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NON-REGISTRATION OF ASSIGNMENT DEED NOT FATAL TO TRADEMARK RIGHTS OF ASSIGNEE

July 17, 2020

By Tulip De and Isha Tiwari

Introduction

Recently in May, the Hon’ble High Court of Delhi determined two interim applications in the matters of M/s Liberty Footwear Company vs. Liberty Innovative Outfits Limited[1] and M/s Liberty Footwear Company vs. M/s Liberty Fashion Outfit[2] while determining the effects of non-registration an of assignment deed. Before delving further into the facts of the case, one must apprise themselves with assignment as under the trademark law.

An assignment is a transfer of rights, title and interests in the trademark by a proprietor (assignor) in favour of another (assignee) and the same is a right entitlement of a proprietor[3]. It differs from a license, as the latter is for a limited period of time and usually for a specific purpose. An assignment can be customized with regard to the trademark, i.e. assigned with or without the goodwill of the business in question[4] and in respect of any or all goods/services registered thereunder. Transfer of trademark by way of assignment is through an instrument called the assignment deed and the same shall be in writing, with the consent of both the parties and both assignor and assignee shall execute the said deed.

Brief facts

Liberty Group of Companies and Firms were established in 1954 and are renowned for manufacturing and marketing inter alia footwear, leather accessories and fashion products. Having an expansive outreach with 10 branch offices, 200 distributors, 500 multi-brand outlets and over 500 exclusive stores, with 20 international stores. As per its internal regulation dated January 20, 2003, IP rights w.r.t. LIBERTY can only be used by a partner in his individual capacity for a competing business subject to the consent in writing of two-third majority and a validly executed License Agreement and vide an assignment deed, these alongwith their respective goodwill stood assigned to M/s Liberty Footwear Company (hereinafter as ‘the Plaintiff’) and in 2003, only Liberty Shoes Limited (hereinafter as ‘LSL’) was granted an exclusive license to use the trademark LIBERTY under Class 18 and 25.

The first suit involves one Mr. Vivek Bansal, founder and Director of Liberty Innovative Outfits Limited (hereinafter as ‘the Defendant No. 1’), partner of the Plaintiff firm and employee of LSL company; and involved in the business of marketing school uniform, bags and shoes under the brand ANYTHING SKOOL as the Defendant No. 1 company.

Similarly, Liberty Fashion Outfit (hereinafter as the Defendant No. 2) was involved in same business being carried on by one, Mr. Raman Bansal, partner of the Defendant as well as the Plaintiff firm.

The Plaintiff sought to restrain use of identical/deceptively similar trademarks LIBERTY, LIBERTY,, and deceptively similar trade name LIBERTY INNOVATIVE OUTFITS LIMITED by the Defendant No. 1 and trademarks LIBERTY FASHION OUTFIT and, and trade name M/s LIBERTY FASHION OUTFITS by Defendant No. 2, as the same resulted in an infringement of the Plaintiff’s statutory and common law rights and moved the Hon’ble High Court of Delhi (hereinafter as ‘the Court’) with interim injunction applications as per Order 39 Rules 1 and 2 of the Code of Civil Procedure, 1908 (hereinafter as ‘the CPC’). It is pertinent to note that the Plaintiff had earlier received an order of ad-interim injunction in its favour dating November 20, 2019.

Contentions of the Plaintiff

It was contended that rights in a trademark transferred immediately upon execution of the assignment deed and mere non-recording by the Trade Marks Registry does not impede proprietorship claim, especially when application for recording such deed is pending at the behest of the Registry. Reliance was placed on judgment delivered in Sun Pharma Industries vs. Cipla Ltd.[5]

In addition, the Plaintiff contended to being the prior and registered proprietor of its well-known trademark LIBERTY since 1954 in several classes, alongwith extensive use by way of sales and advertisement expenses, and that the same had acquired immense reputation and goodwill. Defendants’ use of such impugned trademarks and logos without authorization or license amounted to infringement, with a view to create a false association between the Liberty Group and themselves and registration of deceptively similar trademark by the Defendant No. 2 does not impede the Plaintiff’s rights in its prior used trademark LIBERTY in a case of passing off.

Contentions of the Defendants

Primarily, the Defendants contended about non-registration of assignment deed and relied on the ground that despite the assignment deed, the Plaintiff is not registered as proprietor of LIBERTY trademark in class 25 and failed to mandatorily record the same with the Trade Marks Registry as per Section 45 of the Trade Marks Act 1999 (hereinafter as ‘the Act’). Thus, the proprietorship claim was invalid as under Sections 2(1)(v) and 28 of the Act and reliance was placed on ratio delivered by the Delhi High Court in Su-kam Power Systems Ltd. vs. Kunwer Sachdev & Ors[6]. Furthermore, it was contended that since there were disputes regarding validity of the assignment deed, the same may be refused by the Registrar until further determination of rights as per proviso to Section 45(1) of the Act.

The Defendants had also contented for dismissal of the suit due to bar by limitation and acquiescence as there were no prior objections against the Defendants’ use of the trademarks LIBERTY,  and in respect of their goods; invalid Power of Attorney (POA); and failure to comply with Order 39 Rule 3 of CPC requiring the Plaintiffs to serve a copy of the plaint, injunction application, supporting affidavits and documents relied upon to the Defendants and also to file an affidavit confirming such compliance in the Court. The Defendant No. 2 also contended its subsisting proprietary rights in the registered trademark  under class 25.

Non-Registration of Assignment Deed due to delay on part of Trade Marks Registry

Court’s observations with regards to non- registration of assignment deed

At the outset, the Hon’ble Bench comprising Hon’ble Mr. Justice V. Kameswar Rao, opined that the trademark LIBERTY was indeed assigned in favor of the Plaintiff, despite not being registered with the Trade Marks Registry. The Hon’ble Court had placed reliance on the application as filed by the Plaintiff herein with the Registry for changing the proprietor’s name and one POA executed in 2004 by Mr. Vivek Bansal and Mr. Raman Bansal, wherein Plaintiff’s rights in LIBERTY trademarks were recognized unequivocally.

Furthermore, after perusing judgments delivered in Ramaiah Life Style Café vs. Eminent Entertainment and Ors.[7] and Sun Pharma Industries case[8], it was observed that an assignee acquires title to the registered trade mark on assignment and not by registration and the latter is a mandatory requirement to register the said title. As per Justice Rao, “any delay on the part of the Trade Marks Registry cannot be to the prejudice of the plaintiff firm, who has every right to protect its right in the trade marks” and the Defendants herein had also not refuted to the Plaintiff filing letter with the Registry for registration of the same. Presently, the Court confirmed the order as passed under the ad-interim injunction and the suit is pending further adjudication.

Analysis and Take away

In the present suit, the Court has reiterated that delayed registration of an assignment deed by the Registrar under Section 45 of the Act is not fatal to the assignment of a trade mark. Upon a perusal of the provision and the words “where a person becomes entitled by assignment or transmission to a registered trade mark he shall apply in the prescribed manner to the Registrar to register his title, it is evident that entitlement exists upon an assignment and that would predicate on executing a valid assignment deed. This Section merely enumerates the mandatory requirement of registration of an assignment deed in order to act as a proof of title to proprietorship of over the trademark in respect of the goods or services. Further, as per the proviso to Section 45(1) if the validity of an assignment or transmission is in dispute between the parties, the Registrar may refuse to register the same until the rights have been determined by a competent court. In the present issue, the question of validity of the assignment deed was inadvertently or otherwise, as against another infringing party, Liberty Trends and thus, had recognized the Plaintiff’s rights subsisting in the LIBERTY trademarks.

Precedents on this point suggest that non-registration of an assignment deed cannot prima facie be regarded as a waiver of the rights thereunder, however, voluntary non-registration of an assignment deed, especially after gaining knowledge of a possible infringement, is to be deemed as a positive act towards such waiver or possible ‘acquiescence’ to such act of infringement. Even the provision lays a positive duty on the assignee towards its rights to register the deed and the Plaintiff herein had sufficiently showcased the same, therefore, disregard of such efforts would prove to be an impediment in carrying out the legislative intend behind the Act. This Court had earlier in M/S. Modi Threads Limited vs. M/S. Som Soot Gola Factory and Anr.[9] embarked upon the same query and concluded that regardless of delay in processing the application for transfer of ownership by way of assignment by the Registry, an assignee is not debarred from securing its rights. Another noteworthy observation was voluntary non-registration of an assignment deed can be a valid ground for dismissing a relief for interim injunction, as the purpose of granting the same is to secure the immediate rights/interests existing in the trademark and any proprietor who voluntarily sleeps on such right would not be entitled to such a relief.

Interestingly, it must be noted that a registration cannot be vice-versa proof of a right entitlement in a trademark, as held by the Hon’ble High Court of Karnataka in Hindustan Lever Ltd. vs. Bombay Soda Factory[10]. It is simply an evidence of the present proprietorship title.

Related Posts

Trademark Assignment

[1] I.As. 16177/2019 & 18169/2019 in CS(COMM) 637/2019; https://drive.google.com/file/d/1KJj6qfJ8nGkdT_Z0p4bnJCT9LuqxaVfy/view; accessed on July 13, 2020

[2] I.As. 16180/2019 & 18402/2019 in CS(COMM) 638/2019; https://drive.google.com/file/d/1KJj6qfJ8nGkdT_Z0p4bnJCT9LuqxaVfy/view; accessed on July 13, 2020

[3] Section 37 “Power of registered proprietor to assign and give receipt.” of the Trade Marks Act, 1999; http://www.ipindia.nic.in/writereaddata/Portal/IPOAct/1_43_1_trade-marks-act.pdf; accessed on July 14, 2020

[4] M/S. Nico Quality Products vs. V.Sreenivasan

[5] 2009 (108) DRJ 207

[6] 264 (2019) DLT 326

[7] CS (COMM) 1433/2016

[8] supra

[9] AIR 1992 Delhi 4, 1992 (22) DRJ 24

[10] AIR 1964 Kant 173, AIR 1964 Mys 173, (1964) 1 Mys L

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