Actually, they’re not naughty. And they’re not nice. Actually, they’re quite boring, but like many boring things, they can be important. Forgive the headline designed to lure you in. If you remember 1980s British TV adverts, you’re probably also thinking of cream cakes now too. If I’ve grabbed your attention, you might continue reading…

In the UK, a registered trade mark is personal property. (Or in Scotland, it’s incorporeal moveable property – UK trade marks cover Scotland, just Scotland has some unique legal terms.)

Various dealings with a trade mark registration can occur and transactions affecting a registered trade mark can be recorded on the UK Trade Mark Register. There are similar processes in other territories around the world with Trade Mark Registers.

Aside from assignments (that transfers ownership of a trade mark registration), there are other transactions that can be recorded (“registrable transactions”), namely, licences (where a third party is given permission to use the trade mark) and security interests (where a trade mark registration is used as collateral to obtain a loan).

There are two things to consider with these kind of transactions and, in our view, it is important these are not considered in isolation:

• A legal document that creates the transaction. This can be, for example, an assignment deed. It might be a broader document that sells other business assets, not just trade mark registrations.
• Recording the transaction on the appropriate Trade Mark Registers.

At Stobbs, we have a specialist commercial contracts team who can assist with drafting various types of commercial agreements such as assignment deeds, sale and purchase asset agreements, licensing and franchising agreements and security agreements.

Once executed, however, a Trade Mark Register is not updated automatically. Recordal applications have to be made to the respective Intellectual Property Office so that the Register can reflect:

• New owner details; or
• Details of a party granted a licence to use a trade mark; or
• A bank/lendor’s interest in a trade mark

An assignment is the most common of these transactions so we’ll focus mainly on this in this piece going forward.

Reasons to record

There are some good reasons to record promptly.

1. Notice to third parties

Under English law, a party acquiring rights in a registered trade mark will not be affected by any earlier transactions unless they knew about them at the time of acquisition. Registering a transaction at the UKIPO puts third parties on notice of your rights.

As an example, if Company Y acquires a registered UK trade mark from Company X and then does not record this assignment, if Company Z subsequently acquires the same registration from Company X without notice of Y’s interest, it would be Company Z who would have ownership of the registration.

A recent decision in the EU also highlights the importance of timely recordal. Oy Shaman Spirits Ltd (“Shaman Spirits”) had executed a licence agreement with Brandavid Oy, but this was not recorded on the EU Register. The respective trade marks were then assigned to Global Drinks Finland Oy (“Global Drinks”), with this assignment being recorded on the Register. When Shaman Spirits belatedly went to record their licence on the Register, this was objected to by Global Drinks because, as was their right, they have to agree to registration of the licence.

2. Recovery of costs in infringement proceedings

For the UK, the recommended timeframe for recordal is within six months of the effective date. This is because if the mark is infringed before the assignment is recorded, if infringement proceedings are brought in the new owner’s name, a court shall not award backdated costs unless an assignment application is made within six months of the assignment date. There are provisions if it was "not practicable" to record an assignment within six months, but we do not suggest these are relied upon.

3. Potential time and cost savings

Sometimes when we go to record an assignment, it becomes apparent that an earlier recordal has not been made. We would then look to record this to ensure the chain of title is correct, but sometimes with an older recordal, locating the paperwork can be difficult. If the recordal process of the newest recordal is started without delay this allows us to get informed and get our ‘ducks in a row’ with any earlier transactions more easily.

It is also important to note that you will often not be able to take action against any possible infringement if ownership of the mark is not up-to-date and properly recorded. While the recordal process in the UK is quick (usually two weeks or less), in other territories where an IPO is more under-resourced, the recordal process can take months or even years.

4. Fines for late recordal

Some territories charge a fine if transactions are not recorded within a certain timescale. Depending on how long it is between the change taking place and the recordal request being filed, these additional fees could add up.

5. It helps make trade mark searching more accurate

Many third parties will be conducting trade mark searches before using new trade marks in new territories. This is, of course, highly recommended. When marks are revealed in searches, they will often do more homework to see if a mark is being used, if the owner appears to exist, etc. Prompt recordal keeps registrations serving as a better “keep off the grass sign” deterrent and may mean third parties refrain from filing trade marks applications or commencing use of a mark, saving you time on the enforcement side of things.

Reasons not to record

It is, however, not always necessary to record. While recordal is an administrative task, fees are still involved and they can add up particularly when a portfolio has a number of registrations.

An acquired portfolio can contain a suite of registrations that are not of commercial interest. This could be, as examples, old logo forms that are no longer in use or in territories of no commercial interest. In these events, it could be cost-effective to save recordal fees as, and although things can change, it is highly likely these registrations will lapse as they come up for renewal.

This can, however, sometimes be a false economy. If you re-file in the new owner’s name (for e.g. new forms of a trade mark) in countries that examine based on earlier rights, they may cite the old registrations for which recordal hasn’t been made. There can be ways to overcome these, but it can force incurring the costs of recordal or, with more risk, voluntarily surrendering the old registration.

Recording

The actual process of recording can be bureaucratic, especially when dealing with a portfolio of rights that stretches across numerous jurisdictions.

What’s needed is a methodical project management approach and one that has the experience and organisation to be cost-effective.

Outsourcing this process and granting authority to enable your provider to execute supporting documents is a great way of reducing this administrative burden.

There are some specialist firms that handle recordals inexpensively, but this often means looking at the recordal process in isolation.

Recordal firms just focus on putting a trade mark in the name of Company Z without analysing any chain of title issues or ensuring the paperwork is robust. Should you (or they on your behalf) be executing a Confirmatory Assignment that confirms an assignment that hasn’t been executed (e.g. because the rights were not sufficiently included in it)?

At Stobbs, we have a dedicated Recordals team that looks to strike the winning balance of providing legal expertise around the chain of title and the ability to manage the recordal process in a way that is cost-effective with a strong customer focus and clear status updates whenever required.