Where a registered trade mark has vested in the liquidation estate, the trade mark registration may be sold, with the assignment being signed by the liquidator as assignor (TMA 1994 s.24(3)). The UK IPO must be informed of the assignment for it to be valid (TMA 1994 s.25(3)). To record the transfer of ownership of a registered trade mark form TM16 should be used.
When considering whether a mark should be bought or sold in these circumstances, there are a number of potential issues to consider, such as splitting trade marks into ‘job lots’ and selling them separately from the goodwill of the business, charges and licences.
Splitting trade marks into ‘job lots’ separate from the goodwill of the business
While trade marks can be assigned as property separate from the goodwill of the business (TMA 1994 24(1)), whoever is planning the sale and/or purchase of that mark must take care to divide up a portfolio of marks owned by an insolvent company carefully. Unregistered trade marks can become worthless if they are sold in a way which splits the goodwill from the remaining assets of the business because such division may result in the trade mark become confusing for the consumer in consequence of an inability to identify the origins of products associated with that mark.
One recent example of such a situation involves the owners of the MG mark. When MG Rover went into administration in 2005 its key assets were purchased by Nanjing Automobile Group. Nanjing, which owns the majority of the UK registered “MG” marks, is now in dispute after Rover went bankrupt, when PricewaterhouseCoopers (who were dealing with the administration of the business estate) sold another MG Mark, MG X-Power, to a small UK company. The Birmingham Mail reported the story back in April 2008. The UK company launched invalidity proceedings against all the MG trade marks for the very reason that the assets of MG were split up in that manner.
“NAC has made it clear to Mr Riley and MG Sports and Racing Ltd throughout that NAC is the owner of the global MG brand... NAC has also made it clear that NAC cannot allow MG Sports and Racing Europe Ltd to continue using the MG and/or the MG X Power names.”Who knows how this will end? One risk is that the MG brand might be rendered valueless for deceptiveness. The lesson here is to ensure that one buys all similar/identical marks from a liquidated company to avoid such risks.
If it is the case that the company in liquidation is in receipt of payments under a condition of the sale of a registered trade mark, rather than because they have licensed the mark, the payments cannot be claimed as an asset as the trade mark will not actually vest in the estate of that company. In this instance the payments should be treated as income and can be claimed under an income payments agreement or an income payments order.
In absence of a express provision in a licence agreement which terminates the licence, a licensor will often be keen to ensure that its relationship with an insolvent company is brought to end as quickly as possible for a number of reasons including: the prospect of tarnishing or damage to the brand as a result of association with the insolvent company; the ability to attract a new licensees who will be able to exploit the mark more effectively; and the risk of the licence being sold to an unknown third party by the liquidator, particularly damaging if the licence is sold to a competitor brand.