“Trademark Licensing in India- Challenges Faced by Parties”
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DPIIT, MCI Chair on Intellectual Property Rights & Centre for Intellectual Property Rights Research and Advocacy National Law School of India University, Bangalore “TRADEMARK LICENSING IN INDIA- CHALLENGES FACED BY PARTIES” Under the Guidance of Prof. (Dr) T. Ramakrishna, MCI Chair Professor on IPR Submitted By Palak Daga Maharaja Sayajirao University Of Baroda Vadodara 1 Certificate This is to certify that Palak Daga, student from Maharaja Sayajirao University of Baroda,Vadodara has successfully completed and submitted her report,Trademark Licensing in India- challenges faced by parties. This has been submitted in fulfilment of her internship at the Centre for Intellectual Property Research and Advocacy (CIPRA) during the month of 16th November to 16th December 2020. Bangalore, 31st December 2020 Prof. (Dr.) T. Ramakrishna DPIIT, MCI Chair Professor of IPR Research Associate Jnana Teja Bandi 2 DECLARATION Certified that this research work is my original work and I have not borrowed any material from other‟s work nor have I presented this partly or fully to any other institution/college/university. I have completed with all the formalities prescribed in this regard. Date:31st December 2020 Signature: Place: Bangalore NAME: Palak Daga 3 TRADEMARK LICENSING IN INDIA Introduction: A Trademark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. A Trademark registration will confer an exclusive right to the use of the registered trademark.Trademark are protected by Intellectual Property rights. Intellectual Property refers to creation of mind,such as inventions, literary and artistic works,design,symbols,names and images used in commerce. Intellectual Property is protected by law which enables people to earn financial benefit from the invention or creation. IP system aims to promote an environment in which creativity and innovation can flourish. TRADEMARK According to TRIPS, Trademark can be any sign or combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings.Such signs, in particular words including personal names, letters, numerals, figurative elements and combinations of colours as well as any combination of such signs, shall be eligible for registration as trademarks. Section 2 (zb) of the Trademark Act, 1999 defines the term Trademark. It means a mark which is graphically represented and which is capable of distinguishing the goods or services from one person to another. It can be the shape of goods, their packaging. Trademark can be a sign, design, tagline, symbols, logo, abbreviation which recognizes a product. A trademark should be unique to avoid confusion in the mind of customers. Licensing Licensing is defined as a business arrangement, wherein one company gives another company permission to manufacture its product for a specified payment. There are 3 P‟s in Licensing that is protection,promotion and profit. It should be followed by the licensee while using property or manufacturing a product through the Licensing process. Then what is property licensing ? A License does not create an interest in the property. It acts only as permission which creates a personal right with regards to the property. The Licensee is entitled to use the premises only in a specific manner. Without the permission, his activities would be considered unlawful. A License cannot be assigned or transferred to some third party. 4 Trademark licensing- Is Registered Trademark, used by others for commercial purpose? Yes, A trademark owner can give license to a third party to exploit/use the trademark and can share/ transfer his rights. For the transfer of some of his rights, the Trademark owner needs to make an agreement with the party whom he wants to share his trademark rights. So, A Trademark Licensing is an agreement where a trademark owner permits someone else to use the owner‟s trademark in connection with specific products or services. Trademark licensing can be an effective and inexpensive way for a trademark owner to expand the use and public recognition of its trademark. In licensing, the rights of trademark vest with the original owner, few restricted rights are given to the third party such as usage of trademark, to sell the products. The ownership exclusively lies with the registered proprietor, licensee has no right to claim the ownership during the tenure of the agreement. The licensing of Trademark in India has been quite Liberalised, Indian law does not permit Trademark sub-licensing. A license agreement would be signed between the registered user and the third party. The clauses mainly include royalty payment, rights & duties of both the parties, termination clause and its consequences. Common examples for Trademark Licensing include Merchandising partnership and plant breeders. The term License or Licensing is not mentioned in the Trademark Act,1999. The term Registered user is used for licensee. Section 2(1)(r) of the Trademark Act,1999 defines “Permitted use” means the use of a registered trademark by a registered user with the consent of registered proprietor. Section 48-55 of the Act, are the laws governing the Trademark Licensing. Section 48 provides for Registered Users. TRADEMARK LICENSE AGREEMENT- A Trademark license Agreement is a document entered into between the proprietor of a registered trademark and the third party where the licensor gives authorization to another company (Licensee) to manufacture, sell, distribute the products under the particular trademark. The License is given for a specific range of products for that the licensee obtains exclusivity in a distinct territory. The licensee has to pay a certain sum of money and royalties based on the sales value of the product sold under the license to the registered proprietor (Licensor). Under this agreement, fashion and consumer products relating to sports and entertainment are usually sold. 5 REGISTRATION PROCESS OF TRADEMARK LICENSE- As per Section 48(1) of Trademark Act, 1999 states trademark can be used by others, the other person whom trademark proprietor has given the license of trademark may be registered as a registered user. A trademark license agreement isn‟t required in writing to be enforceable but it is advisable to register it with the Trademark Registrar in the Trademark office. But it is recommended that the Trademark licenses should be memorialized in a written and signed document. The Licensing of Trademarks whether registered or unregistered may be permitted in the course of trade which exists between the good and the owner of the Trademark. This was quoted in the case of Gujarat Bottling Co. Vs Coca Cola Co. (1996). Section 49 of the Act, quotes Registration as registered user. Section 2 (1)(r) of the act defines Permitted use of a Trademark. Use of Trademark by- ● By a registered user ● By a person other than the registered proprietor and registered user in relation to goods and services. Things to be followed to Register the Trademark License- The agreement shall mention certain requisites such as name of the parties agreeing for the license there should be quality check and control on goods and services, the term of license, clear description of the trademark being licensed, nature of license which is non-transferable, the territory for which the license products or services can be sold, consideration for which it has been granted, termination clause, indemnification clause in case of loss occurred, the rights and the duties of both licensor and licensee. 1. There must be a written agreement between the Trademark owner and the Licensee along with their signatures. 2. The Trademark owner and the licensee should jointly apply for the registration of Trademark license with the Registrar of Trademark Office. Section 49 (1) 3. The joint application should be made to the Registrar within six months after the parties entered into an agreement. 4. The application is made in form TM- U 5. There should be a supporting Affidavit which should contain details such as – ● The precise relationship between the Registered proprietor and the proposed registered user. ● Degree of control by Registered proprietor. ● Stating the goods & services in respect of which registration is purposed. ● Duration of the use of Trademark. ● Conditions or restriction, if any purposed with characteristic of goods or services, mode of use, place or region to use the trademark. 6. The amount payable in form of Royalty and other remuneration by the proposed user to the trademark owner. 6 7. The application can be made online / offline- the fees for online application is 4500 and offline is 5000 The Trademark officer or the registrar will register the proposed user or licensee as registered user of the Trademark, if he is completely satisfied with the application and then publish it in a journal and will intimate the trademark owner and the registered user. In case, if the TMO is not satisfied or conditionally approves the application and will give a notice to the parties stating the grounds on which he proposes to pass the order and stating their rights to be heard. Then a hearing can be held within 2 months where the parties can correct their deficiencies and satisfy the registrar of TMO. WHY TO GO FOR TRADEMARK LICENSING? Trademark licensing widens the scope of the products which is covered under the TM. It also extends the growth in terms of value and reputation of the TM product. It is beneficial for both, the registered owner who is already established in his business who will get Royalties & profit with the sale or distribution of TM product and the registered user or licensee who can be a newcomer or a start-up company as he will get share in the profit and will get more such benefits from the sale of TM products. Benefits from Trademark licensing- 1. Expansion of Business of the Trademark owner- The Trademark owner allows the licensee to manufacture the goods or provide services in different regions which is mentioned in their agreement it leads to expansion of territory of the Licensor business.