Assignment vs Licensing — Key Differences
| Trademark Assignment | Trademark Licensing | |
|---|---|---|
| Ownership transfer | YES — ownership moves permanently to assignee | NO — owner (licensor) retains ownership |
| Duration | Permanent | For agreed period (renewable) |
| Revenue model | One-time payment (consideration) | Ongoing royalties or licence fees |
| IP India form | Form TM-P | Form TM-U (Registered User) |
| Government fee | ₹9,000 per mark | ₹4,500 (MSME) or ₹9,000 (company) per mark |
| Common use case | Business sale, M&A, restructuring, inheritance | Franchise, distribution, brand licensing deals |
Trademark Assignment — How to Transfer Ownership
Trademark assignment is the complete transfer of trademark ownership from one party (assignor) to another (assignee). Under Section 37 of the Trade Marks Act, a trademark is personal property and is fully transferable.
1
Execute an Assignment Deed — A formal agreement on stamp paper specifying: the trademark details (number, class, mark), assignor and assignee, consideration paid, whether assigned with or without goodwill, and effective date.
2
Notarise the deed — Get the deed stamped and notarised. Stamp duty varies by state (typically ₹100–₹500+).
3
File Form TM-P with IP India within 6 months — Submit the assignment application online. Delay beyond 6 months requires an explanation. Fee: ₹9,000 per mark.
4
IP India updates the register — The register is amended to show the new proprietor. A fresh certificate is issued in the assignee's name.
Trademark Licensing — Earning Royalties From Your Brand
A trademark licence allows another party (licensee) to use your registered trademark under controlled conditions, while you retain ownership. This is the foundation of franchising and brand licensing.
Types of licences:
- Exclusive licence: Only the licensee (and not even you) can use the mark in the defined territory/scope. Highest royalty value.
- Non-exclusive licence: You can grant the same licence to multiple licensees simultaneously. Common in franchise models.
- Sole licence: Only you and the licensee — no further licensees added.
Registered User (Form TM-U): For a trademark licence to be legally effective against third parties, the licensee must be recorded as a Registered User with IP India by filing Form TM-U jointly by licensor and licensee.
What a Trademark Licence Agreement Must Include
| Clause | Why Critical |
|---|---|
| Trademark identification (number, class, mark) | Specifies exactly which mark is licensed |
| Scope of licence (exclusive/non-exclusive, territory, goods/services) | Defines boundaries of permitted use |
| Quality control clauses | Licensor must retain right to inspect and approve use — essential to prevent "naked licensing" which can invalidate the trademark |
| Royalty terms (rate, payment schedule, audit rights) | Commercial terms of the arrangement |
| Duration and renewal conditions | How long the licence runs and how it renews |
| Termination grounds | How either party can end the arrangement |
| Sub-licensing restrictions | Whether licensee can further license to others |
| Dispute resolution and governing law | How disagreements are handled |
Trademark Licensing and Franchise Operations
Every franchise operation is built on a trademark licence. The franchisor (trademark owner) licences their brand to franchisees in exchange for franchise fees and royalties. The trademark licence agreement is the legal backbone of the franchise:
- Franchisees operate under your brand — they need legal certainty from a registered and licensed trademark
- Quality control clauses in the licence allow you to terminate a franchisee who violates brand standards
- The franchise fee structure (initial fee + royalty) is governed by the licence agreement
- Without a registered trademark, the franchise structure has no IP foundation — franchisees and investors will not commit
Frequently Asked Questions
Yes — Section 45 of the Trade Marks Act allows assignment of pending trademark applications. The assignment is recorded with IP India and the application continues in the assignee's name. However, the mark cannot be formally licensed via Form TM-U until it is registered.
The licence typically runs with the trademark. If the licensor assigns the trademark to a third party, the assignee takes it subject to any existing registered user (Form TM-U) licence. The licence terms (including royalty obligations) transfer to the new owner.
Yes — licence agreements can be territorially restricted (e.g., a franchise licence for a specific city, state, or region only). This is common in food, education, and retail franchise licensing.
Naked licensing is granting a trademark licence without maintaining quality control over the licensee's use of the mark. Under Indian trademark law, a trademark whose owner fails to control the quality of the licensed goods/services can be challenged for cancellation. The quality control clause in a licence agreement is not optional — it is legally necessary to maintain the trademark's validity.
Royalty rates vary widely by industry and brand strength: 2–5% of net sales for established Indian brands in FMCG; 5–10% for strong consumer brands; 15–20% of revenue for premium global brands. Royalty rates are negotiated and must be arms-length for compliance with transfer pricing rules if between related entities.
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