The do’s and don’ts of brand licensing in India

By Sumita Singh,Singh & Associates
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In India, trademark laws are stringent in accepting and acknowledging brand licences as a whole. Precedents have been set to recognize common law principles; however, to understand how rights against infringers work in practice, it is worthwhile to scrutinize well-established practices and understand their value.

Sumita Singh, Partner, Singh & Associates
Sumita Singh
Partner
Singh & Associates

The trademark laws in India are governed by the Trade Marks Act, 1999, which specifically states that all licences or permissions for trademark use must be in writing.

The parties to the licence must spell out the exact relationship and permission that each enjoys by virtue of the trademark’s ownership and the permitted use.

Clear position

In India, the position is clear that the registered proprietor is also the sole owner and thus, the exclusive user of the trademark.

If the owner of a registered trademark decides to extend the right to use the the mark to any other party, it has to be outlined in writing and ought to be registered with the Trade Marks Registry.
If the licence agreement is not recorded and the name of the permitted user is not in the records of the Trade Marks Registry, the benefits of the use of the mark by the permitted user cannot be extended to the registered proprietor.

A matter of goodwill

This proof of use can be submitted against all actions that are based upon non-use claims. At the same time, it can be used to establish goodwill in contentious matters.

It also strengthens the rights of the proprietor and assists in asserting his rights to licensed trademarks in India and abroad.

Statutory requirements

There are a quite a number of statutory requirements that a licence agreement in India must meet:

(i) It must state the relationship between the parties;

(ii) The agreement must describe the trademarks and describe of the products (and/or services) for which these trademarks are proposed to be used (the details may be attached as an annexure to the main agreement);

(iii) It must include provisions for the maintenance of quality control by the licensor;

(iv) There must be a specific clause stating that the trademarks are being used with the permission of the licensor;

(v) The duration of the agreement must be clearly outlined;

(vi) The royalty payments for the permitted trademark use must be included alongside other such remuneration (details may be attached as an annexure to the main agreement); and

(vii) There must be a termination clause included as part of the agreement.

Affidavit needed

In addition to the above, an affidavit is mandatory from an authorized representative of the licensor that clearly specifies:

(i) The particular details of the relationship between the licensor and the licensee;

(ii) The degree of control that will be exercised by the licensor over the licensee and the finished product or services;

(iii) Details of whether the licensee is the exclusive licensee;

(iv) An outline of any other restrictions on the licensee;

(v) The conditions and restrictions as stated in the licence agreement regarding specifics of how the trademark will be used, the mode and place of its proposed use, etc.;

(vi) The exact goods and/or services of the proposed use;

(vii) Whether the permitted use is for a specific period; and

(viii) Whether the trademark has been used by the licensor prior to the application for registration of the subject licence agreement and, if yes, then the period of such use

Single applications

An application may be preferred on behalf of both the licensor and the licensee to record the license agreement.

The above details are the requisites for registered trademarks.
If the licensed trademarks are pending registration, the above can be taken as the guidelines for seeking permission.

There is no provision to record licences pertaining to pending trademarks.

Brands are a way of communication with the consumers and are worthwhile and important as long as their value is protected.

In order to retain their strength and purity, it is important that quality control measures be adopted and adhered to strictly in accordance with their permitted use.

Sumita Singh is a partner at Singh & Associates, a law firm based in New Delhi.

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