Trademark

Stamp Duty Requirements for Trademark Assignment in India

calendar01 May, 2023
timeReading Time: 4 Minutes
Stamp Duty Requirements for Trademark Assignment in India

Trademarks are essential assets for the business because they help foster consumer loyalty and brand identification. Trademarks are names, logos or other distinguishing marks that identify a company’s products or services from others in a particular market. The act of transferring trademark ownership from one entity to another is known as trademark assignment. Scroll down to check more about Stamp Duty for Trademark Assignment in India.

What is Trademark Assignment?

The transfer of a trademark’s ownership from one person or entity to another person or entity is referred to as trademark assignment. The rights to use, sell, or license the trademark can be assigned as a part of the transfer, which can be in partial or total. The parties often enter into a written agreement outlining the terms and conditions of the transfer to formalize the assignment. After the trademark is assigned, the new owner takes on all of the trademark’s rights and obligations, including the power to enforce them against infringers.

Types of Trademark Assignment

There are four ways in which trademark assignment can be done. They are:

  1. Partial Assignment: Only a portion of the rights, title and interest in the trademark are transferred to the new owner in a partial assignment. Some rights to the trademark, such as the ability to use it in specific markets or in connection with particular goods or services, are still held by the present owner.
  2. Complete Assignment: All rights, titles, and interests in a trademark are transferred from the present owner to the new owner during a complete assignment. All rights and obligations related to the trademark are taken on by the new owner, who is now its sole owner.
  3. Assignment with Goodwill: In an assignment with goodwill, both the ownership rights and the business connected to the trademark are transferred. When a business or company is sold, and the new owner wishes to buy the related trademark along with the business, this sort of assignment is called an assignment with goodwill.
  4. Assignment without Goodwill: When a trademark is assigned without goodwill, the accompanying business or goodwill is not transferred; just the trademark’s ownership rights are transferred. This kind of assignment is used when the trademark owner wishes to sell the trademark independently of the business.

Why is Trademark Assignment Important?

By selling the trademark to a third party, trademark assignment may assist a business owner in generating revenue from their brand. This may be helpful if the company owner plans to retire or start a new business. The assignor can make money by selling the trademark and utilize that money to fund their retirement or engage in other business ventures. On the other side, the assignee may profit from purchasing a priceless asset that will aid in the launch and expansion of the company.

Business processes can be made more efficient with trademark assignment. For instance, trademark assignment can assist in combining both companies’ brands if one business owner desires to combine with another. Stronger brand identification may result from this, which may be advantageous for marketing purposes. Additionally, trademark assignment can assist in resolving any legal problems concerning trademark ownership, which can save both time and money.

The value of a brand can be protected through trademark assignment. When a company owner transfers trademark ownership to a new owner, they can be sure that the new owner will utilize the trademark in line with their original intentions for the brand. This might be helpful if a company owner is worried about the standing of their brand or wants to make sure it is utilized in a specific way.

Requirements of the Trademark Assignment Deed

  • The assignment deed should be in writing only. 
  • The Identify the trade mark that is being assigned should be there. 
  • The assignment deed should be executed by both the parties. 
  • The assignment deed should be for monetary consideration. 
  • The assignment deed should mention whether the assignment is with or without goodwill. 
  • The assignment deed should be stamped under the Indian Stamp Act.

What is Stamp Duty?

The government levies a tax known as stamp duty on specific types of legal papers. State governments apply a tax known as stamp duty on the purchase and sale of real estate. It is obligated according to the Section 3 of the Indian Stamp Act of 1899[1]. It is a source of income that government derives through a variety of business dealings including real estate sales, insurance policies and other financial transactions.

Documents are subject to stamp duty to give them legal weight and guarantee that they are completed in accordance with the law. Depending on the kind of document and the transaction’s value, the state government determines the stamp duty imposed on a certain document.

What is Stamp Duty for Trademark Assignment?

With the exception of copyright assignments, which are exempt, stamp duty is due on a deed of IP rights assignment. State laws mandate the imposition of stamp duty. According to the Indian Stamp Act of 1899, also this is payable for trademark assignment. All documents, including trademark transfer deeds, must be stamped in order to be legally enforceable in India. The market value of the assigned trademark is used to determine how much stamp duty is due for trademark assignment.

On form TM-P, a request is submitted to register the title of a person who gains entitlement through the assignment. The state government determines the market value, which differs from state to state. State laws affect the stamp duty, which varies from 3% to 5%. The following are some of the rates of stamp duty which are applicable:

  • Delhi: 3%
  • Mumbai (For the state of Maharashtra): 3%
  • Kolkata (State of West Bengal): 5%
  • Ahmedabad (In the state of Gujarat): 5%

Importance of Stamp Duty in Trademark Assignment

The government imposes a tax known as stamp duty on legal papers to make them enforceable in court. For every party participating in the assignment of a trademark in India, this is an essential factor to take into account.

This is crucial for trademark assignment for a number of reasons, one of which is that it assures legal observance. All documents, including trademark assignment deeds, must be duly stamped in accordance with the Indian Stamp Act of 1899 in order to be admitted as evidence in court. The deed may be declared void, unenforceable, or inadmissible as evidence in court if stamp duty is not paid.

The fact that stamp duty provides the government with an income stream is another significant component of the tax. The money raised by stamp duty goes towards a number of public benefit projects, including those for social welfare, education, and infrastructure improvement.

Conclusion

In conclusion, stamp duty should be taken into account while deciding how to assign a trademark. It is advised to seek the assistance of a legal professional who can walk you through the stamp duty payment procedure and help you adhere to all other legal criteria in order to ensure a smooth and hassle-free trademark assignment procedure. In order for a trademark assignment to be effective in India, you must be aware of the stamp duty laws and complete your stamp duty duties.

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