Assignment Agreement and Licensing Agreement

Jul 2, 2023 | English Blog

 Posted by: Francisco Alvarado | Associate at Alvarado y Asociados.

The right to a trademark registered or in process of registration may be transferred regularly among living parties or by succession. The transfer must be in writing and for it to take effect against third parties, it must be registered with the Registry.

The right in a trademark may be transferred independently of the company or part of the company of the owner of the right, and with respect to one, some or all of the products or services for which the mark is registered. When the transfer is limited to one or some of the products or services, the registration is divided, opening a new one in the name of the purchaser.

At the request of an interested person or a competent authority, a transfer and its corresponding registration can be canceled if the change in the ownership of the right is likely to cause a risk of confusion or association with respect to the business origin of the respective products or services.

This agreement should not be confused with the trademark license agreement. This contract only implies the transfer of the rights of use of the brand or trade name, but in no case is the transfer of ownership as it occurs through the transfer, both legal figures regulated in Chapter VI of Law 380. 

In this way, the use license contract allows the person who signs the contract to make use of the brand. The owner may license the use of the trademark, and may even, by himself, continue to use it, provided that it is not an exclusive license. On the contrary, in the assignment contract, the new owner of the property rights of the brand, trade name or Internet domain will be the assignee, so the assignor will not be able to continue using the brand or license it to others people.

The license of use also has legal effects against third parties from the date on which its registration is requested before the Registry.

In the absence of a stipulation to the contrary in a license agreement, the following rules apply:
a) The licensee shall have the right to use the trademark during the entire term of the registration, including its renewals, throughout the territory of the country and with respect to all the products or services for which the trademark was registered.
b) The licensee may not assign the license or grant sublicenses.
c) When the license had been granted as exclusive, the licensor may not grant other licenses with respect to the same territory, the same brand and the same products or services, nor may it use the brand itself in that territory with respect to those products or services.

Typically such contracts include information about the parties to the contract; the price of the transfer and its form of payment or conditions for the granting of a free transfer; the description of the trademark, including its territorial scope of registration and the territorial scope to which the transfer of the trademark is limited, the statement of the possible existence of charges on the trademark and, the type of transfer of the trademark, whether total , or partial, that is, the trademark is assigned only for certain products or services.

However, in addition to the aforementioned aspects, we recommend including other relevant clauses in the Contract, such as the confidentiality and non-competition clauses of the assignor, since through these, it is intended to prevent the assignor from continuing to make use of their knowledge related with the commercialization or use of the brand, after the signing of the contract, and compete unfairly with the assignee, as well as guarantee the secrecy of the information disclosed in relation to this contract and prevent it from being used by third parties for their own benefit.

Finally, note that at the request of any interested person or of a competent authority and after hearing the owner of the trademark registration, the Judge may cancel the registration of a license agreement and prohibit the use of the trademark by the licensee when, by default, of adequate control by the owner, confusion, deception or harm to the public occurs or could occur, or a practice
detrimental to competition within the market is configured.