Trademark licensing and assignment in Kenya are two quite different ways a trademark can change hands, and confusing them causes real problems. An assignment transfers ownership of the mark itself to a new proprietor. A licence leaves ownership where it is and simply permits someone else to use the mark, usually in exchange for royalties and subject to conditions the owner sets. Kenyan law treats these as distinct transactions under the Trade Marks Act (Cap 506), with different registration steps, and getting the wrong one, or failing to register either properly, can leave a business unable to enforce rights it thought it had.
Assigning a Registered Trademark
Section 27 gives the registered proprietor of a trademark the power to assign it and to give a valid receipt for any consideration paid. Section 25 then places restrictions on how that assignment can happen where the proprietor holds more than one similar or associated mark, precisely to prevent a scenario where marks likely to deceive or confuse the public end up in different hands. Where an assignment is made without the accompanying business goodwill, meaning the buyer gets the mark but not the underlying business reputation attached to it, the Registrar’s directions on advertising that assignment must be followed before it will proceed, and evidence that this advertisement requirement was satisfied must be produced.
Registering the assignment is not a formality that can be skipped. Section 28 requires anyone who becomes entitled to a registered trademark by assignment to apply to the Registrar to register their title, and the consequence of not doing so is set out plainly in section 28(3): a document recording an unregistered assignment cannot be admitted in evidence in any court to prove title to the trademark, except as between the parties to that document itself. In practice, this means a buyer who never registered an assignment can enforce it against the seller, but not against a third-party infringer, since the court will not accept the assignment document as proof of ownership in that dispute. A buyer who has paid for a trademark and skipped registration owns a right that is real between the parties but functionally invisible to everyone else.
Licensing a Registered Trademark
Licensing works through a different mechanism. Under section 31, a person permitted to use a registered trademark under licence is registered as what the Act still formally calls a registered user, using Form TM 48, submitted jointly by the proprietor and the proposed licensee. The application must set out particulars of the relationship between the parties and the degree of control the proprietor will retain over the licensee’s use of the mark, since Kenyan trademark law, in common with most common law systems, is built on the idea that a mark identifies a single, controlled source of goods or services, and a licence granted with no quality control provisions at all risks undermining that function. A well-drafted licence agreement should therefore specify the proprietor’s right to inspect the licensee’s goods or premises, quality standards the licensee must meet, and consequences for failing to meet them, not simply because it is good commercial practice but because it supports the registration itself.
A registered licensee gains real, independent enforcement standing that an unregistered one does not have. Section 7(3) and 7(4) of the Act give a licensee the right to call on the proprietor to bring infringement proceedings, and if the proprietor refuses or fails to act within two months of being called upon, the licensee may bring the infringement action itself, in its own name, joining the proprietor as a defendant. This is a meaningful commercial protection for a licensee who has invested in building a market for a licensed brand and finds the proprietor unwilling or too slow to act against a copycat. It is only available to a registered licensee, so an informal, unregistered licensing arrangement leaves the licensee dependent entirely on the proprietor’s willingness to sue.
Section 7(12) closes off an assumption some licensees make: a licensee has no assignable or transmissible right to use the mark. A licence is personal to the licensee named in it, and cannot be sub-licensed or passed on to a successor business without the proprietor’s fresh agreement and a fresh registration, regardless of what the licensee’s own corporate documents say about assigning its contracts generally.
Drafting Points That Matter in Practice
Beyond the statutory registration mechanics, a trademark licence agreement should address territory and exclusivity clearly, since an exclusive licence that is silent on whether the proprietor can still use the mark itself, or license others, in the same territory is a common source of later disagreement. Royalty structure should specify whether payments are calculated on gross or net sales, in which currency, and on what reporting schedule, and the agreement should state what happens to existing stock bearing the mark once the licence ends, since a licensee left holding unsold branded inventory after termination without a sell-off period is a predictable dispute. Termination triggers should cover both breach and, separately, a change of control of the licensee, since a proprietor who licensed a mark to one company may have real objections to that licence continuing unchanged after the licensee is acquired by a competitor.
Using a Trademark as Security
A registered trademark is an asset a business can offer as security for a loan, and lenders increasingly ask for this where a brand is a significant part of a company’s value. Because the Trade Marks Act’s registration provisions govern proprietorship rather than security interests specifically, a charge over a trademark is typically structured and perfected through the general company charges regime under the Companies Act, registered against the company rather than annotated directly on the KIPI trademark register in the same way an assignment or licence is. A lender relying on a trademark as security should confirm the mark is unencumbered by an existing licence that could limit its resale value, and should check whether any existing licence agreement restricts the proprietor’s ability to grant security over the mark in the first place, since these clauses are common in exclusive licences and easily missed during a rushed facility negotiation.
How This Connects to Enforcement and Registration
Assignment and licensing decisions do not happen in isolation from the rest of a brand’s trademark position. Before taking an assignment of a mark, a buyer should confirm the mark is validly registered and free of pending opposition, covered in our guide to KIPI trademark opposition, and should understand the underlying registration and renewal position set out in our guide to trademark registration in Kenya. A licence or assignment agreement should also be checked for consistency with any trade secret or confidential know-how transferred alongside the mark, since brand licensing frequently comes bundled with access to formulations, processes, or customer data that need their own confidentiality protection separate from the trademark registration itself, a point covered in our guide to trade secrets in Kenya. A licensee relying on its section 7 enforcement rights should also understand the substantive infringement standard it will need to meet, discussed in our guide to trademark infringement and enforcement. Brand owners licensing a mark across several African markets through ARIPO should also see our guide to ARIPO and the Banjul Protocol, since a licence covering Kenya and a licence covering a Banjul member state are not interchangeable documents.
For advice on drafting and registering trademark assignments and licences, structuring royalty and quality control terms, and protecting a licensee’s enforcement rights, consult our intellectual property practice. We advise brand owners across Kenya from our offices at Nextgen Mall, Nairobi.
