Trademark Licensing in India
Trademark Licensing refers to authorizing the use of the concerned trade mark by another party and rights in relation thereto. Authorizing a third party for using the trade mark is tenable on receipt of “royalty” in exchange for such use.
Thus, Trademark Licensing refers to the mode of transfer of rights wherein the actual proprietary rights in the trademark vests with the trademark owner and only few stipulated rights to use the trademark is given to a third party for a mutually agreed period of time.
Transfer/ Sale/ License/ Assignment of Trademark in India
Rights in a trademark can be transferred to a third by way of trademark assignment or license.
Trademark licensing Types-India
Majorly there are two types of trademark licenses:
- Exclusive License
- Non-Exclusive License
To know more about Trademark Assignment/ Sale of Trademark in India, click here.
How to License a Trademark in India?
Trademark Licensing in India is governed by the Trade Marks Act, 1999 (hereinafter, “the Act”). Though the term Licensing/ license is nowhere used in the Act, the statutory provisions in the Act governing trade mark licensing in India refers to the provisions relating to “registered users.”
It would be relevant to mention that recordal of permitted use is voluntary, however it is advisable that the Registered User Agreement/ License Agreement be registered with the Registrar of Trade Marks. The application for recordal of the said license agreement should be made within six months from the date of such agreement.
Procedure for Trademark licensing as embodied under Section 49 of the Act:
Though recordal of permitted use is voluntary, it is advisable that the Registered User Agreement/ License Agreement be registered with the Registrar of Trade Marks. An application for recordal of License Agreement /Registered User Agreement with the Trade Marks Registry can only be made in respect of registered Trademarks and the application for recordal of the said license agreement should be made within six months from the date of such agreement.
For registering a person as a registered user/ licensee of a trade mark, the registered proprietor/ licensor and the registered user/ licensee shall jointly apply in writing to the Registrar on FORM TM-U, along with —
- the agreement in writing or a duly authenticated copy of it, entered into between the registered proprietor/ licensor and the proposed registered user/ licensee with respect to the permitted use of the said trade mark; and
- an affidavit made by the registered proprietor/ licensor giving particulars: – of the relationship, between the registered proprietor/ licensor and the proposed registered user/ licensee – of control by the proprietor/ licensor over the permitted use by the licensee which their relationship will confer – of goods or services in respect of which registration is proposed; – of conditions or restrictions, if any, proposed with respect to the characteristics of the goods or services, to the mode or place of the permitted use, or to any other matter; – of time period for the permitted use;
- a Power of Attorney signed in favour of agents, if any
- such further documents or other evidence as may be required by the Registrar or as may be prescribed.
Once the Registrar is satisfied with the aforesaid application and the entailed particulars, he registers the proposed registered user/ licensee in respect of the goods or services as to which he is satisfied. The entry in the register shall state the date on which the application for registration of registered user was made. This is the effective and enforceable date against third parties. The recordal will be published in the Trade Marks Journal within two month from the registration date. The Registrar is also obligated to issue a notice in the prescribed manner of the registration of such licensee, to other registered users/ licensees of the concerned trade mark, if any. However, upon request by the applicant, the Registrar shall take steps to ensure that the information given for the purposes of an application under this section (other than matters entered in the register) is not disclosed to rivals in trade.
Variation or Cancellation of Registration as a Registered User
A trademark may be licensed for some or all of the goods or services covered. The Act under Section 50 provides for variation or cancellation of the registration of a registered user/ licensee on the grounds, among others, that the registered user/ licensee has used the trademark in a manner not in accordance with the agreement, or the proprietor/ user has failed to disclose any material fact for such registration, or that the stipulation in the agreement regarding the quality of goods is not enforced, or that the circumstances have changed since the date of registration, etc. Under the said provision notice and opportunity of hearing is provided before cancellation of registration.
Rights of the registered user/ licensee:
- To initiate proceedings for infringement in his own name as if he were the registered proprietor. The registered trademark user/ licensee in India is entitled to call upon the registered proprietor/ licensor to initiate proceedings against infringement of the trademark. He can also institute proceedings in his own name after a one month notice, if the proprietor refuses or neglects to do so.
- A registered user/ licensee does not have a right of assignment with respect to the trademark.
The unregistered trademark user, however, has no right to institute any proceeding for infringement. It is advisable for the licensee to cite the proprietor of the trademark as co-defendant in any such proceedings. If the proprietor is added as a co-defendant by the registered user, he shall not be liable for any costs, unless he appears and takes part in the proceedings.
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