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What is Trademark Due Diligence?

Trademark Due Diligence (TDD) is the scrupulous process of examining and analyzing all facts and factors associated with a trademark, especially prior to entering into an agreement or transfer of its ownership. Though trademark due diligence may be required by both the buyer and seller of a trademark, the acquirer/buyer is more concerned with this thorough investigating process.

This webpage offers concise but very enlightening and beneficial information concerned with the trademark due diligence to be performed by a potential acquirer, well before buying or acquiring a trademark together with all the rights attached with this, from a seller company. The transfer of the ownership over a trademark and thus acquisition of the trademark, involves many other processes besides this vital and very significant process of due diligence. These processes associated with assignment of a trademark are described separately in the lower section.

Immense is the importance of trademark due diligence performed by the acquirer/assignee, well before the completion of the assignment by the assignor/seller. In short, a comprehensive and wise trademark due diligence by an acquirer can make both the business and reputation of the acquirer/assignee; and on the other hand, the lack of proper due diligence may result in business losses and ignominy.

Trademark Due Diligence - Acquisition and Post Acquisition Issues and Compliances in Indian Perspective

The acquisition and maintenance of a trademark broadly involve the following processes/tasks to be done by the acquirer/assignee:

  • Due diligence regarding acquisition of the specified trademark/service-mark from the assignor/seller
  • Discussing and Entering into an Agreement with the Seller/Assignor
  • Completion of Assignment
  • Recording the Assignment with the relevant Registrar of Trademarks
  • Subsequent Portfolio Management of the newly-acquired trademark

The due diligence regarding acquisition of a trademark (usually duly registered and established in the market) should cover the following pointers and factors --- the current status of the portfolio management of the specified trademark; brand image and prominence of the trademark in domestic or/and foreign markets; business reputation and goodwill of the seller company/assignor; the strategic requirements for and future benefits of acquiring the trademark; the most beneficial type of assignment - assignment with goodwill or without goodwill; any risks or pitfalls in the acquisition; prospects of licensing and franchising of the trademark to be acquired; and many other significant considerations.

After due diligence and final conclusion by the acquirer, next comes mutual discussion and entering into an agreement with the assignor. The agreed type of assignment must be clearly stated, i.e. assignment with goodwill or assignment without goodwill, and then the assignment deed will be drafted and executed. Assignment (transfer of ownership) is to be made in writing as per the provisions given in the Section 2(1)(b), and in the Sections 37 to 45 of the Indian Trade Marks Act of 1999. After completion of assignment, the assignee by himself or together with the assignor, must submit an application in the prescribed Form to the concerned Registrar of trademarks, for his registration as a subsequent owner/proprietor in the Register of Trademarks.

After proper recording/registration of the assignment with the Registrar, the assignee/acquirer will then be required to perform all necessary legal/regulatory and commercial processes associated with the newly-acquired trademark/service-mark, to secure and update the portfolio management of the trademark.

To receive expert and efficient services from our prestigious IPR law firm of India for trademark due diligence and acquisition of any trademark/service-mark, Indian and foreign entities may readily call over: +91-8800-100-281; or send their respective queries or requests at: