Pledging trademarks

by David Brambani


Building windows

Individual pledge

Until 1 March 2023, it was not permissible to separately pledge registered trademarks pursuant to Norwegian law. Trademarks could only be pledged as part of a pledge on operating equipment under the Norwegian Mortgage Act.

In accordance with the trademark directive (2015/2436/EU), the Mortgage Act § 4-11 now permits a registered trademark to be pledged as such. Non-registered trademarks can still not be separately pledged.

Trademark applications and licenses may also be pledged. In addition to international trademark registrations with effect in Norway, or where such effect is claimed in Norway, only Norwegian registered applications, licenses and trademarks may be pledged.

The revised Trademarks Act also allows establishment of compulsory lien in registered trademarks, cf. the Trademarks Act § 55.

Effect of registration

New rules on legal effects of registration in the trademark register were also implemented in March 2023. Until then, Norwegian legislation lacked rules regarding the priority of rights to trademarks in collisions between voluntary acquisitions or conflicts with creditors.

In line with the revised Mortgage Act § 4-12, registration of pledges is crucial, as creditors are not required to respect older pledges that are not registered when they register their compulsory lien or when bankruptcy is initiated. Specific pledges are legally protected against both voluntary acquisitions and creditor seizures upon registration of the pledge in the trademarks register.

In collisions between voluntary acquisitions involving the transfer of rights to a registered trademark, or other specific rights connected to a trademark, acquisitions that have been submitted for registration take precedence over older acquisitions that are not registered, cf. the Trademarks Act § 56 b (1). However, the older acquisition shall have priority if the younger acquisition is based on a voluntary acquisition and the acquirer knew or should have known of the older acquisition at the time the claim for registration was received by the Norwegian Industrial Property Office, cf. the Trademarks Act § 56 b (3).

It should be noted that objections from the grantor of rights in a trademark shall not be forfeited upon registration in the trademarks register, even if the acquirer was in good faith, cf. the legislation's preparatory works in Prop. 43 LS (2019-2020) p. 75.

The new rules in the Mortgage Act §§ 4-11, 4-12 and the Trademarks Act § 56 b only apply to rights acquired from 1 March 2023 or after.

How to pledge?

In order to pledge a registered trademark, the Industrial Property Office recommends using its form available in "Altinn".

In accordance with the Trademarks Act § 56 a, the Norwegian Industrial Property Office requires documentation for registering the pledge. A copy of the mortgage agreement will normally be sufficient documentation.

Why individual pledge?

On the other hand, it should be carefully evaluated in each case whether an individual pledge may constitute an unwanted hindrance upon a later sale of the business that holds the trademark. The option on pledge of the trademark as part of a pledge on operating equipment should also be evaluated in view of the particular circumstances of the trademark owner's business.

If the trademark is of considerable value and is part of a transaction where the seller gives the buyer credit on payment of the purchase price, then the credit should be considered secured with a registered pledge on the transferred trademark.

It should also be noted that the preparatory works for the Trademark Act § 56 a explicitly states that:

"In cases where a seller of a trademark wishes to make a reservation upon the transfer of payment of the remaining purchase sum or other types of reservations for the benefit of the seller, such a reservation must be taken in the form of a pledge established pursuant to the new provisions of the Mortgage Act §§ 4-11 to 4-12 and be registered in the trademarks register in accordance with the provisions of the paragraph here. Legal protection for such a reservation will be achieved pursuant to § 56 b.”, cf. Prop. 43 LS (2019-2020) p. 153 (Our office translation.)

Do you have any questions?