Restrictions on Assignment and Transmission

restrictions

The Restrictions on assignments and transmissions are not absolute. The validity of the assignment can be challenged on the basis of the provisions contained in section 37 to 45 of 1999 Act.

Multiple Exclusive Right

Assignments and transmissions should not result in the creation of multiple exclusive rights in more than one person, because this could likely to deceive or cause confusion. This restrictions prevent the concurrent use by more than one person concerned with the same and similar trademark in relation to the same or similar and associated goods or services in the same territorial area whether in India or in exports market. Such a use, if allowed, would result in confusion in the public and has hence been restricted. However, such an assignment would not be deemed to be invalid if the exclusive rights therein are made subject to the restrictions and limitations.

Certificate from Registrar

In transactions which are likely to result in the creation of multiple exclusive rights, the following question arises. What would happen where the similarity of the trademark assigned and the similarity of the goods and services for which they are assigned, would result in the use of similar mark on similar goods or services by more than one person concerned, would be likely to deceive or cause confusion? This results in invalidation of the assignment under section 40(1). But if the proprietor proposes to assign the registered trademark in such a case, he may submit a statement of the case setting out the circumstances to the Registrar and the Registrar may issue a certificate stating whether the proposed assignment would be valid under section 40(1) or not. The certificate so issued is subject to appeal, unless it is shown that it was obtained by fraud or misrepresentation, it is conclusive as to the validity or invalidity under section 40(1) of the assignment in so far as the question depends upon the facts set out in the case. A certificate in favor of validity will be conclusive only if an application for trademark registration under section 45 of  the assignee’s title is made within six months from the date of the issue certificate.

Exclusive Restrictions in different persons

restrictions

The assignment or transmission of a trademark, registered or unregistered, which would result in the creation of exclusive rights in different persons in different parts of India is prohibited by section 41. Thus, splitting the ownership of a trademark on a territorial basis within the country is not permitted. In a case of a registered trademark, the Registrar may, however, approve the assignment or transmission if he is satisfied that the use of the trademark in exercise of the rights resulting from such transaction would not be contrary to the public interest. An assignment or transmission so approved under will not be deemed to be invalid if the application for trademark registration under section 45, of the title of the person becoming entitled to the trademark , is made within six months from the date of approval. The exception to the above would be where the approval was obtained by fraud or misrepresentation. In the case of a transmission of trademark such application should be made before that date. Section 40(1) and 42 apply to registered as well as unregistered trademarks. Thus, all the restrictions imposed on the ground of creation of multiple exclusive rights are applicable to all the trademark, whether registered or unregistered. If, notwithstanding an assignment, the assignor retains an exclusive right for himself to use the same mark, the assignment will be ineffective at common law.

Assignment and Transmission of Certification Trademarks

Certification trademarks are assignable or transmissible only with the consent of the Registrar. For the purpose of such an assignment and transmission an application has to be made in the prescribed manner to the Registrar for his permission. Such the restrictions in relation to certification trademark has been imposed because such marks serve the purpose of designating certain characteristics of the goods and services such as their performance, quality, accuracy etc., Thus, an assignment or transmission of such a trademark in favor of a incapable person or association is not to be allowed in public interest. How the permission mechanism would be administered in the case of transmission is not clear.

Assignment and Transmission of Associated Trademark

restrictions

Associated trademarks cannot be assigned separately and are assignable or transmissible only as a whole, meaning all and not separately. The object of this provision is to prevent the likelihood of deception or confusion arising from the use of similar trademarks by different persons as a result of assignment of associated trademarks in favor of different persons. However, for the purposes other than that of section 44, the associated marks will be deemed to be registered as separate trademarks.

Procedure of Trademark Registration after assignment or transmission

The procedure for entering on the register the name of the subsequent proprietor of the trademark as a result of restrictions on assignment or transmission is contained in section 45 which has been amended by 2010 Amendment Act. The new section 45 reads as follows:

  • Where a person becomes entitled by assignment or transmission to a registered trademark, he shall apply in the prescribed manner to the Registrar to register his title, and the Registrar shall, on the receipt of the application, register him as the proprietor of the trademark in respect of goods or services in respect of which the assignment or transmission has effect, and shall cause particulars of such assignment or transmission to be entered on the Register.
  • The Registrar may need the applicant to further evidence in proof of title only where there is a reasonable doubt about the veracity  of any statement.
  • Where the time period of the restrictions on an assignment or transmission is in dispute between the parties, the Registrar may refuse to register the assignment or transmission until the rights of the parties have been determined by a competent court and in all other cases the Registrar shall dispose of the application within the prescribed period.
  • Until an application under sub-section (1) has been filed, the assignment or transmission shall be ineffective against a person acquiring a conflicting interest in or under the registered trademark without the knowledge of assignment or transmission.

The amendment has omitted the requirement of the proof of the title to be accompanied with his application for trademark registration of title to the mark. However, section 45(2) empowers the Registrar to require the applicant to furnish the evidence if there is a doubt about the veracity of statements are documents furnished. Thus it is advisable to furnish evidence in the form of deed of assignment, deed or partnership or dissolution, or any other documents establishing title to the mark.

In an trademark application, the specific direction to the Registrar to satisfy himself under section 45(1) has been omitted, still the Registrar will register the assignment or transmission on his satisfaction that the restrictions or transactions has an effect of transfer of title in trademark. Where the validity of an assignment and transmission  is in dispute between the parties, the Registrar may refuse to register the assignment or transmission until the rights of the parties are determined by the competent court. It was held that trademark registration of assignment  shall not be refused in absence of any material to show that any dispute was pending between the parties with respect to the assignment deed.

The Registrar cannot decide complicated questions of fact and law and he would wait for the decision of the competent civil court. The Registrar is to register the title of assignee on receipt of the application in section 45(1) and till the time an application is made for entering the assignment the same shall be ineffective. Simply on the basis of a letter of the petitioner that the Respondent had failed to comply with the terms of the partition, the Registrar could not give a finding whether the assignment stood revoked.

A document or instrument is not ordinarily admissible as evidence of title to the trademark by the restrictions on assignment or transmission in respect of which no entry has been made in the Register under section 45. The Registrar, the Appellate Board or the Court, as the case may be, is entitled  to direct otherwise. An exception to this rule is made when the document is required for the purpose of the application under section 45(1) or section 57 or in an appeal from an order thereon. If the conditions specified in sections 37 to 45 are fulfilled, the Registrar has to register an assignment or transmission as the case may be. In such case, the Registrar cannot go outside the terms of the restrictions on assignment in order to ascertain if the assignment would have the effect of destroying the trademark.

Discretion vested in court:

restrictions

In a case the Bombay High Court observed that the discretion is vested in the court under section 45 of the 1999 Act (Section 44(2) of the 1958 Act) whether to permit an unregistered document in the evidence or not. At the same time, it cannot be said that the procedure of trademark registration of assignment is a merely  formality. The legislature had thought it fit to scrutinize every application for assignment or transmission keeping in view the various other actions including import restrictions, foreign exchange etc., as also any disputes between the assignor or assignee and only thereafter, of the Registrar is satisfied, the said application for assignment would be registered.

Effect of Non-registration of assignment

An unregistered assignee of a trademark is not prevented from filing a suit during the pendency of trademark registration of the assignment. In this case an assignee of a trademark “RC stylised” had filed infringement and passing-off proceedings against the respondents using  “RC cola” on their goods. The assignee of the registered trademark “RC stylised” who had not get registered the assignment of the trademark though had made an application for registration of assignment, could not succeed in obtaining the temporary injunction as the respondent who were alleged to be selling under similar trademark had started sale of “RC Cola”. The defendant had already made an application for trademark registration on 17 December, 1999. The words “RC Cola” used by the respondents were not in the stylised manner as that of the appellants. The proprietors and assignees both had not started manufacture of goods or use of the trademark due to import restrictions. In this case the deed of assignment for “RC Cola” was dated 19 July, 2001 and was without goodwill. An application was filed on 20 June,2002 for registration of assignment. Steps under section 41 were not taken within 9 months and no application was made for fulfilling mandatory requirement of directions with respect to advertisement of assignment application and registration of assignment was still pending. The court took the view that the suit was maintainable, but refused the injunction.

As per section 42 of the 1999 Act (section 41 of the 1958 Act), an assignment of a trademark takes effect only after an advertisement has been made in accordance with directions of the Registrar and on his ground temporary injunction may not be granted. Moreover, the appellants-assignee had not produced any advertisement published in India to show any goodwill in India not any evidence to show trans-border reputation of the appellant’s word mark was presented.

Hearing must for section 45                                                             

In Bawa Jagmohan Singh vs. Registrar of trademarks, 2002, the court laid down an important principle that the rule of Audi Alterm Partem is applicable on the Registrar in the proceedings under section 45 of 1999 Act (section 44 of the 1958 Act).

restrictions

Petitioner No.1 continued to be the proprietor of the registered trademark and his name continued to appear in the Register of trademarks since 1982. His name was removed by the order under section 44 of the 1958 Act which was impugned in this appeal. Order was passed on the basis of the dissolution deed of the partnership by which petitioner No.1 retired from the partnership. A collateral MOU was not placed before the Registrar. Petitioner No.1 had valuable rights in the trademark and he could have been deprived of the rights only in accordance with the provisions of the Act. The petitioner No.1, in accordance with the provision to section 44 of the 1958 Act, deserved to be given an opportunity of hearing which was not granted and thus, the rule of Audi Alterm Partem was violated by the Registrar.

The petitioner would have suffered an irreparable loss in case  operation of the impugned  order was not stayed. The respondents no.3 and 5 has no objection to the user of the registered trademark by petitioner No.1 within the limits of the territory allotted to him as per MOU, and they would not have suffered any loss with respect to the restrictions. The injury suffered by the petitioner No. 1 would also not be compensated by imposing a cost in case the order of the Registrar remained in operation. Stay was thus granted.

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