what is a deed of assignment of goodwill

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Assignment of Goodwill (Deed): A Comprehensive Guide

• Ayodeji Akingbade
• February 25, 2024
• Land , Law and Regulations

Table of Contents

When it comes to business transactions, the assignment of goodwill is a critical aspect that should not be overlooked. Goodwill refers to the intangible value associated with a business, such as its reputation, customer relationships, and brand recognition. Assigning goodwill through a deed allows for the transfer of these intangible assets from one party to another. In this comprehensive guide, we will delve into the concept of assigning goodwill, the process involved, its legal implications, and the importance of conducting due diligence before entering into such agreements.

Understanding Goodwill and its Importance

Goodwill is a vital component of any business, representing the intangible assets that contribute to its overall value. It encompasses factors such as customer loyalty, brand reputation, intellectual property, and favorable supplier relationships. Goodwill plays a significant role in attracting customers, generating revenue, and maintaining a competitive advantage in the market.

Assignment of Goodwill: An Overview

The assignment of goodwill involves transferring the ownership rights of intangible assets from one entity to another. This transfer is typically carried out through a legal document known as a deed. The deed outlines the terms and conditions of the transfer, including the consideration exchanged, rights and obligations of the parties involved, and any restrictions or limitations on the use of the transferred goodwill.

Components of the Assignment Deed

An assignment deed for goodwill typically includes the following components:

1. Parties : The deed identifies the parties involved in the assignment, namely the assignor (the party transferring the goodwill) and the assignee (the party receiving the goodwill).

2. Consideration : The assignment deed specifies the consideration exchanged between the parties. This can be in the form of monetary payment, non-monetary assets, or a combination of both.

3. Rights and Obligations : The deed clearly outlines the rights and obligations of both the assignor and the assignee. It may include provisions related to the use of the transferred goodwill, non-compete clauses, and any ongoing obligations of the assignor.

4. Restrictions and Limitations : The assignment deed may include restrictions and limitations on the use of the transferred goodwill. This can include geographical restrictions, limitations on the type of business activities the assignee can undertake, or any other specific conditions agreed upon by the parties.

5. Termination : The deed may also include provisions for termination, specifying the circumstances under which the assignment can be terminated and the consequences of termination.

Legal Implications and Considerations

Assigning goodwill through a deed has legal implications that should be carefully considered. Here are some key legal aspects to keep in mind:

Contractual Obligations

The assignment of goodwill is a contractual agreement between the assignor and the assignee. Both parties are legally bound by the terms and conditions outlined in the assignment deed. Therefore, it is crucial to ensure that the deed is drafted accurately and comprehensively to avoid any misunderstandings or disputes in the future.

Intellectual Property Rights

Goodwill often includes intellectual property rights, such as trademarks, copyrights, or patents. When assigning goodwill, it is essential to verify that the assignor has the legal right to transfer these intellectual property rights. Conducting a thorough intellectual property search and clearance process can help identify any potential conflicts or infringement issues.

Due Diligence

Before entering into an assignment of goodwill, it is crucial to conduct due diligence on the business and its intangible assets. This may involve reviewing financial records, customer contracts, licenses, and any legal agreements related to the business. Due diligence helps verify the value of the goodwill being transferred and mitigates the risk of undisclosed liabilities or legal issues.

Compliance with Laws and Regulations

Assigning goodwill may be subject to certain laws and regulations, depending on the jurisdiction and nature of the business. It is important to ensure compliance with applicable laws, such as antitrust regulations, consumer protection laws, and intellectual property laws. Seeking legal counsel can help navigate these complexities and ensure a smooth and legally compliant assignment process.

Importance of Due Diligence in Assigning Goodwill

Conducting due diligence is of utmost importance when assigning goodwill. It helps identify any potential risks or issues that could impact the value of the transferred assets. Some key reasons to conduct due diligence include:

1. Assessing Value : Due diligence allows for a thorough evaluation of the value of the goodwill being transferred. This helps both parties understand the potential benefits and risks associated with the assignment.

2. Identifying Liabilities : Through due diligence, any undisclosed liabilities or legal issues can be identified. This prevents the assignee from inheriting any unforeseen problems that could impact the business’s reputation or financial stability.

3. Mitigating Risks : Due diligence helps mitigate risks by ensuring that the assignor has the legal right to transfer the goodwill and that all necessary permissions and licenses are in place. It also helps identify any potential conflicts or infringements on intellectual property rights.

4. Negotiating Terms : The insights gained through due diligence can be used to negotiate the terms and conditions of the assignment. Thiscan include adjustments to the consideration exchanged, additional warranties or indemnities, or specific provisions to address any identified risks or concerns.

5. Building Trust : By conducting thorough due diligence, both parties demonstrate their commitment to transparency and integrity. This helps build trust and confidence in the assignment process, fostering a positive working relationship between the assignor and the assignee.

The assignment of goodwill through a deed is a significant step in transferring intangible assets from one party to another. It involves careful consideration of legal implications, conducting due diligence, and ensuring compliance with applicable laws and regulations. By understanding the concept of goodwill, the components of an assignment deed, and the importance of due diligence, businesses can navigate the assignment process successfully and protect their interests. It is always advisable to seek legal counsel to ensure a smooth and legally compliant assignment of goodwill.

Ayodeji Akingbade is a Content writer /Copywriter with an insatiable thirst for knowledge. He loves researching topics such as real estate investing, technology trends, and personal finance before writing about them. He’s a realtor and real estate investor who connects with readers through real life experiences to bring fresh perspectives and novel ideas in all of his work. As he strives to keep his content up-to-date, he always looks for new ways to stay ahead and learn something new every day. He enjoys football and the traditional game of Monopoly with friends and family when he is not writing or reading.

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Assignment of Goodwill (Jurisdiction Neutral) | Practical Law

Assignment of Goodwill (Jurisdiction Neutral)

Practical law uk standard document w-016-2422  (approx. 10 pages).

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DEED OF ASSIGNMENT: EVERYTHING YOU NEED TO KNOW.

A Deed of Assignment refers to a legal document in which an assignor states his willingness to assign the ownership of his property to the assignee. The Deed of Assignment is required to effect a transfer of property and to show the legal right to possess it. It is always a subject of debate whether Deed of Assignment is a contract; a Deed of Assignment is actually a contract where the owner (the “assignor”) transfers ownership over certain property to another person (the “assignee”) by way of assignment. As a result of the assignment, the assignee steps into the shoes of the assignor and assumes all the rights and obligations pertaining to the property.

In Nigeria, a Deed of Assignment is one of the legal documents that transfer authentic legal ownership in a property. There are several other documents like a deed of gifts, Assent, etc. However, this article focuses on the deed of assignment.

It is the written proof of ownership that stipulates the kind of rights or interests being transferred to the buyer which is a legal interest.

Read Also: DIFFERENCE BETWEEN TRANSFER OF PROPERTY THROUGH WILLS AND DEED OF GIFT

CONTENTS OF A DEED OF ASSIGNMENT

Content of a Deed of Assignment matters a lot to the transaction and special skill is needed for a hitch-free transaction. The contents of a deed of assignment can be divided into 3 namely; the introductory part, the second (usually the operative part), and the concluding part.

• THE INTRODUCTORY PART: This part enumerates the preliminary matters such as the commencement date, parties in the transaction, and recitals. The parties mentioned in the deed must be legal persons which can consist of natural persons and entities with corporate personality, the name, address, and status of the parties must be included. The proper descriptions of the parties are the assignor (seller) and assignee (buyer). The Recitals give the material facts constituting the background to the current transaction in chronological order.
• THE SECOND PART (USUALLY THE OPERATIVE PART): This is the part where the interest or title in the property is actually transferred from the assignor to the assignee. It is more like the engine room of the deed of assignment. The operative part usually starts with testatum and it provides for other important clauses such as the consideration (price) of the property, the accepted receipt by the assignor, the description of the property, and the terms and conditions of the transaction.
• The testimonium : this shows that all the parties are involved in the execution of the deed.
• Execution : this means signing. The capacity of the parties (either individual, corporate bodies, illiterates) is of great essence in the mode of execution.  It is important to note that the type of parties involved determines how they will sign. Example 2 directors or a director/secretary will sign if a company is involved. In the same way, if an association, couple, individual, illiterate, family land (omonile), firm, unregistered association, etc. is involved the format of signature would be different.
• Attestation : this refers to the witnessing of the execution of the deed by witnesses.

For a Deed of Assignment to be effective, it must include a column for the Governor of the state or a representative of the Government where the property is, to sign/consent to the transaction. By virtue of Sec. 22 of the Land Use Act, and Sec. 10 Land Instrument Registration Law, the Governor must consent to the transaction.

Do you have any further questions? feel free to call Ibejulekkilawyer on 08034869295 or send a mail to [email protected] and we shall respond accordingly.

Disclaimer: The above is for information purposes only and should not be construed as legal advice. Ibejulekkilawyer.com (blog) shall not be liable to any person(s) for any damage or liability arising whatsoever following the reliance of the information contained herein. Consult us or your legal practitioner for legal advice.

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Deed of Assignment (for Intellectual Property)

In the realm of intellectual property, a Deed of Assignment is a formal legal document used to transfer all rights, title, and interest in intellectual property from the assignor (original owner) to the assignee (new owner). This is crucial for the correct transfer of patents, copyrights, trademarks, and other IP rights. The deed typically requires specific legal formalities, sometimes notarization, to ensure it is legally enforceable.

To be legally effective a deed of assignment must contain:

• Title of the Document : It should clearly be labeled as a "Deed of Assignment" to identify the nature of the document.
• Date : The date on which the deed is executed should be clearly mentioned.
• Parties Involved : Full names and addresses of both the assignor (the party transferring the rights) and the assignee (the party receiving the rights). This identifies the parties to the agreement.
• Recitals : This section provides the background of the transaction. It typically includes details about the ownership of the assignor and the intention behind the assignment.
• Definition and Interpretation : Any terms used within the deed that have specific meanings should be clearly defined in this section.
• Description of the Property or Rights : A detailed description of the property or rights being assigned. For intellectual property, this would include details like patent numbers, trademark registrations , or descriptions of the copyrighted material.
• Terms of Assignment : This should include the extent of the rights being transferred, any conditions or limitations on the assignment, and any obligations the assignor or assignee must fulfill as part of the agreement.
• Warranties and Representations : The assignor typically makes certain warranties regarding their ownership of the property and the absence of encumbrances or third-party claims against it.
• Governing Law : The deed should specify which jurisdiction's laws govern the interpretation and enforcement of the agreement.
• Execution and Witnesses : The deed must be signed by both parties, and depending on jurisdictional requirements, it may also need to be witnessed and possibly notarized.
• Schedules or Annexures : If there are detailed lists or descriptions (like a list of patent numbers or property descriptions), these are often attached as schedules to the main body of the deed.

Letter of Assignment (for Trademarks and Patents)

This is a less formal document compared to the Deed of Assignment and is often used to record the assignment of rights or licensing of intellectual property on a temporary or limited basis. While it can outline the terms of the assignment, it may not be sufficient for the full transfer of legal title of IP rights. It's more commonly used in situations like assigning the rights to use a copyrighted work or a trademark license.

For example, company X allows company Y to use their trademark for specific products in a specific country for a specific period.  

At the same time, company X can use a Letter of Assignment to transfer a trademark to someone. In this case, it will be similar to the Deed of Assignment. 

Intellectual Property Sales Agreement

An IP Sales Agreement is a detailed contract that stipulates the terms and conditions of the sale of intellectual property. It covers aspects such as the specific rights being sold, payment terms, warranties regarding the ownership and validity of the IP, and any limitations or conditions on the use of the IP. This document is essential in transactions involving the sale of IP assets.

However, clients usually prefer to keep this document confidential and prepare special deeds of assignment or letter of assignment for different countries.

IP Transfer Declaration

In the context of intellectual property, a Declaration is often used to assert ownership or the originality of an IP asset. For example, inventors may use declarations in patent applications to declare their invention is original, or authors may use it to assert copyright ownership. It's a formal statement, sometimes required by IP offices or courts.

When assigning a trademark, the Declaration can be a valid document to function as a proof of the transfer. For example, a director of company X declares that the company had sold its Intellectual Property to company Y. 

Merger Document

When companies or entities with significant IP assets merge, an IP Merger Document is used. This document outlines how the intellectual property owned by the merging entities will be combined or managed. It includes details about the transfer, integration, or handling of patents, copyrights, trademarks, and any other intellectual property affected by the merger.

In all these cases, the precise drafting of documents is critical to ensure that IP rights are adequately protected and transferred. Legal advice is often necessary to navigate the complexities of intellectual property laws.

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Assignment of goodwill

How it relates to the law in british columbia canada.

In British Columbia, Canada, the assignment of goodwill is governed by the Business Corporations Act. According to the Act, the assignment of goodwill can only be done with the consent of all shareholders of the corporation. The assignment must also be in writing and must be registered with the Corporate Registry. Failure to comply with these requirements can result in legal consequences. Additionally, the assignment of goodwill may also have tax implications, and it is important to consult with a legal or tax professional before proceeding with the assignment.

Impact on Business Owners in British Columbia

The assignment of goodwill is a crucial aspect of any business acquisition in British Columbia, Canada. Small businesses in the province need to be aware of the legal requirements and tax implications of transferring their intangible assets, such as reputation and customer base, to another party. Failure to comply with the Business Corporations Act can result in legal consequences, making it important for small businesses to consult with legal or tax professionals before proceeding with the assignment.

Potential Legal Risks, Legal Challenges, or Legal Pitfalls for Businesses in British Columbia

As a small business owner in British Columbia, it is important to be aware of the potential legal risks and challenges related to the assignment of goodwill. Goodwill refers to the intangible value of a business, such as its reputation, customer base, and brand recognition. Assigning goodwill involves transferring this value from one party to another, typically in the context of a business sale or transfer. One potential legal risk is the possibility of a dispute over the value of the goodwill being assigned. If the parties involved in the assignment cannot agree on the value of the goodwill, it may be necessary to involve a third-party appraiser or mediator to resolve the issue. This can be time-consuming and costly, and may delay the completion of the assignment. Another potential legal challenge is the risk of infringing on the intellectual property rights of others. If the goodwill being assigned includes trademarks, logos, or other intellectual property, it is important to ensure that these rights are properly licensed or assigned. Failing to do so could result in legal action being taken against the business, which could be costly and damaging to its reputation. To avoid or mitigate these issues, small business owners should take the following steps: 1. Seek legal advice: Before assigning any goodwill, it is important to consult with a lawyer who specializes in business law. They can help ensure that all legal requirements are met and that the assignment is structured in a way that minimizes risk. 2. Conduct due diligence: Before assigning any goodwill, it is important to conduct a thorough review of the business's assets and liabilities. This can help identify any potential legal issues that need to be addressed before the assignment can be completed. 3. Obtain proper licenses and assignments: If the goodwill being assigned includes intellectual property, it is important to ensure that all necessary licenses and assignments are in place. This can help avoid legal disputes and ensure that the business's intellectual property rights are protected. By taking these steps, small business owners in British Columbia can help avoid potential legal risks and challenges related to the assignment of goodwill.

BC Business Practices and Consumer Protection Act (BPCPA)

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Deed of Assignment: Everything You Need to Know

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. 3 min read updated on January 01, 2024

Updated October 8,2020:

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. It states that a specific piece of property will belong to the assignee and no longer belong to the assignor starting from a specified date. In order to be valid, a deed of assignment must contain certain types of information and meet a number of requirements.

What Is an Assignment?

An assignment is similar to an outright transfer, but it is slightly different. It takes place when one of two parties who have entered into a contract decides to transfer all of his or her rights and obligations to a third party and completely remove himself or herself from the contract.

Also called the assignee, the third party effectively replaces the former contracting party and consequently assumes all of his or her rights and obligations. Unless it is stated in the original contract, both parties to the initial contract are typically required to express approval of an assignment before it can occur. When you sell a piece of property, you are making an assignment of it to the buyer through the paperwork you sign at closing.

What Is a Deed of Assignment?

A deed of assignment refers to a legal document that facilitates the legal transfer of ownership of real estate property. It is an important document that must be securely stored at all times, especially in the case of real estate.

In general, this document can be described as a document that is drafted and signed to promise or guarantee the transfer of ownership of a real estate property on a specified date. In other words, it serves as the evidence of the transfer of ownership of the property, with the stipulation that there is a certain timeframe in which actual ownership will begin.

The deed of assignment is the main document between the seller and buyer that proves ownership in favor of the seller. The party who is transferring his or her rights to the property is known as the “assignor,” while the party who is receiving the rights is called the “assignee.”

A deed of assignment is required in many different situations, the most common of which is the transfer of ownership of a property. For example, a developer of a new house has to sign a deed of assignment with a buyer, stating that the house will belong to him or her on a certain date. Nevertheless, the buyer may want to sell the house to someone else in the future, which will also require the signing of a deed of assignment.

This document is necessary because it serves as a temporary title deed in the event that the actual title deed for the house has not been issued. For every piece of property that will be sold before the issuance of a title deed, a deed of assignment will be required.

Requirements for a Deed of Assignment

In order to be legally enforceable, an absolute sale deed must provide a clear description of the property being transferred, such as its address or other information that distinguishes it from other properties. In addition, it must clearly identify the buyer and seller and state the date when the transfer will become legally effective, the purchase price, and other relevant information.

In today's real estate transactions, contracting parties usually use an ancillary real estate sale contract in an attempt to cram all the required information into a deed. Nonetheless, the information found in the contract must be referenced by the deed.

Information to Include in a Deed of Assignment

• Names of parties to the agreement
• Addresses of the parties and how they are binding on the parties' successors, friends, and other people who represent them in any capacity
• History of the property being transferred, from the time it was first acquired to the time it is about to be sold
• Agreed price of the property
• Size and description of the property
• Promises or covenants the parties will undertake to execute the deed
• Signatures of the parties
• Section for the Governors Consent or Commissioner of Oaths to sign and verify the agreement

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• Deeds & Drafts / ASSIGNMENT-OF-A-GOODWILL-BUSINESS

ASSIGNMENT OF A GOODWILL BUSINESS

This Deed of Assignment being executed on this ___________ day of _________. Between Sh. _________, S/o Sh. __________, R/o ____________ (as named "the assignor") which expression shall include his successors, executors and administrators on the one part And Sh. _________, S/o Sh. ___________, R/o _____________ (as named "the assignee") which expression shall include his successors, executors and administrators of the other part. Whereas 1. The assignor is in the trade of manufacturing cloth and so, for the past 32 years. 2. The assignor has by way of the said trade earned goodwill and established a good reputation. The assignor has trade connections with several other firms/persons. 3. The assets liabilities of the said trade are stated in Annexure I enclosed herein. 4. The assignee has for a sum of Rs. ______, consented in taking the trade of the assignor as a running business with its goodwill, liabilities and remaining. Now This Deed Witnesses as Follows: 1. That according the said covenant and in lieu of the sum of Rs.__________ (Rupees ______________only) paid to the assignor (whose receipt is hereby acknowledges) assignor beneficial owner hereby assigns as follow to the assignee— (i) the goodwill trade; (ii) all debts and outstanding stated in the schedule unclose and also other sums as are or may be found due to assignor concerning the trade; (iii) all rights, privileges, benefits, emerging out all pending contractual engagement. (iv) Business -mark in concerning said trade; (v) stock-in-business furniture, fixtures of the trade; The assignee shall take over the said trade completely. The assignor bearing no right /interest of any form as left in the same. 2. The assignor also agrees and guarantees the assignee that help the assistance in claiming and realizing/ getting the debts remaining of the trade. assignor shall also at all period clarify, any item in account books, for claiming any legal claim , concerning the said debts /outstanding. 3. The assignee also consents that for paying and discharging all debts, liabilities and outstanding of the said trade till this day shall, at all times, keep indemnified the assignor /his estate and effects from and against all hearing, costs, claims, expenses/liabilities, whatsoever, relating thereof. In Witness Whereof, the parties to this deed have signed at (Name of place), on day, month and year first above noted, in presence of :

Assignor ___________ Assignee: ____________ Signed ................. Date ................ Witnesses: 1. 2.

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Assignment of Trademark with Goodwill

Assigning a trademark entails giving the other party the owner's title, rights, interests, and benefits. The parties involved in a transfer are referred to as the 'Assignor' and the 'Assignee.'

Trademark Assignment has been defined in Section 37 of the Trademark Act 1999. According to the definition, a ‘Trademark Assignment’ is transferring ownership of a trademark and a brand mark. Both temporary and permanent transfers are possible through Trademark Assignment. Trademark Assignment is a procedure in which the actual owner of the trademark transfers ownership of the trademark, with goodwill or without the goodwill, to the new proprietor who has been duly registered. Through Vakilsearch , get your trademark assigned online.

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Assignment of Trademark with Goodwill 

When an Assignor transfers ownership of a trademark connected with goods or services currently in use by the assignor to the assignee, all associated value, rights, and entitlements are likewise transferred. The Assignee is free to use the trademark given to him for any products or services, including those that were already being provided by the assignor, after assuming ownership of the brand’s goodwill. Trademark with Business Goodwill is the name given to such a transaction.

As an illustration, A, the owner of the ‘TH’ trademark for the production and sale of watches, may assign the trademark and grant the assignee the right to use the mark in connection with the same product.

Assignment of Trademark Without Goodwill

Assignment of the trademark without goodwill states that the Assignor will limit the buyer’s rights while transferring the trademark. Here, the assignor forbids the buyer from using a product brand that the assignor already uses. In other words, the assignee does not receive the goodwill associated with the brand. It is also called a Gross Trademark.

For instance, if the owner of the trademark TH decides to assign it without goodwill despite using it for the manufacture and sale of watches, it indicates that the assignee may use the brand TH for any product other than watches.

What Advantages do Trademark Assignments offer?

For the company’s budget, designing and promoting the trademark can be highly expensive. The company decides to legalise its intellectual property and assign its trademark as a result. The following are some of the advantages of trademark assignment with goodwill. 

Brand Monetisation

Profit from the value of your trademark and take an interest in the results of the time and effort spent developing your brand.

Easy Brand Development

The assignee benefits as well because the brand building is not something they have to do.

Maintenance of Intellectual Property Rights 

It refers to the process of keeping trademark registrations current. Trademark assignment aids in this process.

The Owner Receives the Trademark’s Value

Creating a brand, which takes a lot of money, effort, and time. As a result, the trademark assignment aids the trademark’s creator in determining the trademark’s financial worth.

Serves as a Reliable Proof

If there is ever a disagreement over the assignment of a trademark, it can be used as legitimate proof. Through such agreements, the registered trademark owner’s legal rights are effectively secured.

What Documentation is Needed for the Assignment of a Trademark?

The following documentation is necessary for trademark assignment:

•  A certificate proving trademark registration
• Details of the assignor and assignee, including evidence of identity and residence
• A NOC (Non-Objection Certificate ) from the registered trademark’s first holder
• A description of goodwill or without goodwill-based trademark assignment
• A copy of the ad and the registrar’s instructions
• Witnesses and Signatories
• Notarisation
• Proof of the Time and Place of Execution
• Authority of Attorney

List of Prerequisites for the Trademark Assignment Registration 

• The assignment of a trademark must be made in writing
• It needs to include the next two identifying parties
• an Assignor (trademark owner or actual owner)
• an Assignee (the purchaser of the trademark or new owner)
• It must be done with the assignor’s knowledge and permission
• It has to be made for just compensation

Steps Involved in Trademark Assignment Agreements

• The Assignee, Assignor, or both must submit an application for the Trademark Assignment as the first stage. In accordance with Trademark Rules  2017, the application must be made using Form TH and include all relevant information regarding the transfer
• After the application is completed, its needs to be submitted to the trademark registrar within 3 months of the acquisition of the ownership or proprietorship
• The approval from the Registrar of a trademark is required before the expiration of three months which can be extended when there is a Trademark Assignment with goodwill or without the goodwill of a registered trademark
• The Registrar will mention and provide details on how the Trademark Assignment will be advertised. The applicant then has to make the proper advertisement as per the advertisement code mentioned by the registrar. Additionally, a copy of the advertisement made by the new owner, along with a copy of the registrar’s instructions, must be submitted
• The Registrar will formally transfer ownership of the trademark from the actual owner to the new owner, who has been registered after the registrar is satisfied with all the supporting evidence provided
• The Assignee, or new owner, must have their name entered in the register as a new owner. The Assignee may then use the trademark in accordance with the terms of the agreement.

The Trademark Assignment enables the owner to profit financially, intellectually, and time-wise. The registration of a trademark assignment is equally significant since it serves as notice to the general public because, upon registration, the assignee’s information is updated in the trademark register. Additionally, the creation of assignment agreements is crucial since they contain the rights, obligations, interests, and economic terms between the Assignor and the assignee. Connect with  Vakilsearch , and let our experts help you with the assignment of your trademark.

Frequently Asked Questions

What is goodwill in a trademark.

Goodwill in trademarks refers to the positive reputation and consumer loyalty associated with a brand. It encompasses intangible assets like brand recognition, customer trust, and market reputation, enhancing a company's competitive edge and commercial value.

How do you prove goodwill in a trademark?

To prove goodwill in a trademark, evidence such as sales figures, customer testimonials, market surveys, advertising efforts, and media coverage can be presented. Additionally, demonstrating consistent quality, customer satisfaction, and longevity in the market reinforces the goodwill associated with the trademark, showcasing its commercial significance and consumer acceptance.

What is the goodwill certification of a trademark?

Goodwill certification of a trademark verifies that the mark has established a positive reputation, customer loyalty, and market recognition. It attests to the trademark's commercial value and distinguishes it from generic or lesser-known brands, providing assurance to consumers and enhancing its marketability.

What is trademark assignment with goodwill in India?

Trademark assignment with goodwill in India involves transferring not only the trademark but also the associated positive reputation, customer loyalty, and market recognition to the assignee. This comprehensive transfer includes the intangible assets linked to the trademark, ensuring the continuity of brand value and commercial benefits for the assignee post-transfer.

Is trademark assignment with or without goodwill?

Trademark assignment can occur with or without goodwill. When assigned with goodwill, the positive reputation, customer loyalty, and market recognition associated with the trademark are transferred along with the mark. Without goodwill, only the trademark itself is transferred, without the accompanying intangible assets.

How do you assign goodwill value?

Assigning goodwill value involves assessing various factors such as brand reputation, customer loyalty, market position, and future earning potential. Methods like income-based approach, market-based approach, and cost-based approach may be used to determine the value of goodwill, considering both quantitative and qualitative aspects of the brand's intangible assets.

How is goodwill determined?

Goodwill is determined through comprehensive evaluation of factors such as brand recognition, customer loyalty, market reputation, and future earning potential. Financial and non-financial indicators are analysed to assess the intangible value associated with the trademark, providing insight into its commercial significance and market acceptance.

What is goodwill in law?

Goodwill in law refers to the intangible value of a business, encompassing its positive reputation, customer loyalty, and market recognition. It represents the commercial advantage derived from consumer trust and brand reputation, enhancing the business's value beyond its tangible assets and intellectual property.

Can you assign goodwill?

Yes, goodwill can be assigned as part of a business transfer or asset sale. When assigning goodwill, the positive reputation, customer loyalty, and market recognition associated with the business or brand are transferred along with it. Assigning goodwill ensures the continuity of brand value and customer relationships for the assignee.

• Does a Trademark Assignment Need to be Notarized
• What are the benefits of Trademark Assignment in India
• Benefits of Trademark Assignment
• What Are the Examples of Trademark Assignment

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• Jun 9, 2021

Can I Transfer My Trademark? How?

This is one of the commonly asked questions by trademark owners about trademark. The answer is yes, a trademark is an intangible asset which can be transferred from one to another. The process is generally known as, assignment of trademark.

Section 64(1) of the Malaysian Trademarks Act 2019 ("Trademarks Act") provides that, a registered trademark shall be transmissible by assignment or assignment in the same way as other personal or movable property, and shall be so transmissible either in connection with the goodwill of a business or independently"

"Wait, does it mean only registered trademark can be assigned? What happened to unregistered trademark?"

Fret not, unregistered trademark can be assigned too! Section 64(6) of the Trademarks Act provides that, nothing in this Act shall be construed as affecting the assignment or other transmission of an unregistered trademark as part of the goodwill of a business. (Phew!)

How to assign a trademark ownership?

To kickstart the process, the original owner of the trademark ("Assignor") and the new owner of the trademark ("Assignee") should sign a deed of assignment, a legal instrument that transfer the trademark from the Assignor to the Assignee. One deed of assignment may include multiple trademarks. The deed of assignment contains the terms and condition to transfer the trademark. Generally, it should include the identity of parties, the details of trademark to be transferred, effective date of transfer, and the consideration, ie. the transfer price. The consideration may be a nominal sum.

Once the parties have signed the Deed of Assignment, the document should be filed with the Government Trademark Office, with the prescribed official form (Form TMH-1) and fees.

Upon filing the documents, the Malaysian Trademark Office will usually take a few months to record the assignment into the database of the registry.

Although it seems like may take some time, but the effective date of transfer of ownership is based on the date of deed of assignment, not the date of recordal by the Trademark Office. So the rights of the parties are not affected, despite the heavy workload in the Trademark Office.

Who should be responsible to file the assignment?

There are no hard and fast rules as to whether the deed of assignment and/or application for recordal of assignment should be done by the assignor or assignee. The parties may decide on a case-to-case basis.

International Assignment of Trademarks

Since registration and protection of trademark is territorial based, the recordal of trademark assignment will also be done country by country.

In some countries, a universal deed of assignment is acceptable. Hence the same document may be used to apply for recordal of trademark assignment in a few countries and save some legal fees in drafting a separate deed of assignment in each country.

However, in some countries, there are specific requirements on format or languages of the Deed of Assignment.

So, it is always safe not to assume and you should seek consultation from your trademark agent .

When is the best timing to assign trademark ownership?

There are many reasons that prompt the need of assignment of trademark. For example, sale of trademark, corporate restructure, moving a business from sole proprietorship to private limited company (Sdn. Bhd.) or vice versa & etc.

Once you have decided any of the above moves, the assignment of trademark should be done immediately without any delay.

There are many instances that the assignment of trademark has been delayed due to procrastination or overlook. This may lead to serious and unwanted consequences.

For instance, after a few years, upon realizing the need of doing the deed of assignment, if the assignor has ceased to operate or passed away (for individual assignor), this may complicate the process of recordal of assignment due to the difficulty in locating the assignor to sign the documents.

Another example is, there may be a problem when the assignee needs to take legal action against trademark infringer, as the legal ownership of the assignee on the trademark is questionable.

Looking for assigning the ownership of your trademark? Don't wait! Contact us today!

Written by,

Li Yen Seow

IP Legal Executive

Bachelor of Laws

Lawrence Tan

Registered Trademark, Patent and Design Agent

LL.B (HONS), CLP Advocate & Solicitor (Non-Practising)

Disclaimer: The above information is merely for general sharing and does not constitute any legal advice. Readers are advised to seek individual advice from the professionals.

Copyright reserved 2021 © IP Gennesis Sdn Bhd

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Assignment of Trademark with Goodwill

In the Trademark Act of 1999, Section 37 outlines what a Trademark Assignment means. It refers to the transfer of ownership of a trademark and a brand mark. This transfer can be either temporary or permanent. It’s a process where the current owner of the trademark hands over ownership, with or without goodwill i.e., assignment of trademark with goodwill or without goodwill to a new registered proprietor. In this blog, we shall specifically see what assignment of trademark with goodwill means.

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Understanding the Assignment of Trademark with Goodwill

When an Assignor transfers ownership of a trademark connected with goods or services currently in use by the assignor to the assignee, all associated value, rights, and entitlements are likewise transferred. This includes the assignment of a trademark with goodwill associated with the brand.

The Assignee, upon receiving the assignment of trademark with goodwill, gains the legal right to use the trademark for any products or services. This includes the ability to use the mark for goods or services that were previously provided by the assignor.

This transaction, in which the assignment of trademark with goodwill takes place, is commonly referred to as “ Trademark with Business Goodwill .”

Assignment of Trademark without Goodwill

When an Assignor opts to assign a trademark without goodwill, it signifies a transaction in which the Assignor imposes restrictions on the buyer’s rights while transferring the trademark.This type of transaction is commonly referred to as a “Gross Trademark ,” emphasizing the absence of goodwill transfer along with the trademark.

Advantages of Assignment of Trademark with Goodwill

There are various advantages that assignment of trademark with goodwill offers, as have been mentioned below:

1. Brand Monetization

One of the key advantages of assignment of trademark with goodwill is the opportunity to monetize your brand. By transferring the trademark to another party, you can realize financial gains and participate in the value generated from the brand you’ve invested time and effort in developing.

2. Easy Brand Development

Trademark assignments benefit not only the assignor but also the assignee. When a trademark with goodwill is transferred, the assignee inherits an established brand without the need to invest in the time and resources required for brand development. This can expedite their entry into the market.

3. Maintenance of Intellectual Property Rights

Trademark registrations require ongoing maintenance to remain current and enforceable. assignment of trademark with goodwill can aid in this process by ensuring that the rights associated with the trademark are preserved and upheld. This serves as a major benefit of assignment of trademark with goodwill.

4. Realizing the Trademark’s Financial Value

Creating a brand is a resource-intensive endeavour, involving significant financial investment, effort, and time. Through trademark assignment, the creator of the trademark can determine and realize the financial worth of their intellectual property, providing a return on their initial investment.

5. Reliable Legal Proof

In the event of disputes or disagreements related to the assignment of a trademark, the assignment agreement serves as legitimate proof. Such agreements effectively secure the legal rights of the registered trademark owner, offering a reliable means of resolving disputes and upholding the integrity of the trademark ownership transfer.

Required Documentation for Trademark Assignment

In the process of trademark assignment, several essential documents are necessary to ensure a legally sound transfer. These documents include:

1. Certificate of Trademark Registration

A certificate proving the registration of the trademark being assigned is a fundamental document to establish the legitimacy of the trademark and its ownership.

2. Details of the Assignor and Assignee

Comprehensive information about both the assignor (current trademark owner) and the assignee (the party receiving the trademark) is vital. This should include evidence of their identity and residence to verify their credentials.

3. Non-Objection Certificate (NOC)

A No-Objection Certificate , commonly referred to as an NOC, is required from the original registered trademark holder, indicating their consent to the assignment. This ensures that the transfer is carried out without any legal objections.

4. Description of Goodwill or Without Goodwill

The type of trademark assignment, whether with or without goodwill, should be explicitly described in the documentation to clarify the nature of the transfer.

5. Copy of Advertisement and Registrar’s Instructions

Including a copy of any advertisements or notices regarding the assignment, as well as any instructions from the registrar’s office, can be crucial for record-keeping and transparency.

6. Witnesses and Signatories

The involvement of witnesses and the signatures of both parties, i.e., the assignor and assignee , are integral to validate the agreement.

7. Notarization

Notarization of the documents ensures their authenticity and legal validity.

8. Proof of Time and Place of Execution

Documentation should include evidence of when and where the assignment agreement was executed. This information helps establish the timeline and location of the transaction.

9. Authority of Attorney

If an attorney is representing either party in the assignment, documentation verifying their authority to act on behalf of the assignor or assignee should be included.

By providing these documents, the trademark assignment process is made transparent, legally binding, and free from potential disputes or challenges.

Requirements for Trademark Assignment Registration

Before registering a trademark assignment, several prerequisites must be met to ensure its validity and legality. These prerequisites include:

1. Written Agreement: The assignment of a trademark must be formalized in a written agreement. This written document is a crucial requirement to establish the transfer.

2. Identifying Parties: The agreement should clearly identify the following parties:

• Assignor: The current trademark owner or the legal owner of the trademark who is transferring the rights.
• Assignee: The purchaser of the trademark or the new owner who is receiving the rights to the trademark.

3. Assignor’s Knowledge and Consent: The assignment must be carried out with the assignor’s full knowledge and explicit permission. It is essential that the assignor consents to the transfer.

4. Just Compensation: The assignment agreement should stipulate that the transfer is made in exchange for just compensation or consideration. This consideration may be financial, goods, services, or any other agreed-upon form of compensation.

Steps Involved in Trademark Assignment Agreements

The process of executing a trademark assignment involves several sequential steps, as outlined below:

1. Application Submission

The Assignee, Assignor, or both parties must initiate the trademark assignment by submitting an application. This application should adhere to the guidelines specified in Trademark Rules 2017 and be prepared using Form TH. It should contain all relevant information regarding the transfer.

2. Application Submission Deadline

The finished application needs to be sent to the trademark registrar within a certain timeframe. Usually, this should be done within three months of obtaining ownership or control of the trademark.

3. Registrar Approval

Approval from the Registrar of Trademarks is necessary in three months . In certain cases, such as Trademark Assignments with goodwill or without goodwill, the period may be extended.

4. Advertising Process

The Registrar will outline how to advertise the Trademark Assignment. It is the applicant’s duty to conduct the advertisement following the guidelines set by the registrar.

5. Official Ownership Transfer

After the Registrar reviews all the provided proof and is content with it, they will officially transfer ownership of the trademark from the current owner (Assignor) to the new owner (Assignee).

6. Register Entry

The Assignee, now the new owner, needs to have their name entered in the register as the rightful owner of the trademark. Consequently, they gain the right to use the trademark as per the terms in the assignment agreement.

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Final thoughts.

The assignment of trademark with goodwill is a strategic and mutually beneficial transaction for both assignors and assignees. It allows the assignor to monetize the value of their brand and the hard work invested in its development. Simultaneously, the assignee gains immediate access to an established brand, eliminating the need for extensive brand building efforts. This form of assignment maintains the intellectual property rights associated with the trademark, ensuring legal protection and credibility. Furthermore, it serves as a reliable proof of the transfer, offering security in case of disputes. In essence, assignment of trademark with goodwill is a vital mechanism that facilitates a seamless transition of brand ownership, ultimately driving the growth and prosperity of businesses while upholding the integrity of intellectual property rights.

Aishwarya Agrawal

Ms. Aishwarya Agrawal is a graduate from Hidayatuallah National Law University, Raipur [HNLU Raipur]. Aishwarya holds a great interest in adding value to the legal fin-tech sector. She joined "StartupFino" with a motive to help budding lawyers in their day-to-day journey in the field of Law.

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Deed of assignment of trademark (absolute without goodwill).

KShs  3,300.00

A Deed of Assignment of Trademark is a document through which the registered proprietor of a trademark transfers his/her/its rights, title and interest in the trademark to a third party. This gives the third party the right to use the trademark of the owner.

Once the Deed of Assignment is done it is required to be registered with the Registrar of Trademarks.

The difference between an assignment and a trademark is that a license allows the licensor to retain their rights and interests in their IP while an assignment transfer all of the assignor’s rights and interest to the assignee.

This Deed is applicable in the following scenarios:

• where the assignment is absolute; and
• where the goodwill of the business is not being assigned.

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Assignment of intellectual property rights and goodwill (for use with asset purchase agreement)

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