How Do I Transfer a Trade Mark from One Business to Another?

In Short

• Transferring a Trade Mark – A trade mark can be transferred through assignment (permanent transfer) or licensing (allowing use for a fee while retaining ownership).
• Proper Documentation – Assignments must be recorded with IP Australia, while unregistered trade marks must show goodwill for a valid transfer.
• Licensing Options – Trade mark owners can grant exclusive, sole, or non-exclusive licences to generate revenue while maintaining control.

Tips for Businesses

When transferring a trade mark, ensure the agreement captures all rights and goodwill. Record assignments with IP Australia to secure ownership. Licensing can be a flexible way to generate income while keeping control. Always consult a lawyer to draft agreements and protect your intellectual property during business sales or restructuring.

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Table of Contents

• Sale of Shares or Sale of Assets?
• Assigning a Trade Mark
• Registered vs. Unregistered Trade Marks
• Licensing a Trade Mark
• Key Takeaways
• Frequently Asked Questions

A trade mark is a valuable intellectual property (IP) asset distinguishing your business’s goods and services from your competitors. When buying or selling a business, trade marks are often included in the transfer of ownership. This article examines how to transfer ownership of a registered trade mark from one business to another during a sale or acquisition. 

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Sale of Shares or Sale of Assets?

It is essential to note the difference between transferring ownership of a business via a sale of shares or a sale of assets, as the method of transfer will impact how any intellectual property is handled. In an asset sale, where a company sells all or part of its assets (including IP) to another entity, transferring ownership of a trade mark is generally straightforward. However, in a share sale, where a company holds its ownership, the company changes, and the agreement and transfer can be more complex.

Regardless of the type of sale, it is crucial to transfer trade mark ownership and any associated goodwill properly. This way, you can avoid jeopardising the trade mark’s value and enforceability.

Assigning a Trade Mark

Assignment refers to the legal transfer of ownership and rights in a registered trade mark from one party to another. Under section 106 of the Trade Marks Act 1995 (Cth), you can either fully assign your mark or partially assign it.

A partial assignment involves effectively ‘splitting’ an existing trade mark registration. This allows each party to own and use the trade mark concerning specific goods and services.

For example, suppose you have a registered trade mark covering various classes of goods and services:

• clothing; 
• video games; and 
• stationery. 

You can partially assign the mark to another business to use only for clothing. Accordingly, you retain the right to use your trade mark for video games and stationery. Meanwhile, the new owner can use the mark exclusively for clothing.

The process for assigning a registered trade mark in Australia involves the following steps:

1. The registered trade mark owner or the entity to which the owner assigns the mark must apply to IP Australia to record the assignment.
2. The application must be submitted in the approved form provided by IP Australia and any supporting documentation, such as a deed of sale. 
3. IP Australia will record and publish the assignment in the trade marks database upon receiving the application.
4. The entity to which the original owner assigned the mark will become the new registered owner the day after IP Australia records the assignment. 

Registered vs. Unregistered Trade Marks

The process for transferring the ownership of unregistered trade marks is much the same as that for transferring registered trade marks – but with an additional requirement. For an unregistered mark to be legally transferred, it must have accumulated sufficient goodwill in the marketplace. 

What is Goodwill?

Goodwill represents the reputation that a brand acquires through the extensive use and promotion of its trade mark​​ over time. Goodwill can attach to both registered and unregistered trade marks. However, an unregistered trade mark is unlikely to have any value without goodwill, and without any goodwill associated with it, it may be deemed unsaleable.

In 2012, the High Court decided that unregistered trade marks belonging to tobacco giant British American Tobacco were transferable property because of the goodwill they had accrued. Although unregistered, the court considered the trade marks to hold significant commercial value because of their brand recognition. For new businesses, it is less likely that IP Australia or the courts will find that goodwill has been attached to their unregistered trade marks.

Whether your trade mark is registered or unregistered, it is essential to ensure that any existing goodwill is captured in the assignment of the mark. Failing to do so may present issues later on for the new owner, such as their ability to demonstrate historic evidence of use or prove ownership in the event of a dispute.

Licensing a Trade Mark

An alternative to assigning a trade mark is a licensing arrangement. Rather than permanently transferring ownership through an assignment, licensing a trade mark allows the owner (the licensor) to permit a third party (the licensee) to use the mark for specific purposes for a fee. This enables the trade mark owner to exploit the mark’s commercial value while retaining legal ownership.

The terms and conditions that govern a licensing agreement allow the licensor to impose various terms and limitations upon the licensee. For example, you could license your trade mark for use in New South Wales while retaining exclusive use of the mark in Victoria.

There are three types of IP licences available in Australia: 

Licensing intellectual property is particularly important for franchisors. Franchise agreements rely on the franchisor licensing key brand assets to franchisees for use in their operations. For example, The Coffee Club has registered its slogan “Where Will I Meet You?” as a trade mark. It then licenses to franchisees to use through its franchise agreements. This licensing strategy allows the franchisor to leverage the franchisee network to grow brand awareness and extend market reach.

Franchisors should clearly state the obligations of franchisees regarding the use of their intellectual property. This guarantees that franchisees will maintain the brand’s integrity and consistency.

Key Takeaways

Trade mark ownership and rights can be transferred via assignment or licensing. Assignment involves permanently transferring complete or partial ownership to another entity. You must formally record the transfer with IP Australia to assign a trade mark. Licensing enables trade mark owners to contractually permit third parties to use the trade mark for a fee without transferring ownership. License types like exclusive, sole and non-exclusive offer varying degrees of control over authorised users. Franchisors commonly use non-exclusive licensing models to expand their brand and influence across their franchisee network.

If you need assistance assigning or licensing your trade mark, our experienced IP lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions