Recording a license agreement

INTRODUCTION

The publication aims to clarify the practical side – factual and legal significance, necessary documents, requirements and procedure for recording of the concluded license agreements. The material was prepared with regard to trademarks, but, similarly, registry entries laid down in legislation of the other objects of Industrial Property (IP) present to a significant extent similar characteristics.
The immediate task, which solution is sought, is after familiarization with the text the parties to a license agreement to be able to make an informed decision concerning the fulfillment of the obligation to record the agreement.

LEGISLATION

The general provisions governing the license agreement and in particular the recording in the register kept by the Patent Office are laid down in Chapter 35 of the Commercial Law:

CHAPTER THIRTY-FIVE
LICENSE CONTRACT
Article 587 – Definition and form
(1) Under a license agreement the owner of a right over an invention, utility model, industrial design, mark, topology of integrate circuits or know-how, who shall be termed licensor, shall grant for compensation, entirely or in part, the use thereof to the licensee.
(2) The license agreement shall be made out in writing.

Article 590 – Registration of the contract
The license agreement shall be entered in a register of the Patent Office. It shall be effective vis-а-vis third parties after the registration.

A special provision is included in Article 22, paragraph 5 and 6 of the Law on Marks and Geographical Indications:

License Agreement
Art. 22. (1) The proprietor of a mark may permit the use of his mark in respect of all or some of the goods or services for which it is registered in all or part of the territory of the Republic of Bulgaria by means of a written license agreement.

(5) A license agreement shall be recorded in the State Register at the request of one of the parties, the request being accompanied by an extract from the license agreement with data identifying the licensee and the licensor, the mark and its registration number and the term of the license agreement, with the signatures and seals of both parties affixed thereto. The Patent Office shall issue a certificate of recording.
(6) The license agreement shall have effects vis-à-vis third parties as from the date on which it is entered in the State Register.

EFFECT OF THE RECORDING

In order to determine the meaning of the recording with regard to the validity of the license agreement it is necessary to examine the legal effects of the recording or the lack of it in the following directions:

  • Whether the recording is a prerequisite (conditio iuris) for a valid license agreement;
  • Whether the lack of recording leads to a void license agreement on the ground of contradiction to mandatory provisions (Art. 26, first paragraph of the Law on Contracts and Obligations).

Despite the terminological inconsistency, traditional for the Bulgarian legislator, it is obvious from the aforementioned provisions and undisputedly accepted that the recording is not a constituent element of the factual aspects of concluding the license agreement and is not a condition for its validity. The provision stipulates an accompanying obligation, and if it remains unfulfilled the parties suffer the resulting (negative) legal consequences.

As to whether the failure to comply with the obligation for recording can be categorized as a contradiction to a mandatory provision, which leads to a void contract, considering the fact that the provision is aimed mostly towards protection of the interests of the contracting parties it should be accepted that the failure to comply with the obligation for recording is not a ground for nullity. The opposite would mean that the parties are given a very easy way to infringe the contractual obligations- by pleading void agreement consequent to the unfulfilled recording requirements.

Although it is not part of the circumstances concerning the validity of the concluded license agreement, the recording in the State Register kept by the Patent Office is relevant in several practically important directions:

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