Assignment Without Goodwill: Section 42

In one line

An assignment of a mark without the business it belongs to does not take effect until the assignee asks the Registrar how to advertise it and does so.

In the wording a student can write in an exam: section 42 provides that where an assignment of a trade mark, whether registered or unregistered, is made otherwise than in connection with the goodwill of the business in which the mark has been or is used, the assignment shall not take effect unless the assignee, not later than six months from the date of the assignment, or within such extended period not exceeding three months in the aggregate as the Registrar may allow, applies to the Registrar for directions with respect to the advertisement of the assignment, and advertises it in such form and manner and within such period as the Registrar may direct.

Why the section exists

Section 38 permits an assignment without goodwill. The old objection was that a mark separated from its business misleads the buyer about the source of the goods. Chapter 230 works the doctrine.

Section 42 keeps a residue of that objection as a formality. The public, or at least the trade, is told that the mark has changed hands and that the business behind it has not gone with it.

And it has teeth. The assignment shall not take effect until the requirement is met. It is not a penalty; it is a condition precedent.

The four requirements

One: the assignment must be otherwise than in connection with the goodwill of the business. The Explanation, below, cuts down what counts.

Two: the ASSIGNEE must apply, not the assignor.

Three: within SIX MONTHS from the date on which the assignment is made, extendable by the Registrar by not more than three months in the aggregate. So the outer limit is nine months.

Four: he must apply for DIRECTIONS with respect to the advertisement, and then advertise in such form and manner and within such period as the Registrar directs. Two steps, not one: asking, and then doing.

And the section applies to registered and unregistered marks alike. Its words are "whether registered or unregistered", which is unusual in Chapter V and matches section 39.

The Explanation: two assignments that do NOT count as being without goodwill

For the purposes of the section, an assignment of a trade mark of the following description shall NOT be deemed to be an assignment made otherwise than in connection with the goodwill of the business in which the mark is used:

• (a) an assignment of a trade mark in respect only of some of the goods or services for which the mark is registered, accompanied by the transfer of the goodwill of the business concerned in those goods or services only; or
• (b) an assignment of a trade mark which is used in relation to goods exported from India or in relation to services for use outside India, if the assignment is accompanied by the transfer of the goodwill of the export business only.