India: The Trade Name Game

Last Updated: 7 July 2008
Article by Manisha Singh

Anybody looking for commercial viability cannot ignore the facet of having a mark that speaks for itself. Infringement suits take place day in and day out to beat the vicious rival. Splits, buy-outs, mergers and acquisitions are also often dwelling in the trademark ownership conflict. The reputation, recognition and relation that a trademark builds for a product is primarily what keeps products staging.

The protection of trademarks in India, vests in the principle of protection of goodwill and repute. The Indian law very clearly states that the right to use a mark vests with the owner. Ownership may be acquired through a process of application, examination, publication, opposition (if any) and registration. Section 28 of the Trademarks Act, 1999 confers an exclusive right to use the mark upon the trademark owner. The section also prescribes that the exclusive right to use the mark subject to the limitations that are imposed upon the registration, (S. 28 (2)). Further, the exclusive rights conferred by registration shall not be operational against other registered proprietors of identical or similar marks (S. 28(3)) or honest concurrent use of the same or similar mark (S. 12).

However, the owner of a trademark may not essentially be the "holder" of the trademark. The Indian trademark edicts provide for transmission, assignment and licensing of trademarks. The terms though may sound synonymous, have quite a stark degree of difference. S. 2(1)(ac) of the Trademarks Act, 1999 clearly distinguishes between "transmission" and assignment stating:

"Transmission" means transmission by operation of law, devolution on personal representative of a deceased person and any other mode of transfer, not being assignment."

Transmission of unregistered marks may take place with or without goodwill of the business concerned. This is referred to as "assignment in gross". The Indian law demands that assignment be necessarily in writing, with the consent of the Registrar (S. 43). However, while taking note of such assignment, the Registrar is not bound to go behind the terms of the assignment, so as to witness if the assignment would lead to destruction of the mark, by acting in a deceptively similar fashion.

Licensing of a registered trademark does not confer any proprietary rights upon the licensee, but is merely a permission to use the marks. This prevents the licensor from being accused of infringement while conferring rights and duties upon both the licensor and the licensee. Prior to the Trademarks Act, 1999 coming into force, the concept of "licensing" was absent in the Indian jurisdiction. However, the concept of "permitted to use" did find a place therein .

The differences between licensing and assignment are vital. Assignment is a form of permanent transfer, while a license is a temporary transfer. Assignment may be with or without goodwill. Further more licenses are revocable in nature while assignments are not.

The disputes of trademark ownership find themselves in troubled waters where established brand owners decide to split. Goodwill and repute being the primary concern of brand establishment, often witness parties to the split vouching hard for their right to use the mark. The Mirchandani family, the proprietors of the famous electronics brand "ONIDA" is faced with the issue of rightful usage of the mark. While the stakes in the company have split, the mark still lies under contention, owing to the value that it attaches to its use.

Commercial exploitation of brands and products increasingly perceives these processes in play. Indian cities are experiencing an influx of corporations in the retail sector. The largest of corporations are taking franchising to the highest possible level with a range of products on display arraying from groceries to garments, from electronics to equipment. While brands are infusing the public with their impact and influence, it is time for companies to take stock of their mark management, to steer clear of conceivable conflicts in the future.

© Lex Orbis 2008

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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