You buy a company’s trademarks — then the seller keeps using a confusingly similar mark, claiming rights it says it never gave up. That fight is almost always about how carefully the assignment deed was drafted.
The facts
Novateur Electric & Digital Systems acquired assets — including all IP — from Indo Simon Electric and Eon Electric via a Business Transfer Agreement, with rights transferring from Indo Asian Marketing to Novateur. The agreement said the defendants “ceased to be the owner of all IP in India and rest of the world,” but retained limited rights to use INDO SIMON — provided it did not cause confusion with INDO ASIAN.
In January 2014, Novateur found the defendants using INDO SIMON in a way confusingly similar to INDO ASIAN, associating the two businesses. The defendants claimed ownership through “pooling in” of marks in joint ventures — which Novateur disputed.
The decision
The court found a prima facie case of IP appropriation and restrained the defendants — and their associates, subsidiaries, group companies, franchisees and licensees — from using the assigned marks and from using INDO SIMON in a confusingly deceptive manner.
Why it happened — and how to avoid it
- Specify what transfers, precisely. “All IP” is good, but the residual use the seller keeps must be defined tightly — here, “limited rights to use INDO SIMON without confusion” became the battleground.
- Address related entities. Transfers involving subsidiaries, JVs and group companies need express treatment, or “pooling” arguments arise. (See our note on the four types of assignment and trading trademarks.)
- Define the confusion boundary. If a seller may keep a related mark, spell out exactly what non-confusing use looks like — colours, get-up, context.
- Record the assignment with the Registry so title is clean.
The takeaways
- Ambiguity in an assignment invites litigation — especially where related entities and residual use are involved.
- A carve-out for the seller must be narrow and precise — or it becomes a licence to confuse.
- Injunctions reach the whole group — associates, subsidiaries, franchisees and licensees can all be bound.
Frequently asked questions
What went wrong in this assignment dispute? The seller kept a limited right to use a related mark “without confusion,” then used it confusingly — the vague carve-out led to litigation and an injunction.
How do I draft a safe trademark assignment? Specify exactly what transfers, define any residual seller use narrowly, expressly address related entities, and record the assignment.
Can an injunction bind the seller’s group companies? Yes — here the court restrained associates, subsidiaries, group companies, franchisees and licensees.
Why do related-entity transfers cause disputes? Because “pooling” or shared-use arguments arise unless the deed clearly allocates ownership among the entities.
Legislation referred to
- The Trade Marks Act, 1999