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trademark as security ?

service

1. Can trademark (which is an intangible asset) of one of the productline of a company be given as security against a loan from a bank?

2. under which provisions of a law?

 
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advocate

No, a trademark is an intangible asset, that is why it cannot be mortgaged. The bank has no provison to accept that. 


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Corporate Commercial & IP Lawyer

 

Dear Mr. Anand,

Tangible properties can create only good will, nothing beyond that.  if it is a good brand, it can be sold for a huge value. It comes Valuation of IP during mergers and acquisitions.


Feel free to contact me, if you need further details.

Thanks

Nagaraj

Trademark Attorney & IP Lawyer

IP Lex Global Services

Email: nagaraja_bs@iplexglobal.in

Mob: 9902007635


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service

If it can not be mortgaged then can it be hypothecated?  i have come across a case wherein a leading private bank sanctioned loan to a company wherein company's one of the trademarks was hypothecated. A deed of hypothecation was also executed.

Is there any provision in law where it mandates that intangible asset like trademark can not be mortgaged or hypothecated ?

pls guide

 
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service

one more point, In the above case, the trademark was given as a collateral security. i want to know it's legality.
 

 
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Advocate

As trade mark is also a kind of property, it can be mortaged or hypothecated through mortgage or hypothecation deed. Even the right of usage can be assigned through deed. 

Same in copyright matters too. There royalty can be shared on decided propertions by both the parties or it can be assigned to the other party altogether depending on the terms agreed upon. 

Same with Patent matters too. 

 
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Ipr Lawyer(Trademarks Patents Designs and Copyrights)

Hi!

 

Yes Trademarks can be offered as collateral. In fact Kingfisher is the first company in India who has been given loan based on the valuation of its Trademarks.

Summit Aggarwal

www.iprindia.in

 
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A Company has a Brand registered in Mumbai. The Co. is also registered in Mumbai however it has a Factory in Delhi. Can it sign hypothecation Deed  for charging such Brand in favour of a Bank at Delhi instead of Mumbai?

 
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Ipr Lawyer(Trademarks Patents Designs and Copyrights)

Well since the mark is registered for the whole of India. The same can be done. However if the Delhi Bank is offering the loan against the same, the stamp duty for the docs will be according to Delhi ofcourse.

 
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This is not a question of law its a question of commerce. If the bank is willing to apportion value to the trademark and grat you a loan with the trademark as security then yes, its possible. Just out of curiosity, what would they do in case you default? How will they enforce the security? Will they auction your trademark (presumably for the goodwill it carries) to the highest bidder? Seems commercially unviable, however, if the bank is willing to do it it's their neck not yours.

 
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