of a well-established and recognized brand.
• Trademark assignment is beneficial for both the assignor and the assignee and helps in business expansion.
• A trademark assignment agreement allows the assignor and the assignee to establish their legal rights and responsibilities.

When to Choose Trademark Licensing or Assignment?

If you have any confusion about trademark assignment and licensing and need to choose the most relevant for your business, then consider the following points –

• Trademark Licensing serves the best when you do not want to transfer control over your brand completely and allow other parties to access it for a fixed time only. It is an excellent way to generate regular revenue in terms of royalties without losing trademark ownership.
• Trademark Assignment is relevant for you if you want to transfer trademark ownership permanently. This is a good option to reduce the responsibility when you sell the trademark to another company or exit a particular business.

Conclusion

It is important to understand the difference between trademark licensing and assignment, whether you are a start-up or an established business as it helps you safeguard your trademark and enhance its potential. If you are seeking to expand your brand without losing trademark ownership, then moving with trademark licensing is a great option. For businesses looking to transfer trademark ownership and its rights permanently, trademark assignment acts as the best way.

In case of any confusion related to trademark assignment and licensing, you can also consult with legal professionals to make a wise decisions.