Assignment of pending trademarks – Nigeria’s position
This paper discusses the legality or otherwise, of the assignment of unregistered trademarks in Nigeria as well as its effects. The relevant provisions of the law relating thereto are also highlighted.
The Concept of Trademarks
A trademark is a mark, logo, symbol or sign that distinguishes the goods of one manufacturer from those of another. It is a mode of connecting certain goods in the mind of the public with a particular manufacturer or seller, with the objective of giving that purchaser a satisfactory assurance of the make and quality of the article he is buying. Closely related to trademarks are service marks, which are essentially, marks that identify and distinguish the source of a service rather than goods. Thus, a service mark enjoys the same form of protection as a trademark.
Examples of trade/service marks that readily come to mind are: Dangote, Zenith Bank, Nokia, Tecnom zaron, Jackson Etti & Edu GTBank, and many others.
The Trademark Registration Process
In Nigeria, a straightforward/no-objection, trademark registration process is in two phases: the Application Stage and the Registration Stage. The process flowchart for this, is as follows:
Application Examination Publication in Journal Payment of Registration/Sealing Fees Issuance of Registration Certificate
On completion of the registration process, an applicant is issued with a Registration Certificate which is formal proof of the grant of exclusive rights to the trademark filed. These rights date back to the date the application was lodged, rather than the date of the issuance of the certificate. The registration certificate is formal proof, according to the records of the trademark office, of the proprietor, in whom the rights repose, as well as the goods or services the registration covers. Such records are open to the public.
A trademark is valid for 7 years, counting from the date of the application. It can be renewed thereafter, for 14 year periods, ad infinitum.
Assignment of Trademarks
The assignment of a trademark refers to the process by which the owner or proprietor of a trademark divests himself of ownership rights in the trademark in favour of a third party.
According to our laws, an assignment may be full or partial. In the case of a partial assignment, the Assignor (proprietor) divests only a part of the title to the mark, retaining the rest. He may also divest his title to 2 different entities, although care must be taken to ensure that such activities do not result in confusion.
Section 26(1-3) of the Trademarks Act provides as follows:
• (1) Notwithstanding any rule of law or equity to the contrary, a registered trade mark shall, after the commencement of this Act be assignable and transmissible either in connection with the goodwill of a business or not.
• (2) A registered trade mark shall after the commencement of this Act be assignable and transmissible in respect either of all the goods in respect of which it is registered, or was registered, as the case may be, or of some (but not all) of those goods.
• (3) Subsections (1) and (2) of this section, shall apply in regard to an unregistered trade mark used in relation to any goods as they apply in regard to a registered trade mark registered in respect of any goods, if – (a) at the time of the transmission of the unregistered trade mark it is used in the same business as a registered trade mark; and (b) it is assigned or transmitted at the same time and to the same person as that registered trade mark; and (c) it is so assigned or transmitted in respect of goods all of which are goods – (i) in relation to which the unregistered trade mark is used in that business; and (ii) in respect of which the registered trade mark is assigned or transmitted.
These provisions clearly indicate that assignments are limited to registered trademarks unless the unregistered (pending) marks are being assigned at the same time and to the same person as a registered trademark and in respect of all goods which are being used in the same business as the registered marks. From this, we can posit that an unregistered mark can be assigned together with registered marks in the same instrument of transfer, so long as the indicated criteria are met.
It is interesting to note that the same position has been adopted in some African countries like Kenya and South Africa.
Case Study
ABC Holdings Ltd is a well-known conglomerate in the soft drinks & biscuits manufacturing business. It has a portfolio of over 100 trademarks, all of which are used in the business. Most of them are pending at the trademarks registry. Approximately 40 have however been registered.
The company seeks to diversify its business by spinning off the biscuit manufacturing side to its subsidiary: KYZ Ltd. After negotiations regarding the value to be placed on these trademarks and the goodwill of the business, a Deed of assignment is drawn up transferring 70 trademarks from ABC Holdings to KYZ Ltd, out of which, only 30 are registered.
Question:Is ABC Holdings Ltd restricted to assigning only the 30 registered trademarks or can the assignment be executed in respect of all 70 marks, whether registered or pending?
Answer: By virtue of Section 26(3) of the Act, ABC Holdings Ltd can assign all 70 marks in the same instrument of transfer (Deed) and the transaction will be recorded at the registry as having been lodged. The conditions to be met are however that the pending marks must be assigned at the same time and to the same person as at least one registered trademark and in respect of all goods which are being used in the same business as the registered mark.
Question: Does an unregistered mark enjoy the same benefits as a registered mark by reason of being transferred through the same instrument (Deed)?
Answer: The assignment transaction does not change the position or status of KYZ Ltd (the assignee) vis-a-viz the unregistered mark, as certain rights that inure to a proprietor by reason of the registration of a mark (e.g. institution of an infringement action) do not flow to the unregistered mark. An assignment instrument does not cure such a defect and as such, the Assignee would have no valid rights to exercise against 3rd parties as the mark is not yet registered.
Note however, that this does not affect, in any manner, the rights between the parties to the assignment, as the assignment transaction constitutes a valid agreement between them.
Question: Must a deed of assignment be lodged at the Trademark Registry?
Answer: Section 30 of the Trademarks Act provides as follows:
1. Where a person becomes entitled by assignment or transmission to a registered trade mark, he shall make application to the Registrar to register his title, and the registrar shall, on receipt of the application and on proof of title to his satisfaction, register him as the proprietor of the trade mark in respect of the goods in respect of which the assignment or transmission has effect, and shall cause particulars of the assignment or transmission to be entered on the register.
(2). Any decision of the Registrar under this section shall be subject to appeal to the court.
(3). Except for the purposes of an appeal under this section or of an application under section 38 of this Act, a document or instrument in respect of which no entry has been made in the register in accordance with the provision of subsection (1) of this section, shall not be admitted in evidence in any court in proof of the title to a registered trade mark unless the court otherwise directs.
By virtue of this provision, the Trademark Act requires all assignments or transmissions of registered trademarks to be registered at the trademark Registry. Note also the case of A.B Chami Vs. W.J. Bush & Co. Ltd 1990-1997 Vol.3 I.P.L.R p.284; where the court stated that in the event of assignment of a registered Trademark, there must be evidence of the fact of assignment, application made to the Registrar to register the Deed and the certificate of assignment issued by the Registrar.
In the light of the above position, it is safe to conclude that a change in title (by way of an assignment) MUST be recorded at the Trademarks Registry in order to be effective. The obligation to register the change in title however falls on the Assignee, that is, the entity who is entitled to the mark after the change in title.
Conclusion
Assignment transactions are crucial to the structure and status of trademark proprietorship. Given the magnitude and effect of such transactions, it is important for businesses to be fully aware of the intricacies that can be involved especially where registered and unregistered marks form part of the same portfolio in order to obtain the desired results.
Chinwe Ogban, Tolu Olaloye, and Joy Azumara
Chinwe, Tolu and Joy are Intellectual Property Specialists at Jackson Etti & Edu, one of Nigeria’s leading full service commercial law firm.