INTELLECTUAL PROPERTY RIGHTS PSDA

ASSIGNMENT AND LICENSING IN TRADEMARKS

Submitted to:

Prof. (Dr.) Lisa P. Lukose , Professor, USLLS

Submitted By: Megha Mishra (04116503820)

BALLB

8th Semester 4th year

ABSTRACT

This research paper provides a comprehensive analysis of trademark assignment, and licensing
primarily focusing on the Trade Marks Act, 19991. Trademarks serve as crucial assets for
businesses, enabling consumer identification and brand differentiation. The paper begins by
elucidating the fundamental goal of trademark protection: to eliminate consumer confusion and
ensure the identification of goods or services' sources. It explores how trademarks have evolved
from simple markers of origin to influential drivers of consumer purchasing behavior and valued
corporate assets. Trademark assignment, the process by which ownership rights to a trademark
are transferred, is dissected in detail. Furthermore, it delves into the regulatory requirements for
trademark assignments, including restrictions on transferability to safeguard against confusion or
deception. Trademark licensing, another vital aspect of trademark management, is explored
comprehensively. The paper elucidates the contractual arrangements between trademark owners
(licensors) and third parties (licensees), wherein the licensee is granted the right to use the
trademark under specified conditions and for a defined duration. Moreover, the paper provides
strategic considerations for businesses when choosing between trademark assignment and
licensing.

Keywords : Trademark assignment, Trademark licensing, Trade Marks Act, 1999, Consumer
identification ,Brand differentiation.

INTRODUCTION

The goal of trademark protection has been to eliminate any possibility of confusion for
consumers by enabling them to identify the maker or place of origin of branded goods. When
buyers and merchants utilised the most straightforward markings to identify the source and
provenance of the underlying products, this became a reality. Businesses are searching for ways
to differentiate their products and services. Marks began to take the initiative in influencing
customer purchasing behaviour in the interim and developed into a valued resource. Businesses

1
The Trade Marks Act, 1999, No. 47, Acts of Parliament, 1999 (India).
were searching for fresh approaches to market and create products that would appeal to
consumers' perceptions 2. According to Section 2(1) (zb) of the ‘The Trade Marks Act,1999’
"Trade mark" refers to a mark that may be visually depicted and is used to identify one person's
goods or services from those of others. It can include the shape of the goods, how they are
packaged, or the way they are coloured 3. Trademarks have a complex justification. Due to its
ability to help consumers identify the product or service they like and purchase it exclusively in
the future, trademarks are economically effective. As a result, the producer of the favoured good
is motivated to continue manufacturing high-quality products. Furthermore, infringement
allegations arise when another project utilises a mark that is comparable to that specific
trademark since good quality is linked with it. In addition to safeguarding the rights of
customers, this stops people from unfairly benefiting from the labour and goodwill of the
original mark holder 4. While it is not required, trademark registration is strongly advised in India
because it offers the trademark owner a number of benefits. By granting exclusive rights to use
the mark in conjunction with registered products or services, registered trademarks stop third
parties from utilising marks deceptively or diluting the distinctiveness of a brand. In India, a
trademark's ten-year protection period begins on the date of registration and can be perpetually
extended for additional ten-year periods by paying renewal fees. Owners of trademarks need to
actively use their marks and keep an eye out for possible infringements in the marketplace in
order to maintain protection. Both civil and criminal remedies are available in India for the
enforcement of trademark rights.

Through civil courts, trademark owners can pursue legal action against infringers in order to
obtain injunctions, damages, and other relief 5. The Trade Marks Act also has criminal provisions
that permit imprisonment, fines, and penalties for trademark infringement and counterfeiting 6.

2
Shikha Sharma, Critique on Unconventional Trademarks in India: Stretching the Limit Too Far, 7.2 IP Tech LJ 23
(2020)
3
The Trade Marks Act, 1999, § 2(1)(zb)
4
Vatsala Sahay, Conventionalising Non-Conventional Trademarks of Sounds and Scents: A Cross-Jurisdictional
Study, 6 N.S.L. Rev. 128 (2011) .
5
Princeton University v. Vagdevi Educational Society, 2023 SCC OnLine Del 8543
6
The Trade Marks Act, 1999, § 135
In India's dynamic economic climate, trademarks are essential for promoting consumer welfare,
investment and innovation, and fair competition. Trademarks play a major role in the expansion
and advancement of the economy by safeguarding intellectual property rights and brands.

TRADEMARK ASSIGNMENT

The legal procedure through which ownership rights to a trademark are transferred from one
individual or organization to another is referred to as assignment of trademark. During this
procedure, the exclusive rights related to the trademark are transferred. These rights may include
the ability to use, license, sell, or enforce the trademark. A trademark assignment entails the full
transfer of ownership from one entity to another. The person who receives the trademark rights in
this situation is known as the assignee, and they are fully in charge of the trademark, including
the ability to utilize it only for their own business needs. All rights and interests in the trademark
are forfeited by the assignor, or the person transferring the trademark rights. As per Section
2(1)(b) of the Trade Marks Act of 19997, an assignment refers to the documented transfer of a
trademark between the parties concerned. This includes the transfer of both registered and
unregistered trademarks, which can occur either with or without the consent of the business
involved.

TYPES OF ASSIGNMENT

● Complete Assignment

The term "complete assignment" describes the transfer of all trademark rights from one
person to another. This covers the rights to earn royalties, transfer the trademark further,
and maintain complete control over how it is used.

● Partial Assignment

A partial assignment is the transfer of ownership that is limited to particular goods or

services.

7
The Trade Marks Act, 1999, § 2(1)(b)
 ● Assignment with Goodwill

The term "assignment with goodwill" describes the transfer of a trademark, together with
all of its rights and values, from one individual to another.

● Assignment without Goodwill

The transfer of a trademark in a manner that permits usage for objectives other than the
original one is known as assignment without goodwill.

THE TRADE MARKS ACT,1999

The assignment of trademarks is regulated by the provisions of the Trademarks Act, granting
authority to the current proprietor of a trademark to assign it and issue receipts for consideration
received 8. A registered trademark, irrespective of goodwill, is transferable for any or all goods
or services it covers, barring certain restrictions outlined in the Act9. These restrictions prevent
assignment if it would lead to exclusive rights over similar goods/services, potentially causing
confusion or deception10. Unregistered trademarks can also be assigned, with or without
goodwill, subject to the Act's restrictions 11. An assignment not related to the goodwill of the
business must be advertised as per Registrar's directions within a specified timeframe.
Certification trademarks require Registrar 12 approval for transfer. Associated trademarks are
assumed as separate registrations but can only be assigned as a whole. Upon assignment, the
assignee must apply to the Registrar for registration, with the Registrar updating the register
accordingly. Documents regarding assignment must be registered to be admissible as evidence,
except for specific legal proceedings outlined in the Act. The Trademarks Act specifies that
assignment of a trademark, whether registered or unregistered, must be done with careful
consideration of the implications on the business's goodwill. Assignments made solely for
purposes unrelated to the goodwill of the business, such as financial transactions or other
arrangements, must adhere to specific procedures outlined by the Registrar 13. This includes
8
The Trade Marks Act, 1999, § 37
9
The Trade Marks Act, 1999, § 38
10
The Trade Marks Act, 1999, § 40
11
The Trade Marks Act, 1999, § 39
12
The Trade Marks Act, 1999, § 2(1)(y)
13
The Trade Marks Act, 1999, § 42
obtaining approval for the transfer of certification trademarks and ensuring that associated
trademarks are treated as a unified entity during assignment. Moreover, the Act emphasizes the
importance of timely registration of assignments with the Registrar to establish legal validity and
facilitate accurate record-keeping. Failure to register assignments in accordance with the Act's
requirements may result in the documents being inadmissible as evidence in legal proceedings
pertaining to trademark ownership. By delineating these procedures and requirements, the
Trademarks Act aims to uphold the integrity of trademark ownership and transactions while
providing clarity and legal certainty to all parties involved.

TRADEMARK LICENSING

A trademark owner (the licensor) and a third party (the licensee) enter into a contract known as
trademark licensing whereby the owner permits the licensee to use the registered trademark for
particular purposes, under specified conditions, and for a specified amount of time. A trademark
license usually entails paying a royalty to a third party to use the brand. Trademarks can be
assigned or licensed, both registered and unregistered. Trademark licensing differs slightly from
trademark assignment in that the licensed party is granted the right to temporary use of the
trademark, but no actual trademark ownership rights are transferred. Within the changing
economic landscape of India, trademark licensing has enabled enterprises to achieve new heights
in terms of brand reach and commercial potential. By issuing a trademark License, the owner of
the trademark authorizes the licensee to utilise the trademark on their products, services, or in
marketing campaigns as per the conditions of the licensing agreement, creating a symbiotic
relationship that benefits both sides. Trademark licensing provides companies looking to expand
their brand a quick and affordable way to get into new areas, add new products to their lineups,
or connect with undiscovered customer groups. Conversely, licensees obtain entry to well-known
brands and can profit from their goodwill and devoted following of customers. A trademark
license agreement should have the following essential clauses: territory, term, consideration,
termination, and indemnity.

The Trademark Act of 1999 provides the legal foundation for trademark licensing. The phrase
"permitted use" 14 is used in the Act's provisions for trademark licensing, even if the term

14
The Trade Marks Act, 1999, § 2(1)(r)
"trademark licensing" is not used entirely in it. According to the statute, the licensor is referred to
as the “registered proprietor” 15 and the licensee as the “registered user” 16. Section 48 outlines
the process by which a person can be registered as a "registered user" of a trademark, provided
certain conditions are met 17. It mandates that both the registered proprietor of the trademark and
the proposed registered user must submit a joint written application to the Registrar, following
the prescribed procedure. This application must include: An agreement in writing, or a duly
authenticated copy thereof, between the registered proprietor and the proposed registered user
regarding the permitted use of the trademark. An affidavit, either from the registered proprietor
or someone authorized by them, detailing various aspects such as the relationship between the
parties, the degree of control the proprietor will exert over the permitted use, specifics about the
goods or services in question, any proposed conditions or restrictions, and the duration of the
permitted use. Any additional documents or evidence as required by the Registrar. Once these
requirements are fulfilled, the Registrar will proceed to register the proposed user for the
specified goods or services. Section 49 elaborates further on the registration process for a person
as a registered user of a trademark 18. It clarifies that the permitted use of a trademark by a
registered user is deemed to be used by the proprietor of the trademark. This means that legally,
the use by the registered user is considered as if it were by the proprietor. However, it's crucial to
note that this usage is subject to the provisions outlined in Section 48.19 Additionally, the
Registrar is required to issue a notice of the registration of a person as a registered user to other
registered users of the trademark, if any. Furthermore, if requested by the applicant, the Registrar
is obligated to take steps to ensure that certain information provided for the application, except
for matters entered in the register, is not disclosed to rivals in trade.

Section 50 outlines the procedures for varying or cancelling the registration of a person as a
registered user of a trademark 20. The Registrar has the authority to modify registration upon the
registered proprietor's application, and can cancel it based on various grounds including misuse,
misrepresentation, changes in circumstances, or non-compliance with quality stipulations. The

15
The Trade Marks Act, 1999, § 2(1)(v)
16
The Trade Marks Act, 1999, § 2(1)(x)
17
The Trade Marks Act, 1999, § 48
18
The Trade Marks Act, 1999, § 49
19
The Trade Marks Act, 1999, § 48
20
The Trade Marks Act, 1999, § 50
section mandates notice issuance to relevant parties and provides for a cancellation procedure
with the registered proprietor entitled to a reasonable opportunity to be heard before cancellation.

INTERSECTION OF ASSIGNMENT AND LICENSING

In the context of trademarks, the intersection of assignment and licensing refers to the transfer of
a party's right to use a trademark to another. While licensing involves allowing another party to
use the trademark under specific restrictions while maintaining ownership, assignment involves
the complete transfer of trademark ownership. Instead of giving their rights up completely,
trademark owners occasionally decide to license their marks to outside parties. In doing so, the
owner of the trademark is able to keep ownership and continue making money from licensing
fees. On the other hand, assignment may be chosen if the owner of the trademark wants to
transfer ownership completely. A licensee under a licensing agreement may choose to transfer
their rights to another party in certain situations. In some situations, the original trademark owner
might have to consent to the assignment in order to make sure the new assignee satisfies the
requirements and obligations stated in the license agreement. In general, trademark rights are
transferred through both licensing and assignment; however, the degree of control and ownership
kept by the original trademark owner varies. A licensee of a trademark may attempt to transfer
their licensing rights to another entity. To make sure the new assignee complies with the
conditions and requirements outlined in the licensing agreement, the original trademark owner
may need to approve the assignment in certain situations. Owners of trademarks may decide to
assign or license their rights with limitations on where they can be used. This indicates that the
mark may only be used by the licensee or assignee in specific geographical areas. Furthermore,
the ability to assign the rights granted under the license may be impacted by the conditions of the
licensing agreement. Certain agreements may contain clauses that limit or regulate the transfer of
licensing rights, safeguard the owner of the trademark's interests, and uphold quality control over
the mark's usage. Assignment and license agreements usually contain clauses pertaining to
termination and punishments for violations. This could include the right to sue for unauthorized
use of the trademark and obtain damages or an injunction, or the right to terminate the agreement
for noncompliance with its conditions. The duration of the rights given is specified in both
license and assignment agreements. The term of the agreement is a crucial factor to take into
account, regardless of whether it's a temporary license or a permanent assignment. A license can
be given for a set amount of time and can be renewed by both parties, but an assignment results
in the transfer of rights permanently. Although consideration (money or otherwise) is a part of
both license and assignment agreements, the type of consideration may vary. According to sales,
usage, or other predetermined indicators, royalties are frequently paid by the licensee to the
licensor under licensing agreements. As an alternative, assignments could call for the transfer of
ownership rights in exchange for a one-time payment or other types of consideration.

CONSIDERATIONS THAT MUST BE TAKEN INTO ACCOUNT WHEN DECIDING

BETWEEN ASSIGNMENT AND LICENSING.

Businesses and trademark owners need to take into account a number of important
considerations when choosing between assigning and licensing trademarks. In order to choose
whether to fully transfer ownership through assignment or to maintain ownership while granting
particular rights through licensing, they must first consider the implications of ownership and
control. They should also assess how long the agreement will last and what its terms are, taking
into account if it is a limited-term or permanent transfer.

They must specify exactly which rights—territorial, product/service-specific, and branding—will

be given in order to determine the scope of the rights. It is imperative for trademark owners to
maintain quality control because their mark's reputation and standards are attributed to them. For
this reason, they ought to put policies in place to guarantee that license holders uphold these
requirements.

Since license and assignment agreements can have distinct financial ramifications, financial
considerations are important. Businesses must evaluate their financial needs and possibilities for
revenue production before committing to any kind of payment, be it one-time, recurring
royalties, or licensing fees. Another crucial component is risk management, which calls for a
careful assessment of possible hazards including violation and reputational harm as well as the
implementation of mitigation strategies.

Businesses ought to have an exit strategy in place, therefore it's critical to take flexibility and
long-term objectives into account. Adherence to pertinent rules and regulations governing
trademarks and intellectual property is crucial for legal and regulatory compliance. It is advisable
to get legal counsel to make sure the agreement is enforceable under law and safeguards their
rights. Businesses can make well-informed decisions that support their goals and reduce risks by
carefully considering these variables.

Stakeholders must weigh the wider effects on their strategic positioning and market presence
when deciding between trademark assignment and licensing. They must evaluate the effect on
their market positioning and brand identity, understanding that licensing permits more strategic
brand management while assignment may result in the loss of control over brand image.

They should also take into account the possible effects on customer perception and brand
consistency. While assignment may result in differences in brand execution and dilution of brand
equity, a well-executed license agreement can guarantee consistent brand representation across
various markets and product lines.

Additionally, it is important to assess the operational and cultural compatibility with possible
assignees or licensees. Business beliefs, marketing tactics, and client demographics that align can
have a big impact on how well the arrangement works and how well brand integrity is
maintained.

It's also critical to take the larger competitive environment into account. Making informed
decisions can be aided by examining the potential effects of assignment or licensing on entry
barriers, market competitiveness, and cooperative opportunities with other market participants.

Stakeholders ought to think about the possibility of growing or diversifying their portfolio of
trademarks in the future. While licensing can provide greater flexibility to adapt to changing
market trends and economic possibilities, assignment may limit future flexibility in exploiting
the trademark for new enterprises or partnerships.

CASE LAWS

Gujarat Pottling Co.Ltd. & Ors vs The Coca Cola Co. & Ors 21

FACTS
21
Gujarat Pottling Co.Ltd. & Ors v. The Coca Cola Co. & Ors, AIR 1995 SC 2372 (India)
Gujarat Bottling Company and Coca Cola Co. signed a contract on September 20, 1993, for the
bottling and distribution of the brands "Thumbs Up," "Maaza," "Limca," "Rim Zim," and "Gold
Spot," which Coca Cola had purchased from Parle. GBC was subject to a negative covenant in
paragraph 14 of the aforementioned contract, which prohibited them from bottling, distributing,
or even just engaging with any other business or trademarks for the duration of the agreement. It
was to last until 1998, at which point either partner might stop it by mutual consent or by giving
one year's notice. The aforementioned agreement also prohibited GBC from supplying syrup in
the event that control was later transferred without Coca-Cola's approval. In 1994, a second
contract was made in order to register under the terms of the Registered User Agreement. The
product's standards and specifications, as well as its proper registration and formulation under
the Trademarks Act, were covered by the contract. A clause in the agreement shortened the
one-year prior notice period to ninety days. The ownership rights of the majority shares were
transferred to PepsiCo representatives in 1995 as a result of internal concerns related to GBC's
expansion. The 1994 agreement, according to the new proprietors, superseded the previous 1993
arrangement. They gave Coca-Cola 90 days' notice in advance that the 1994 deal was ending.
They sent Pepsi product concepts that went beyond the parameters of the 1993 agreement.
JUDGEMENT
The court addressed the idea of trademark licencing, making a distinction between common law
and legislative licencing. The public should not be misled or confused by the licencing. It
shouldn't lessen the trademark's uniqueness, which should keep differentiating the goods from
those associated with others. There should always be a relationship between the goods and the
mark owner that is compatible with the definition of a trademark in the course of business. The
court noted that, in contrast to licencing under statutory laws, which necessitates a contract
between the registered proprietor and the intended user, licencing under common law might
happen when the registered proprietor grants the proposed user a licence. In this case, the court
observed that the 1993 Agreement essentially constituted a common law licence for the use of
trademarks that Coca-Cola had purchased. To guarantee adherence to common law rules
governing trademark usage, GBC was required to follow a number of terms in the agreement
when using these trademarks. The court came to the conclusion that the 1994 Agreement, which
was signed in order to register users in accordance with statutory provisions, should be separated
from the 1993 Agreement, which granted a licence under common law. Therefore, unless there
was mutual permission between Coca Cola and GBC, which was not shown in this case,
provisions in the 1994 Agreement could not amend terms in the 1993 Agreement.

Cinni Foundation v. Raj Kumar Shah and Sons22

FACTS
The plaintiff, represented by M/s. Cinni Foundation and its Managing Trustee Chandra Kumar
Sah, filed a lawsuit citing Sections 134 23 and Section 135 24 of the Trade Marks Act, 1999. The
lawsuit sought a permanent injunction against the defendants for infringing on the 'CINNI'
trademark, passing off their goods as those of the plaintiff, and surrendering all materials bearing
the offending trademark. The 'CINNI' trademark had a history dating back to the 1950s when it
was initially used by a partnership firm called M/s. Raj Kumar Sah and Sons, later assigned to
the plaintiff trust through a Deed of Assignment in 2000. Despite this assignment, the defendants
allegedly interfered with the plaintiff's business, including attempting to remove Chandra Kumar
Sah as Managing Trustee. Legal proceedings commenced in 2009, with the court issuing
summons to the defendants and restraining them from interfering with the plaintiff's business.
The defendants argued against the jurisdiction of the court, claiming that the cause of action did
not occur within its territorial jurisdiction, primarily as both parties were based in Varanasi, Uttar
Pradesh. They further contested the involvement of M/s. Sah Agencies, a distributor in Delhi,
asserting that there was no contractual relationship or business conducted within the jurisdiction
of the court between the plaintiff and Sah Agencies.

JUDGEMENT
The court emphasized that title to a trademark accrues upon execution of the deed of assignment,
irrespective of registration. It clarified that registration merely records the created title and does
not confer it. The court cited legal precedents to support this interpretation, asserting that rights
in a trademark are acquired upon assignment, even without registration. It rejected the argument
that an assignee acquires no title without registration of the assignment deed.

CONCLUSION

22
Cinni Foundation v. Raj Kumar Sah & Sons, 2009 SCC OnLine Del 2856
23
The Trade Marks Act, 1999, § 134
24
The Trade Marks Act, 1999, § 135
In conclusion, a crucial point in the strategic management of brands and intellectual property
assets is the area where trademark assignment and licensing collide. For companies and
trademark owners, the choices taken at this intersection have a significant impact on income
creation, market positioning, brand control, and legal compliance. A trademark assignment is the
total transfer of ownership rights—that is, giving up control and ownership of the mark—from
one entity to another. On the other hand, trademark licensing enables a third party to temporarily
use a trademark under certain restrictions while still maintaining ownership. Assignment and
licensing have different functions and present different benefits and difficulties, so stakeholders
must give them serious thought. There are a number of important considerations to consider
when choosing between trademark assignment and licensing. Stakeholders must first assess the
effects of control and ownership. Whereas licensing permits the trademark owner to keep control
while providing others particular usage rights, assignment involves a total transfer of ownership
and the loss of brand control. Another crucial factor to take into account is the agreement's term.
Permanent ownership transfers occur from assignments, although temporary and renewable
licenses offer flexibility to both sides. The extent of rights that are granted is also crucial. All
trademark-related rights, including the ability to sublicense, are transferred through assignments,
however licenses might only cover certain regions, goods, or services. Maintaining the integrity
and reputation of a brand requires strict quality control. To preserve the reputation and goodwill
of their brand, trademark owners must make sure licensees follow quality requirements and
brand guidelines. One of the main factors influencing decision-making is the budget. Licenses
may involve regular royalties or licensing payments, although assignments might only require a
one-time payment or consideration. To choose the best arrangement, stakeholders must evaluate
their ability to generate income and their financial demands. An other important factor is risk
management. Owners of trademarks are required to reduce the risks of infringement, illegal use,
and damage to their reputation. To safeguard trademark rights and reduce legal risks, contracts
must include explicit terms and enforcement procedures. Furthermore, adherence to the law is
essential. Trademark transactions are subject to all applicable laws and rules regarding contracts
and intellectual property rights.
To guarantee that agreements are valid and safeguard the interests of all parties concerned, legal
advice should be obtained. Stakeholders need to strategically take into account the broader
effects on future portfolio expansion, brand consistency, and market positioning. While licensing
can help a brand expand into new markets or product lines, assignments may have an influence
on brand control and consistency. The court has shed light on the legal complexities regarding
trademark assignments and licensing by important case laws like Cinni Foundation v. Raj Kumar
Shah and Sons 25 and Gujarat Pottling Co. Ltd. & Ors vs. The Coca Cola Co. & Ors 26. These
instances highlight how crucial it is to abide by legislative regulations, common law rules, and
contractual conditions in order to protect trademark rights and preserve brand integrity. To put it
simply, in today's competitive market, businesses need to use efficient trademark management
strategies—whether they be assigned, licensed, or a combination of the two, in order to
safeguard their intellectual property, improve their market presence, and promote long-term
success. The choices that are made at the nexus of trademark assignment and licensing
significantly influence the course of brands and their level of success on the international
commerce scene.

25
Cinni Foundation v. Raj Kumar Sah & Sons, 2009 SCC OnLine Del 2856
26
Gujarat Pottling Co.Ltd. & Ors v. The Coca Cola Co. & Ors, AIR 1995 SC 2372 (India)
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