India: Joint Ownership Of Trademarks

Last Updated: 9 June 2017
Article by Martand Nemana

Most Read Contributor in India, December 2018

INTRODUCTION

An average common consumer always relates to a product based upon the comfort, compatibility and satisfaction which is derived from the use of the same; these traits evolve over a considerable period of time, and are known as the "goodwill" of the product. The manufacturers and merchants have to endure fierce competition in providing their goods and services to the consumers, which makes it difficult to sustain in the market.

Given the fierce competition, any entity providing goods and services shall always aim at being the best in order to maintain the established goodwill and reputation. Going a step ahead in order to portray consumer centric approach, companies come together to establish themselves as a new joint entity to provide goods and services in collaboration with each other which they're individually well known for in the market. In order to get a local face which is closer and easily acceptable by the local customer base, most entities/business houses come up with a local name which is used as a business name in a particular jurisdiction and hence apply with a joint ownership of Trademark. With the emergence of this new joint entity the companies try to provide goods and services which shall together garner reputation and goodwill based on the established market standards.

As per the TM law, all the joint owners of the trademark will be treated as owner of the TM jointly and no quantification of rights is possible as per the provision of Trademark Marks Act, 1999. Whereas, the financial outcome arising out of the use of jointly used TM, can be quantified, as per the terms & conditions agreed upon while entering in to the said joint ownership.

WHAT ARE JOINTLY OWNED TRADEMARKS?

When more than one legal entity come together to act as proprietor of a trademark, either for a joint entity created by both or to share and act in accordance for the good and services provided jointly by them; they're said to be joint owners of trademark. As per Section 24 of The Trade Marks Act, 1999 - Joint ownership of trademark is a mutual agreement between both the entities/parties to hold the mark together, but neither of them shall be said to be the absolute owner of the mark and the then registered trademark shall be registered in favour of both the parties, held together.

While entering into joint ownership/proprietorship of Trademarks as per Section 18 of The Trade Marks Act, 1999 it has been laid down that the either of the Applicant necessarily needs to have principle place of business in India, and if not then, it would be mandatory for them have their address for service in India.

Apart from the intellectual property, the joint ownership also witnesses' joining of the economic value of the trademark is crucial to each individual joint owner. The proceeds generated from any business from the said joint ownership/venture shall have to be divided equally or as per the terms of the contract agreement. The balance of interest thus established shall also be helpful in determining the obligation and share of responsibility of each individual entity.

NECESSARY GUIDELINES TO BE FOLLOWED WHILE REGISTRATION

As per the Indian Trademark Law, while registration of a jointly owned trademark, description of mention should be given in the following format:

In case of joint owners, the full name of each of the joint owners, whether individuals or companies, is essentially required. A trading style or business name is not acceptable as the name of the joint owners and, if given in addition to the joint owners, such names will be recorded separately.

"M/s XXXXXXXXXXXX, A Company registered in India under the Indian Companies Act, 2013

AND

M/s YYYYYYYYYY, A Company registered in India under the Indian Companies Act, 2013... Are claiming to be the joint ownership of trademarks."

The registered mark shall thereby be used jointly only by all the applicants mentioned in the application.

CONDITION AS TO JOINT USE OF TRADEMARKS:

In a case of jointly owned trade mark, the condition should be "The mark shall be used jointly by all the applicants mentioned in the application"; or

"The mark shall be used only in relation to goods or services with which all the applicants mentioned in Section 24 of the applications are connected in the course of trade with all the joint applicants and it shall not be used against each other.

ADVANTAGES OF JOINTLY OWNED TRADEMARKS

1. SURETY OF USE

The joint proprietors of the jointly owned trademark shall be responsible for the use and for the goods and services provided under the trademark. However, no single user of the jointly owned trademark can exercise total control over the mark or the good will generated from the same.

2. COMPLETE DISSOLUTION

In a case of dissolution of the jointly owned trademark no single owner can claim complete ownership over the trademark; the complete bundle of rights shall be dissolved instantly and shall not be available for single use, thus preserving the generated trust and goodwill of the mark over the period of usage.

CHALLENGES UPON DISSOLUTION OF A JOINTLY OWNED TRADEMARK

1. CLOUD OVER JOINT OWNERS TO EACH CONTINUE TO USE THE MARK AFTER TERMINATION

Upon dissolution of the trademark each joint owner of the mark, shall not be eligible to use the mark any further on an individual basis. As per the conditions mentioned during the time of registration, the rights of use are vested in the owners strictly with the condition precedent that the use of the trademark would be on a joint basis, and thus this nullifies the aspect of single owner using the mark.

2. ONE OWNER PURCHASES THE MARK AND LICENSES IT THE OTHER OWNER

Irrespective of the grounds of dissolution, if both the joint owners of the trademark mutually agree, to transfer the rights vested in them as per the provisions of the Trade Marks Act, 1999 (through assignment), to either of them, to carry forward the business individually under the same joint trade-name, the same can be carried out by the conditions mutually agreed upon by them at the time of dissolution.

As per the general practice, full-fledged licensing is carried out to avoid complexities further. However, an option of mutual settlement in private is also open to the joint owners. The parties involved in the joint ownership of the mark can transfer the mark to each other on basis of "buy me/buy you" clauses. Further, the parties together can sell/license/assign the mark to a new party which may be interested to carry out business under the trade-name. These kinds of settlements are seen when the parties have no interest left to completely use the mark upon dissolution. The proceeds from these kinds of transactions are generally shared equally between the parties involved in the joint ownership.

3. DISSOLUTION OF INDIVIDUAL IMAGE / CREDITS

In case of dissolution of a jointly owned trademark, the individual image generated by the prolonged use of the mark shall be dissolved accordingly which would in turn dissolve the goodwill of the mark. No individual owner of the mark shall be allowed to use the mark or any related mark either individually or in association unless clear permission has been given by all the joint owners of the earlier mark. Also, neither of the party shall be individually allowed to take any credit for the mark or the goodwill or revenue generated by use of the jointly owned trademark.

EXAMPLES OF JOINTLY OWNED TRADEMARKS:

  • In 2014, Hero Honda Motors Limited, a joint involvement between Hero and Honda motors was dissolved and a new Indian entity Hero MotoCorp Limited was established which got to carry out business using the earlier established tradename.
  • In 1999, VOLVO sold its Car manufacturing automotive division to FORD MOTOR COMPANY, yet still had rights over all other automotive divisions such as its truck business. This cause called for a sharing of rights of trademark and the hence VOLVO gave control of its car manufacturing automotive division to FORD.
  • In a 2001 joint venture between Sony and Ericsson to make cellular communication devices, the parties combined their respective trademarks, while maintaining their separate identities.

CASELAWS ON JOINT OWNERSHIP

1. ELLIOT OPTICAL COMPANY LTD.'S [APPLICATION (1952) 69 RPC 169]

In the scenario where the goods manufactured, have been sold under a specific mark by the applicant directly to certain customers and partly by the opponent to certain customers, joint ownership of trademark in such scenario shall then be refused.

2. POWER CONTROL APPLIANCES V. SUMEET MACHINES PVT. LTD. 1994 AIR SCW 2760; (1994) 2 SCJ 644: 1994 (2) SSC 448

As per law relating to trademark, there can only be one source and proprietor of one trademark and the trademark cannot have two origins. Hence, when the defendant proclaimed himself as a rival of the plaintiff, the joint owner, it was not permissible under the law. Joint ownership cannot be used in rivalry or in competition with each other.

3. GUDAKHU STAR & LABEL TRADE MARK [1990 PTC 216];

The Trademark was the property of one of the partners, and thus became the property of the firm. In other words all the partners became the owners of the trade mark and the copyright. Earlier dissolution of the earlier partnership had completely dissolved the rights of the partners over the trademark. Though having formed a different partnership and using the trademark similar to the earlier, the partners and the firm are not eligible for using the mark due to lack of rights.

4. RAMAPPA V. MONAPA [AIR 1957 MAD: ILR (1957) MAD 206]

The Madras High Court has held that where the application for rectification of the Registrar was made on the basis that the registration of the mark was obtained by fraud, and it is found that the allegations are correct, the court must direct the entry to be expunged from the register and the order of joint registration should be annulled.

5. IN RE PALMOLIVE [(1932) 49 RPC 269, 278]

It has been laid down that before a mark could be registered in the joint names of the parties to the joint ownership, as engaged in a joint adventure, it must be established that all the goods which would be traded under the name of the mark are to be placed and should pass through the hands of both the parties, i.e. joint owners. For examples, if the joint proprietors were sharing the profits, all of them would be connected in the course of trade with the trade mark.

JOINT OWNERSHIP AND FINANCES

Observing from a global perspective, instances have iterated the where clear demarcation has been laid down between ownership and sharing of finances. All the joint owners of the trademark shall have no quantification of their rights over the ownership of the mark. However, the financial outcome from the use of the trademark can be quantified and be controlled by the conditions laid down and mentioned either in the contract or the agreement for joint ownership. Joint Ownership of trademark is mostly confused with Co-Ownership and hence it has been seen on various occasions that licensing of the rights of the parties to each other acts as an escrow guarantee to safeguard the interest involved in the ownership.

CONCLUSION

The inception of Intellectual Property was seen only to be as a set of rights to safeguard the vested interests of the owners. Given the evolution in the changing course of time and in light of the developments which have taken place all through the era, we now witness various concepts which require higher threshold of interdependence and trust. The joint ownership of trademark is a result of one such evolution which has proved to be a multi faceted boon for the IP industry. Despite having its share of negativity, joint ownership of trademark shall always be the preferred way of creating a new face of the mark of a single company based on the geographical boundaries. The amount of benefit vested shall be a prerogative of the user and the owner of the mark.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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