After a trademark right has been acquired, a trademark, as a type of intellectual property, is transferable from one party to another.718 The assignment of a trademark, like any other property right, has substantive and procedural requirements. Article 3 (4) of the ATML defines the transfer of a trademark as “an action as a result of which the ownership of a trademark shall transfer from one person to another person and including sale, donation, and inheritance and so on”.719 Furthermore, Article 17 of the ATML recognizes the transfer of a trademark and states that the transfer of a trademark shall be deemed valid so long as it has been registered in the CBR office in accordance with the provisions of the ATML.720 These Articles (3 and 17) constitute the legal provisions on the transfer of trademarks. No specific Articles have been allocated to defining and describing the transfer and licensing of a trademark either together with a transfer of trademark rights or without. As the ATML is silent in this regard, it would be better to refer to some other sources regarding the assignment of trademark rights.
716 - ATML, Art. 11.
717 - Article 10 of the ATML states: “Legal and real persons may apply for registration of a trademark either personally or through their respective legal representatives.”
718 - CHARLES R. McMANIS. Intellectual Property and Unfair Competition, 5th edn, THOMSON WEST,2004, p 158.
719 ATML, Art. 3 (4).
720 - Article 17 of the ATML states: “Trademarks are transferable and the transfer shall be valid if recorded separately with the Central Registration Office (Trademarks Registration Section) pursuant to the provisions set forth in this law and their relevant regulations.”
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Legally, there are two types of action regarding the assignment of trademark rights – the assignment of ownership of a trademark, and the assignment of rights of use of a trademark. The former implies the transfer of ownership from one person to another person (lawyers also call this assignment).
The latter is referred to as licensing.
4.7.1. Assignment
Assignment721 of a trademark hands over ownership of a trademark from a trademark proprietor (the assignor) to another person (the assignee).722 “An assignment consists of an outright transfer of rights”.723 When a trademark owner transfers the right of property of a trademark to a third party, the previous owner has no further rights to the transferred trademark. In order for transfer of trademark ownership to be legally valid, the registration office that acknowledges the legal right of the owner should be aware of the assignment of the trademark.724
Two types of assignment usually exist in practice. The first type is the assignment of a trademark with the assignment of the “goodwill of a business connected with a trademark”.725 In this method a trademark is not transferable without the “goodwill” of a trademark. The second type is the assignment of a trademark without the goodwill of a trademark, which is also called “assignment in gross”, in the course of which no rights to the business to which the trademark is attached are transferred to the assignee.726 Put simply, the first type of assignment is a transfer of a trademark with the business to which it has been attached, and the second type implies transfer of a trademark without the business to which it is attached. In civil law systems like Japan, France and Germany, a trademark can be assigned with or without assigning the goodwill associated with the trademark, whereas in the USA, transfers of trademarks without the association of goodwill are not valid.727
Article 21 of the TRIPS Agreement acknowledges both types of trademark assignment, as it specifies that “the owner of a registered trademark shall have the right to assign the trademark with or without the transfer of the business to which the trademark belongs”.728
721 - According to the ATML, Article 3 (5), assignment includes the “sale, donation, inheritance and so on”. See also: G. H.
C. Bodenhausen, Guide to the Application of Paris Convention, WIPO Publication No 611 (E), (2007), p. 105.
722 -Jeremy Phillips, Trademark Law A Practical Anatomy, p. 515.
723-Charles R. McManis, Intellectual Property and Unfair Competition, p. 161.
724 - Jeremy Phillips, Trademark Law A Practical Anatomy, p. 515.
725- Sheldon W. Halpern, Craig Allen Nard and Kenneth L. Port, Fundamentals of United States Intellectual Property Law, p.
350.
726 - Charles R. McManis, Intellectual Property and Unfair Competition, p. 161.
727 - Sheldon W. Halpern, Craig Allen Nard and Kenneth L. Port, Fundamentals of United States Intellectual Property Law, p.
350.
728 - WTO. TRIPS Agreement, Art. 21.
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As mentioned, Article 17 of the ATML only recognizes and defines the assignment of a trademark, but provides no detailed provisions concerning the different types of assignment mentioned above. Article 17 states that a trademark is transferable, but it is not clear as to whether or not it is with or without the goodwill of the business to which it was originally attached. However, according to Article 17 of the ATML, a trademark will only be valid if it has been registered in the CBR office and subsequently been published in the OG. If there is an objection regarding the assignment of a trademark, the objector can refer to the CBR office or the Commercial Court. The objection process with regards to assignment is also subject to Articles 25 and 26 of the ATML.729 It can be inferred from the context of Articles 3 and 17 of the ATML that both kinds of assignment are permitted. The lawmakers in Afghanistan did not pay close attention to this issue, which might be due to a lack of legal knowledge, or due to the fact that this has not occurred in practice in Afghanistan.
4.7.2. Licensing
Before touching upon licensing, in accordance with the Afghan legal system, it would be useful to describe the function of licensing from a development perspective. Generally, a license of a trademark is a permit awarded by a trademark proprietor, who is also called “licensor”, to another person, who is called “licensee”. Once a trademark proprietor issues a license, the owner still has and maintains ownership of the trademark.730 Currently, trademark licensing as a common business practice has a significant effect on the economic development and extending the domain of legal protection of trademarks. Likewise, in the economic epoch of globalization and foreign investment, trademark licensing has been viewed as one of the most productive aspects for the establishment of intellectual property.731 A license can be issued for all of the goods and services that a trademark is registered to cover, or the license may cover one or more of the goods and services specified in the registration.
Moreover, a trademark proprietor can issue a license to many different people, which may cover all the classes or one or two elements from those classes.732
As mentioned earlier, a trademark proprietor can hand over a license to a third party, allowing the latter to use the mark on a certain number of goods and services. However, at the same time, the licensor will retain the right to observe the quality of the products on which the trademark is used. This is referred to as “quality control,” which is usually reflected in the license agreement between the
729 - ATML, Art. 27.
730 -Sheldon W. Halpern, Craig Allen Nard and Kenneth L. Port, Fundamentals of United States Intellectual Property, p. 516.
731 - Vernika Tomar, Trademark Licensing & Franchising: Trends in Transfer of Rights, Journal of Intellectual Property Rights, Vol. 14, (2009), p. 399.
732 - Jeremy Phillips, Trademark Law A Practical Anatomy, p.518.
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licensor and the licensee.733 Unobserved or “naked” trademark licensing, similar to an “assignment in gross,” will damage the mark’s validity and cause it to lose its importance. In fact, such unobserved transferring of a trademark will be considered as an “abandonment” of the trademark. With regard to the degree of quality control, there is no consensus among scholars. Some argue that simply holding the right to apply quality control will be adequate “even if the licensor exercises no actual control”. Others believe that a licensor may put its faith in the licensee’s “voluntary efforts” to apply quality control himself. However, the most predominant notion is that the quality of goods and services to which the trademark has been attached mostly depends on real control on behalf of the licensor, and not on merely reserving the right to apply quality control or on trusting the licensee. Therefore, the licensor, in order to ensure that the quality of the goods and services is maintained, cannot only determine the specifications of the products or services, but can also manage recurring investigations or assessments and take samples of the product.734
Trademark licenses can take many forms, such as “exclusive licenses”, “non-exclusive licenses”,
“sole licenses”, “compulsory licenses” and “sub-licenses”.
a. An exclusive trademark license is permission that is given for a “single licensee to use the trademark”
exclusively. This kind of license excludes all other parties, sometimes even the trademark proprietor himself. Therefore, the price and value of an exclusive license is greater than other kinds of licenses.735 b. A non-exclusive license is a license which permits a different number of licensees to use a trademark for specific classes of goods and services simultaneously.736 It should be clarified that the terms and conditions for use of a trademark will be determined in the license agreement. It must be noted that the license agreement should provide details as to whether the license is exclusive or non-exclusive, whether it is intended for use in a specific geographical jurisdiction, as well as the issue of quality control provisions.737
c. A sole license permits one person to use a trademark license in specified classes of goods and services. In this type of licensing, the owner of a trademark mostly maintains the right of use of a trademark for himself. For example, if a licensee has not been able to produce a certain quantity of
733 - Sheldon W. Halpern, Craig Allen Nard and Kenneth L. Port, Fundamentals of United States Intellectual Property Law, p.
350.
734 - Charles R. McManis. Intellectual Property and Unfair Competition, p. 163.
735- Sheldon W. Halpern, Craig Allen Nard and Kenneth L. Port, Fundamentals of United States Intellectual Property Law, p.
521.
736 - Sheldon W. Halpern, Craig Allen Nard and Kenneth L. Port, Fundamentals of United States Intellectual Property Law.
p. 521.
737 - Deborah E. Bouchoux, The Law of Trademarks, Copyright, Patents, and Trade Secrete, p. 104.
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products within a fixed period of time, and there might be a risk of losing the market for the product, the licensor himself will produce and in doing so use the trademark that been has licensed to a third party.738 d. A compulsory license is a mandatory license which is given in contrary to the intention of a trademark proprietor. According to the compulsory license, the competent authority, as the owner of a trademark, will “freely license a trademark to any firm producing a product of the same quality and characteristic”.739 The ATML is silent on this issue and contains no provisions about compulsory licensing. In practice, there have not been any particular cases that have been solved by the Afghan Commercial Court and the CBR office concerning compulsory licensing.740
e. A sub-license is a license that is given by a licensee to another licensee. The conditions as well as the extent to which a licensee can grant a license for use of a trademark are mostly dependent on the terms and conditions provided by domestic law and the license agreement, which may provide some criteria for sub-licensing.741
As has already been mentioned, the ATML contains no provisions in regard to the licensing of trademarks in Afghanistan. However, in practice, through the development of foreign and domestic investment, there may be some enterprises and traders that desire to license a trademark to an Afghan company. In such circumstances, it would be better to find a solution for this important issue by drawing on the general principles previously mentioned. 742 It would be better for the legal authorities, at the time of revising the ATML, to take the issue of trademark licensing into account in order to improve the ATML.
At the same time, the ATML generally stipulates the assignment of a trademark, yet provides no further provisions about the mechanisms via which that should occur. Whenever there are regulations and procedural guidelines in place for the legal protection of a trademark in the future, it would be pertinent to consider the transfer of a trademark with goodwill or without goodwill.