TM: Selling One Product Line Can Restrict Your Next Trademark Filing
One Brand, Two Owners
A company owns BRAND X for shampoo and conditioner. It sells the shampoo business and assigns the trademark rights for shampoo to the buyer, while keeping the rights for conditioner. Section 49 of the Trademark Act allows a registered mark to be assigned for some of the goods it covers. Once the partial assignment is recorded, the buyer and seller can own the same mark for their respective goods. The deal may settle who owns BRAND X today while leaving open who can register its next version.
The Conflict Can Surface When Either Party Rebrands:
Suppose the seller later applies to register a refreshed BRAND X logo for conditioner. If the registrar considers the new logo similar to the buyer’s mark and finds that shampoo and conditioner are goods of the same character, the buyer’s mark can block the application of the seller for conditioner. The same issue can arise if the buyer updates its branding and the seller’s retained mark stands in the way.
The Department of Intellectual Property’s examination manual identifies this type of split ownership as a situation Section 51/1 was designed to address. Where that section applies, written consent from the other party creates a presumption of special circumstances. The registrar may then allow coexistence under Section 27, subject to conditions on use. Consent helps, but it does not guarantee registration.
Plan for the Next Filing Before Closing:
The sale agreement should identify the exact goods covered by the transfer and the branding each party will retain. It should also address whether either party may refresh the logo, extend the brand to adjacent products, or file for related marks. If the parties agree to support future filings, specify when written consent must be given, what applications it covers, and how the parties will respond if the registrar proposes limits on use. That discussion is easier while both sides are negotiating the deal than after one has invested in new packaging and needs the other’s signature.
Key Takeaways:
A partial assignment divides existing trademark rights by goods. It does not settle future filings. If both parties will continue using the brand, agree before closing on which changes and product extensions each can pursue, when consent is required, and what happens if registration is refused or allowed only on conditions.
Author: Panisa Suwanmatajarn, Managing Partner.
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