Brand and Goodwill

List of questions to be considered

1. Specification of the patents to be licensed.

2. Extent of the rights granted to the licensee; which acts covered by the patent he may perform, in which technical fields, and in which country where a patent is held by the licensor.

3. Maintenance in force of the patents.

4. Consequences of invalidity of the patents.

5. Possible obligation of the licensee to use the patented invention.

Special questions relating to trade mark licences

1. Form of the trade mark and extent of use.

2. Quality control.

3. Obligation to use.

4. Duration of licence: possibility to early termination.

5. Royalties.

6. Obligation to refer to licensor.

Brands are different from goodwill, Goodwill is associated with benefit of advantage derived from a business by virtue of increasing customers. Goodwill is an asset of a business. On sale of Business with goodwill, the purchaser usually obtained right to use the name of old concern and right to represent himself as the successor of an old concern. Goodwill can be defined as the advantage arising from reputation and trade connection of a business. Goodwill is a substantial item to be taken into account on sale of a business.

Brands are on the other hand like trademarks. A Brand is a distinctive symbol that identifies particular product of a trader to the general public. The symbol consist of device, words or combination of both. A businessman may register his trademark and enjoy the exclusive right to the use of Trademark. Registration is generally for 10 years and is then renewable. The owner of the trademark may assign it allowing others to use it. If anyone uses a Registered Trademark without the owner’s permission, the owner can initiate impugnment proceeding and claim damages also.

Corporate name statutes

Trade name value may inhere it in a corporate name or the name of a product. A corporate name may be protected by the creation of inactive corporations in the states in the market area. The name of a product may be protected by incorporating it in a trademark that is used and registered.

Corporate name statutes grant only limited protection. They merely ensure that the name will be protected against subsequent adoption as a corporate name by another entity within the state and against granting of permission to a foreign corporation to do business in that state under that corporate name. The usual corporate name section grants no protection against use of the same name as a trade name or mark; rather the corporation must seek its relief under the non-statutory precedents available to it in the state law of unfair competition. Further, such statutes do not purport to protect a corporate trade name against names used by unincorporated business. Apart from these procedures, judicial protection of business names have developed as a part of the overall law of unfair competition.

Fictitious name statutes

The vast majority of states have enacted a fictitious name statute in one form or another. Generally, it provides that one doing business under an assumed or fictitious name must file certain information in affidavit form in each country where business is transacted and, in addition, may require other acts on the part of the user calculated to inform the public of the actual ownership of the business. Some of the statutes apply by their terms to corporate trade names; some that do not have been constructed to apply to corporations when transacting business under names other than their corporate names.

The purpose of these statutes is universally recognized to be the prevention of fraud by providing potential customers, and more particularly potential creditors, with information about those with whom they are dealing. Whether or not sanctions are enforced to a degree sufficient to compel compliance with a particular statute, it is apparent that no substantive protection is sought to be given to a name registered or certified under its terms.

TRADEMARK

Trademarks and trade names

A trademark is usually associated with specific product, while a trade name is representative of the business itself its established reputation and goodwill. Trademark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours.

Trademarks (unlike patents and copyrights) are not exclusively within the federal domain. Federal power to regulate trademarks is based on the commerce clause and in the past a narrower view of "Inter-State commerce" has been adopted than in other branches of the law. For example, federal registration of trademarks has been denied to hotels, restaurants, service stations, etc., even though their customers may come from across state lines and are solicited by inter-State advertising. However, a recent registration of a service mark used in only one state may possibly reflect a new trend.

How to preserve exclusive rights in a trademark

Rights in a trademark are first acquired through use, i.e. by selling the product with the mark affixed either to the product or to its container. If the mark is to be registered, it must be used in inter-State commerce, so the product should be shipped to a customer in another state.

Keep a record of the first use of the trademark. The following will help substantiate the use:

A copy of the invoice. The invoice must show the trademark followed by the generic description of the product.

The bill of lading signed by the carrier.

A letter from the buyer stating he received the product and mentioning the trademark.

This first use of the mark doesn’t mean that exclusive rights have been acquired. Someone else may have been using it before; no search can guarantee that you are the first user. Therefore, don’t start extensive selling and advertising campaigns until initial test sales leave you reasonably sure there’s no infringement and as a result, the mark won’t have to be abandoned.

After the first use, continued and proper use of the mark is necessary to establish your exclusive rights. What constitutes "Proper" use? The following checklist may provide some help.

Use the trademark as an adjective only to modify the generic name of the product, and at least once on every page. Don’t separate the trademark and the generic name with another word or any punctuation.

Use the mark in a distinctive way, that is, different type, italics, capitals, within quotation marks, or in some way to make it more conspicuous than the other words preceding or following it.

Use of the mark must be consistent. Once adopted, the mark must be continuously used.

Application for trademark registration

An application for registration must be filed in the name of the owner of the mark. It should give details as to a variety of matters including the date of the applicant’s first use of the mark as a trademark or in connection with goods specified in the application; the date of the first use of the mark in inter-State commerce, specifying the nature of the commerce; the manner in which the mark is used in connection with the goods; and the class of merchandise according to the official classification if known to the applicant. It must also contain various averments as to ownership and right to use the mark. Further it must be signed and verified and must include a drawing of the mark, five specimens or facsimiles, and the required filing fee. There are special rules for foreign applicants. The Trademark Office will supply printed forms of applications for (1) individuals, (2) firms, or (3) corporations or associations.

The drawing must be a substantially exact representation of the mark as actually used. (if the mark is incapable of representation by drawing then the application must describe it). Regulations cover such matters as the type of papers and ink, the size of the sheets and margins, the heading, the character of the lines, the use of linings for showing colour, and how the drawings are to be shipped. The Trademark Office will make drawings when possible, at the applicant’s request and expense.

The five specimens should be duplicates of actually used labels, tags, containers, or displays or portions thereof if flat and not larger than the size of the drawing. If specimens can’t be furnished (due to the mode of applying the mark or using it or the nature of the mark), then a photograph or other acceptable reproduction not larger than the size of the drawing may be used. If a disc recording is to be registered special regulations apply.

If on examination of the application and the accompanying papers it appears that the applicant is entitled to have his mark registered in the Principal Register, it will be published in the Official Gazette and will be subject to opposition by any person who believes he’ll be damaged a period of 30 days after publication being provided for filing opposition. If the Trademark Officer finds a conflict between two co-pending applications, it determines which applicant is entitled to register. If there’s no notice of opposition and no interference, a certificate of registration will be issued in due course.

Assignability of trademarks

Trademarks are not readily assignable, since their existence is dependent upon their connection with the business or product for which they are used. When a business using a trademark is sold or assigned, the continued use of the trademark must be for an item substantially similar to the one for which it was used by the assignor.

Trademark or trade names representing "personal care and skill of a certain individual" are usually not assignable, for the obvious reason that the assignee cannot claim to possess the assignor’s personal care and skill. Registered and unregistered trademark can be assignable and transmissible with or without goodwill of the business concerned.

Some practical considerations in the selection of a trademark

Trademark registration may be matter of law, but trademark selection is a business judgment, best left to specialists in advertising and marketing. Although registration is not obligatory, anticipate future need when making the original trademark selection and avoid adopting a mark that will be refused registration. The following checklist indicates some trademarks that can pose a problem:

Name, portrait, or signature of a living person without his consent.

Name, portrait, or signature of a deceased during the life of his widow, without her consent.

Flag or coat or arms of the United States, any state, municipality, or foreign nation.

A mark that is merely descriptive of the goods, or deceptively misdescriptive

A mark that when applied to the goods is primarily geographically descriptive or deceptively misdescriptive of the goods.

A mark that is primarily merely a surname.

A mark that resembles a trademark previously registered or used by another and not abandoned, if its use is likely to cause confusion or mistake or to deceive purchasers.

A mark that disparages or falsely suggests a connection with persons living or dead institutions, beliefs, or national symbols, or brings them into disrepute, or contempt.

A mark that is immoral, deceptive, or scandalous.

A mark can be registered even though it is merely descriptive, geographically descriptive or is primarily a surname or it has become distinctive of the registrant’s goods in commerce. Five years of exclusive and continuous use prior to filing application may be accepted by the Commissioner of patents and Trademarks as prima facie evidence that the mark has become distinctive.

PATENTS

In order to work effectively as the patent attorney, it is necessary to understand the broad procedures associated with securing a patent, as well as the related problems regarding licensing, cross-licensing, and assignments. The following paragraph is designed to give broad explanation of the general law.

Availability of patent protection

A patent grants the inventor a "statutory monopoly", the right of exclusive use for 20 years. A patent can be contained for any "new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof". New methods, new combinations, and new designs may be patented. However, no one can obtain a patent for a new or better idea for doing business. A so-called "plant patent" is not really issued on a plant but on the method of asexually reproducing the plant. Today, it is not only possible to get patent when you build a better mousetrap, but also when you build a better mouse; in 1988 the Supreme Court refused to hear a case (and thus upheld the Court of Appeals) involving the grant of a patent for genetically engineered mouse. The advice of a patent lawyer is essential the prospective patentability of a new development.

No patent may be granted for an invention if it was "patented or described in a printed publication in this or a foreign country, before the invention by the applicant for patent."

Who should apply for the patent?

Only the inventor should apply, the person who takes the inventive step. If there is more than one inventor, each should apply as co-owner of the patent, and each one, upon the granting of the patent, obtains an "undivided interest in the entire patent." However, the usual rules of co-ownership do not apply in the patent situation. Therefore, when one co-owner seeks to license or assign his or her rights under the patent, it is best to consult a patent attorney.

Patents issued in the name of anyone other than the true inventor or inventors are invalid if the facts are proven, except where it can be shown that a wrong party was included through error and without any deceptive intent. The employer has no right to designate an applicant who is not the true inventor. An inventor may not have multiple patents for the same invention (no "double patenting"). An inventor who later improves on an invention may apply for addition patents to cover the improvements.

Once an inventor has a patent for an invention, he or she cannot obtain a patent for the means of producing the already-patented invention.

When to apply for a patent

Several circumstances may trigger the need for a patent application:

1. If the invention is described in a publication, used publicly, or placed on sale by the inventor, it is necessary for the inventor to apply for the patent within one year from the time of publication, use, or sale.

2. If an application for a foreign patent has been filed abroad, application for a U.S. patent should be made within one year of the foreign filing.

3. Where two or more parties are competing for a patent on the same invention, the first to file prevails in the great majority of cases. The other party has the very heavy burden of proof that he is the first inventor.

Assignment vs. Licensing of Patents

A patent is assigned when all the rights to an object are granted exclusively to another party. A license is the grant of an exclusive right under the patent which does not include the right to make, the right to use, and the right to sell the object when the full rights under a patent are confined to a particular geographic areas (territorial grant), the patent has been assigned.

In deciding whether to make an assignment or merely grant a licence, the following considerations should be kept in mind.

1. Assignments should be recorded; licences need not be.

2. All owners of title must join in suit against an infringer but a licensee need not be joined (except in limited cases).

3. Receipts from an assignment, although a percentage royalty, may be treated as capital gains; whereas receipts from a licence are fully taxable as ordinary income. Licence payments may be deducted; the price paid for an assignment may be depreciated. Even when the price is not a percentage basis, these percentage payments may be deducted as depreciation of the patent.

Drafting the instrument for the assignment or licence of the patent is an intricate art, best left to an experienced patent attorney.

Duration of patent

Patents have a 20-year life. When the patent expires the item or process becomes public property.

The D.C. Circuit has overruled the FDA policy of treating the 180 day exclusive period for a generic drug as running from, and being from, and being dependent upon, the institution of a suit for patent infringement. The Federal Circuit has ruled that applications for extension of the term of a drug patent must be submitted to the Patent and Trademark Office within 60 days of the FDA’s grant of marketing approval: the 60-day "regulatory review period" runs from marketing approval, not action by the DEA.

FORM TM 24

The Trade Marks Act, 1999

Agent’s Code No.
Proprietor’s Code No.

I/We, ………………………….………………………………………………………………. hereby request that my / our name may be entered in the Register of Trade Marks as proprietor of trade(s) No.(s) ……. In class …….. as from the ……… .

I am/ We are entitled to the trade mark(s) by virtue of ……………………………………. of which the original and an attested copy of are enclosed herewith.

The assignment of the trade mark was (not) made otherwise than in connection with the goodwill of the business in which the mark (had been) (was) used (and there is sent herewith a copy of the Registrar’s direction to advertise the assignment, a copy of each of the advertisements complying therewith, and a statement of dates of the issue of any publications containing them).

I /We declare that the facts and matters stated herein are true to the best of my/our knowledge, information and belief.

All communications relating to this application may be sent to the following address in India:-

Dated this ………… day of ……………20…..

………………..
Signature
Name of Signatory in Letters

To

The Registrar of Trade Marks,
The Office of the Trade Marks Registry
at …………………

THIS ASSIGNMENT is made on the ……… day of ………. Between (name and address of Assignor) of the One Part (hereinafter referred to as "the Assignor") and (name and address of Assignee (hereinafter referred to as "The Assignee") on the Other Part.

WHEREAS the Assignor is the proprietor in India of the registered trade marks as set out in the schedule attached hereto (hereinafter called as "The Trade Marks").

AND WHEREAS the Assignor has agreed to assign the said Trade Marks to the Assignee together with the goodwill of the business in the goods for which the said Trade Marks are registered for the consideration hereinafter appearing.

Whereas the present assignment or transmission is not contrary to the public interest.

NOW THIS DEED WITNESSETH that in pursuance of the Agreement and in consideration of the sum of ……………. Duly paid to the Assignor by the Assignee, the receipt of which is hereby acknowledged.

THE ASSIGNOR HEREBY ASSIGNS the said Trade Marks to the Assignee –

1. Together with the goodwill of the business in the goods for which the said Trade Marks are registered.

2. To hold the same unto the Assignee, its successors and assigns absolutely.

IN WITNESS WHEREOF the Assignor and the Assignee have caused their name and seal to be hereto affixed the day and the year first above written.