Trademark agreements

In our previous articles, we discussed the national and international registration of trademarks, as well as the resolution of disputes in the field of trademarks. The subject of this article is agreements in the field of trademarks.

1. Introduction.

Registration of a trademark means that legal protection is granted to it. However, after registration, rights in a trademark are not limited to use by the right holder itself. The right holder may assign those rights to another person, grant the right to use the mark under a licence agreement, and may also pledge the rights in the trademark.

Thus, there are three main types of agreements in the field of trademarks:

1. Agreement on the assignment of rights in a trademark;
2. Licence agreement granting the right to use a trademark;
3. Agreement on the pledge of rights in a trademark.

Each type of agreement is discussed in more detail below.

2. Agreement on the assignment of rights in a trademark.

The assignment of rights in a trademark under an agreement is governed by Article 28 of the Law of the Republic of Azerbaijan “On Trademarks and Geographical Indications”. In this case, the right in the trademark is transferred to another person in full or in respect of certain goods and services.

At present, the registration of the above agreements is carried out by the Intellectual Property Agency of the Republic of Azerbaijan. The same procedure is governed by the “Rules for Registration of Agreements Concerning Trademarks” (hereinafter, the “Rules”), approved by Resolution No. 139 of the Cabinet of Ministers of the Republic of Azerbaijan dated 15 September 2009.

The Law “On State Duty” provides for separate state duties for registration of an agreement on the assignment of rights in a trademark to another person:

18.11-7. For registration of agreements on the assignment of rights in a trademark:

18.11-7.1. for one trademark under an application – AZN 35;

18.11-7.2. for several trademarks under applications (for each trademark exceeding one) – AZN 20;

18.11-7.3. for one registered trademark – AZN 60;

18.11-7.4. for several registered trademarks (for each trademark exceeding one) – AZN 50.

At what stage may rights in a trademark be assigned?

Rights in a trademark may be assigned to another person in two cases:

1. Assignment of rights under an application filed for registration of a trademark;
2. Assignment of rights in an already registered trademark.

In the first case, this does not concern the assignment of an exclusive right in a trademark that has not yet been registered, but rather the assignment to another person of the right under an application filed for registration of the trademark. Under the Rules, in such a case the right of the new holder takes effect from the date on which the application was filed.

In the second case, the right in an already registered trademark is transferred to another person. The right may be assigned in respect of all goods and services for which the mark is registered or only a certain part thereof. The assignment of the right must not create a misleading impression for consumers regarding the goods, services or manufacturer.

The agreement must clearly specify the goods and services in respect of which the right is assigned. This is particularly important where the rights are assigned only partially, in respect of certain goods or services.

Amendments and additions may subsequently be made to a registered agreement. Amendments to a registered licence agreement are made by agreement of the parties, and the relevant amendments are entered in the State Register. Information on amendments and additions is also published in the Agency’s official bulletin.

An agreement may be terminated early by mutual agreement of the parties or on the basis of a court decision. If unilateral termination of the agreement is provided for, such right and the conditions for its exercise must be specified in the agreement itself. Information on early termination is also entered in the State Register and published in the official bulletin.

3. Licence agreement granting the right to use a trademark.

It should be noted that the relevant relations are governed by the Law and the Rules referred to above.

The right to use a trademark may be granted to another person under a licence agreement. There are three types of licence agreements:

• Exclusive licence – granted to only one licensee. In this case, the licensor loses the right to use the mark in respect of the goods and services specified in the agreement, as well as the right to grant such right to other persons.
• Non-exclusive licence – the licensor retains both the right to use the mark itself and the right to grant licences to other persons.
• Sole licence – granted to only one licensee. In this case, the licensor retains the right to use the mark itself but may not grant licences to other persons.

Under the Rules, a licence agreement must specify its subject matter, term, territory of validity, the parties to the agreement and their addresses. In addition, the quality of the licensee’s goods or services must not be lower than the quality of the licensor’s goods or services, and the licensor must monitor compliance with this requirement. In this regard, pursuant to paragraph 1.12 of the Rules, a document setting out the requirements for the quality of the goods produced or services provided must also be attached to the agreement.

Termination, early termination and amendments to the agreement are carried out in accordance with the procedure set out in Section II of this Article.

A licence agreement is registered with the Intellectual Property Agency. Under the current tariffs, a fee of AZN 120 is payable for registration of a licence agreement in respect of one trademark, and AZN 75 for each additional trademark exceeding one.

4. Pledge agreement.

Pursuant to Article 28 of the Law “On Trademarks and Geographical Indications”, exclusive rights in a registered trademark may be pledged to another person under an agreement.

The pledge of exclusive rights in a trademark is governed by the “Rules for Registration of a Pledge Agreement”, approved by Resolution No. 146 of the Cabinet of Ministers of the Republic of Azerbaijan dated 18 September 2009.

Under the Rules, a pledge agreement must be concluded in writing and notarised. The agreement must specify the names and addresses of the parties, the subject matter of the pledge, the nature of the obligation secured by the pledge and the term for performance of that obligation. A pledge agreement may be concluded only in respect of exclusive rights in a registered trademark valid in the Republic of Azerbaijan, and the pledge right arises from the moment the agreement is state-registered.

A pledge agreement is registered with the Intellectual Property Agency. Under the current tariffs, a fee of AZN 90 is payable for registration of an agreement on the pledge of exclusive rights in a registered trademark.

5. Conclusion

This article has considered three main types of agreements relating to trademarks. Each agreement serves a different business need. For example, where a company within a group of companies wishes to retain the rights in a brand while allowing other group companies to use it, a licence agreement may be the more appropriate solution; where ownership of the brand is to be transferred to another person or the brand is to be used as security for financing purposes, other contractual mechanisms apply.

At Ironwood Consulting, we provide legal support and assistance in identifying the specific needs and legal objectives of your business, selecting the appropriate contractual model, preparing the agreement and registering it with the Intellectual Property Agency.