An NCLT scheme transfers the transferor company’s intellectual property (“IP”) to the transferee company as part of the transfer of the undertaking. Section 232(3) provides that the assets and liabilities of the transferor company shall vest in the transferee company by virtue of the sanction order, without any further act or deed. But the statutory vesting does not automatically update the IP registries, and the transferee company must take separate steps to record the transfer with the trademark and patent registries.
The Statutory Vesting
The NCLT order is the instrument of transfer for the IP. The order vests the trademarks, patents, copyrights, designs, and other IP in the transferee company. The vesting is effective from the appointed date, and it does not require a separate assignment deed.
The Registry Requirements
The trademark registry and the patent registry maintain their own records, and the transferee company must apply to record the change of ownership. For a trademark, the application is made in Form TM-P within six months of the assignment. For a patent, the application is made in the prescribed form with the Controller of Patents. The registry may require the certified copy of the NCLT order and the scheme.
The Risks of Non-Recording
The failure to record the transfer creates a gap between the legal ownership and the registry records. The gap can cause problems in enforcement proceedings, in licensing transactions, and in due diligence. A third party who searches the registry may not be aware of the transfer, and the transferee company may face challenges in asserting its rights.
The Due Diligence
The scheme should include a detailed IP schedule, and the transferee company should conduct a due diligence of the IP portfolio before the effective date. The due diligence should identify the registered IP, the pending applications, the licences, and the encumbrances. The scheme should also address the transfer of the IP licences and the consent requirements.
A technically sound IP transfer requires the NCLT order, the registry applications, and a coordinated due diligence process.
Call to Action
Anuj Desai & Associates advises companies on the IP aspects of an NCLT scheme—from the IP due diligence and the scheme schedule to the trademark and patent registry applications and the enforcement of the transferred rights. If your scheme involves a significant IP portfolio, we can help you manage the transfer.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
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