Thailand: Managing mergers and the renewal grace period

Since the Thai Trademark Act (No.3) came into force on July 28 2016, it has been possible for trade mark owners to file applications to renew their registrations within six months after the relevant expiration date subject to an official fee increase of 20 per cent. This six month renewal grace period has been of great benefit to many owners of trade mark registrations in Thailand. However, if the registered owner has merged into another entity before the renewal period, this merger needs to be recorded along with the late renewal.

While mergers are operations amply provided for under various Thai and foreign laws, the Thai Department of Intellectual Property does not recognise the specific transfer of trade marks through a merger of companies, preferring to class such an occurrence as an assignment. This is probably because provisions of the Thai Trademark Act dealing with the transfer of rights in trade mark applications and registrations (Sections 48 and 49) only provide for transfers in terms of assignment and inheritance. Therefore, to obtain legal protection for marks obtained through a merger transfer, the owner is forced to comply with laws and regulations on trade mark assignments.

The law requires that assignments be made in writing and filed at the Trademark Division of the Department of Intellectual Property (DIP). To record a trade mark assignment, DIP's regulations require that either the assignor or assignee must file an application to record the assignment along with 1) an original notarised copy of the assignment agreement and 2) the original registration certificate (for registered marks). If the recordal application is filed through a single agent, the agent would be acting for both assignor and assignee, and thus, 3) a notarised power of attorney (POA) for the assignor and assignee each must also be filed.

From the procedural requirements above, anyone with even a slight acquaintance with company law would see a series of impossibilities. Mergers, by definition, result in a single entity, as the target company is absorbed into the acquiring company. The target company (or, under Thai trade mark law, the assignor) no longer exists, and it is no longer possible for the recordal agent to obtain a POA from the assignor. The trade mark agent remaining on record for the subject registrations (if different from the recordal agent) no longer has any authority to act for the assignor as the latter no longer exists and has no acting capacity to pass on to such agent – nemo dat quod non habet. In other words, no one can act on behalf of the assignor in a merger recordal. Further, the assignment agreement must be submitted in original form showing both the signatures of the assignor and assignee on the same document. As the transfer of trade marks in a merger is likely effected through a merger agreement, filing an original merger agreement may not be desirable for many companies, and oftentimes a newly executed short form agreement is filed instead of a detailed agreement. Again, a new short form agreement is not an option to record a merger because the assignor no longer exists.

The obstacle course reaches its peak for a merger recordal filed together with a renewal application during the renewal grace period. As mentioned above, trade mark renewal is now possible within six months following the expiration date but the DIP's system does not allow printing of registration certificate duplicates during the renewal grace period. For ordinary assignment recordals, if the original certificate is lost or cannot be conveniently provided, it is possible to obtain its duplicate to fulfil the formal requirements of the assignment recordal. This is not an option when the recordal application is filed during the renewal grace period.

From the above, if a merger is envisaged or has taken place which results in a transfer of ownership in Thai registered trade marks, it is highly recommended that the parties take into account the need to record such a transfer early on, taking the following steps:

1) a Thai trade mark agent be designated to handle the recordals;

2) a POA be executed in favour of such agent by the target company (current registered owner);

3) a short form assignment agreement be executed by both the target and acquiring companies before the target company ceases to exist;

4) avoid recording the merger during renewal grace period; and

5) if recordal during renewal grace period cannot be avoided, locate the original registration certificates.

Dhanasun Chumchuay	Saowaluck Lamlert

Spruson & FergusonNos. 496-502 Amarin Plaza BuildingUnit Nos. 1806-1807, 18th Floor, Ploenchit Road, Lumpini Sub-District, Pathumwan District, Bangkok 10330 ThailandTel: +66 2 256 9164mail.asia@spruson.comwww.spruson.com