Trademark assignment is a process in which the owner of the trademark transfers the ownership of the mark either with or without the goodwill of the business. We had earlier written about the procedure for assigning trademarks and also the key points that should be incorporated in an assignment deed from a practical perspective. There are times when assignment of trademarks can be complicated – rights to a particular trademark are jointly owned by two or more companies or when the rights are held by the parent company but are the trademarks are used by the subsidiary. These are situations when one should ensure that the assignment deed is carefully drafted to include all the aspects and secure the rights of the assignee to the fullest extent.

There was a case before the Delhi High Court, where the plaintiff was suing for permanent injunction against use of the mark INDO SIMON which was deceptively similar to their mark INDO ASIAN. This is where it gets interesting – the defendants has assigned all of their rights in the mark INDO ASIAN to the plaintiffs, however, they had retained the right to use the mark INDO SIMON in a way which was not confusingly similar to that of INDO ASIAN (the colour combination, font and general visual impression).

Facts of the case

The plaintiff Novateur Electric & Digital Systems Pvt. Ltd. entered into a Business Transfer Agreement with Indo Simon Electric Pvt. Ltd. (defendant 1) and Eon Electric Pvt. Ltd. (defendant 2) and acquired the assets and liabilities of the company. All the intellectual property was assigned from Indo Asia Marketing Ltd., which was related to the defendant 2. Based on the terms of the agreement, the defendants ceased to be the owner of all IP in India and rest of the world. However, they were allowed to use the mark INDO SIMON but in a way that not cause confusion or associate the mark with that of the plaintiffs.

In January 2014, the plaintiffs came to know that the defendants were using the mark INDO SIMON, deceptively similar to that of their mark INDO ASIAN and in such a way that it associated the business of the defendants with the plaintiffs. The plaintiffs sent them a legal notice and received a reply stating that since the registration of the mark INDO ASIAN was owned by Indo Asian Marketing Limited, they have a right to use the mark INDO SIMON. It is interesting that the defendants claimed that they owned the rights by the concept of “pooling in” of various trademarks in the joint ventures.

The plaintiffs clarified that the defendants did not have any rights in the trademark to begin with, since the same had been acquired by the plaintiffs from Indo Asian Marketing which owned all the marks. Further that the terms of the assignment clearly indicate that the plaintiffs shall have exclusively rights to use the mark INDO ASIAN and the right to use of INDO SIMON was permitted only so long as it was not similar to that of the plaintiffs.

Decision of the Court

The Court found that the plaintiff had been able to make a prima facie case and that it was a classic case of appropriation of intellectual property. The defendants, their associates/subsidies/group companies, franchisees, licensees etc. were restrained from using the marks that have been assigned on the basis of the agreement deed. Further, they were also restrained from using the mark INDO SIMON in a confusingly deceptive manner.

Thoughts

It is very important to the clearly state the trademark and the extent of rights to use the mark in any assignment. In cases which involve transfer of rights from one subsidiary of a company or its related entity, as in this case, it is even more important to ensure that all the terms of the assignment are put down in a manner where there is no ambiguity at a later stage. From time to time, such cases and Courts are a reminder of the fact that we cannot undermine the importance of even minute details while drafting and executing contracts of any kind.

This article has been authored by Nikita, an IP Law practitioner.