In today’s world, intellectual property forms the backbone of every sector. Whoever comes up with the idea or invention or creation has sole control over its use since it is his hard work. Possessing these rights allows for exploitation of one’s creation, which helps in growth in market share, profit-making, leveraging etc. In India, these rights are guaranteed under the Patent Act,1970, Trade Marks Act, 1999, Indian Copyright Act,1957 and Designs Act,2000, which protect the author, inventor, or intellectual property owner.
One significant aspect of intellectual property is licensing. An intellectual property right owner known as a licensor agrees to allow the other known as a licensee to use the rights. The rights can be in trademark, patent, copyright, designs subject to certain conditions in exchange for an agreed payment known as a royalty. This nowadays has become a common practice for both the licensor as well as the licensee.
Process of Licensing of the trademark is the subject matter of study of this article.
Trademark Licensing is the process in which a registered proprietor (licensor) who as per Section 2(1)(v) of Trade Marks Act, 1999 (hereinafter referred to as the “Act” ) is the person for time being who entered in the register as a proprietor of the trademark authorises a registered user ( licensee ) who as per Section 2(1)(x) of the Act is a person who is for the time being registered as such under section 49 of the Act or a third person by consent of registered proprietor ( permitted user i.e licensee) to use the registered mark in the course of trade by entering into a licensing agreement without transferring the ownership of the mark.
| Registered User | Permitted User/Unregistered Licensee |
| To be called as a registered user, the proposed register user and registered proprietor have to file an application jointly to the Registrar of the trademark. | There is no need to file an application to the Registrar of trademarks. |
| They have the right to sue for infringement in their own name. | They do not have the right to sue for infringement in their own name. |
Section 48 of the Trademark Act deals with who is the “Registered User”. Sub-section (1) states that “ Subject to the provisions of section 49, a person other than the registered proprietor of a trademark may be registered as a registered user thereof in respect of any or all of the goods or services in respect of which the trademark is registered ”.
The use of the word “may” in section 48(1) of the Act makes it clear that registration of users is not mandatory.
Section 49 of the Act deals with, “Registration as a registered user” and states the process that is to be followed for such registration.
When it is proposed that a person should be registered as a registered user of a trademark, the proposed registered user and the registered proprietor have to jointly apply in writing to the Registrar in Form TM-U. This is to be accompanied by the documents, evidence and details as required in section 49 (1) within six months as per Rule 86 of Trade Marks Rules, 2017 (hereinafter referred to as “Rules,2017”) from the date of agreement for permitted use of a trademark.
After the Registrar is satisfied that all the requirements mentioned in section 49(1) are complied with, he will register the proposed registered user in respect of the goods or services as to which he is so satisfied and publish the same in the Journal. Section 49(2) of the Act and Rule 89 of the Rules,2017 describe the particulars that the register with respect to the entry of a registered user contain :
Under Rule 90 of the Rules,2017, the Registrar shall communicate in writing of the registration of a registered user to the registered proprietor of the trademark, to the registered user and to every other registered user whose name is entered in relation to the same trademark. It shall also be inserted in the Journal within three months of such entry in the register. Under section 49(4) of the Act, if the applicant requests, the Registrar takes steps for securing that 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.
NOTE: A s per Rule 88 of the Rules,2017 the Registrar may after giving an opportunity of hearing to the parties concerned either refuse the application or accept the same with such condition(s), if any, as he may think fit and shall communicate such order in writing to the parties.
Section 49(1) of Act specifies that every joint application made to the Registrar by the registered proprietor and proposed registered user should be accompanied by:
(i) relationship, existing or proposed, between the registered proprietor and the proposed registered user, including particulars showing the degree of control by the proprietor over the permitted use which their relationship will confer and whether it is a term of their relationship that the proposed registered user shall be the sole registered user or that there shall be any other restriction as to persons for whose registration as registered users application may be made;
(ii) stating the goods or services in respect of which registration is proposed;
(iii) stating the conditions or restrictions, if any, proposed with respect to the characteristics of the goods or services, to the mode or place of permitted use, or to any other matter;
(iv) stating whether the permitted use is to be for a period or without limit of the period, and, if for a period, the duration thereof made by the registered proprietor or by some person authorised to the satisfaction of the Registrar to act on his behalf
An application for registration, variation in respect to goods/services or condition/restriction and cancellation of registered user can be made physically by paying a fee of Rs 5000 and in an electronic form by paying a fee of Rs 4500 by filling all the mandatory fields mentioned in Form TM-U .
The registration of a person as a registered user under section 50 of the Act may be varied by the Registrar as regards the goods or services in respect of which it has an effect on the application in writing in the prescribed manner by filling form TM-U of the registered proprietor of the trademark.
The Registrar under section 50 of the Act is empowered to cancel the registration of the registered user on the following grounds :
The Registrar either on his own motion or on the application in writing in the prescribed manner by any person can cancel the registration on the ground that any stipulation in the agreement between the registered proprietor and the registered user regarding the quality of the goods or services in relation to which the trademark is to be used is either not being enforced or is not being complied with.
Rule 94 of the Trademark Rules,2017 deals with the Procedure on application to vary entry or cancel the registration.
(1) NOTICE: The Registrar shall notify in writing applications under section 50 to the registered proprietor and each registered user (not being the applicant in either case ) of the trademark.
(2) INTERVENOR: Any person notified under sub-rule (1) who intends to intervene in the proceedings, shall within one month of the receipt of such notification give notice to the Registrar in Form TM-U to the effect and shall send therewith a statement of the grounds of his intervention. The Registrar shall therefore serve or cause to be served copies of such notice and statement on the other parties, namely, the applicant, the registered proprietor, the registered user whose registration is the subject matter of the proceeding in question and any other registered user who intervenes.
(3) LEADING EVIDENCE: In the case of any application made under section 50, the applicant and any person notified under sub-rule (1), may, within such time or times as the Registrar may appoint, leave the evidence in support of his case, and the Registrar after giving the parties an opportunity of being heard, may accept or refuse the application or accept it subject to any conditions, amendments, modifications or limitations he may think right to impose and shall inform the parties in writing accordingly.
(4) DISPOSAL OF THE APPLICATION: In the case of an application for varying any registration under section 50(1)(a) or cancelling any registration on any of the grounds mentioned in section 50(1)(c)(i) to (iv) the Registrar shall consider the application together with any notice in Form TM-U and statement of case filed and shall dispose of the application and also inform the parties in writing accordingly.
A registered user under section 52 of Act may institute proceedings for infringement in his own name as if he were the registered proprietor. The registered proprietor shall be made as a defendant in this case. The rights and obligations of such registered users in such cases being concurrent with those of the registered proprietor. However, a registered proprietor so added as defendant shall not be liable for any costs unless he enters an appearance and takes part in the proceedings.
In Himalaya Drug Co. Pvt. Ltd. vs Arya Aushadhi Pharmaceutical ( AIR 1999 MP 110) , the Madhya Pradesh High Court held that, “ A bare perusal of the provision would show that the registered user of the Trade Mark shall be entitled to call upon the proprietor of such Trade Mark to take proceedings to prevent infringement thereof and if such registered proprietor refuses or neglects to do so within three months after being so called upon, the registered user may institute proceedings for infringement in his own name as if he were the proprietor, making the proprietor a defendant.
Going by the relevant provisions of the Act, it is firstly proprietor of a Trade Mark who can maintain a suit for infringement of such Trade Mark. The registered user could also do it but only after the registered proprietor would neglect it or refuse it within three months from the date of having
Section 54 of the Act states that “If in case the registered user being an individual enters into a partnership with any other person for carrying on the business concerned then the firm may use the trademark, if otherwise in force, only for so long as the registered user is a member of the firm. Also where the registered user being a firm subsequently undergoes a change in its constitution then the reconstituted firm may use the trademark only till the time it is in force.”
The Supreme Court in Gujarat Bottling Co. v Coca-Cola Co. 1995 AIR 2372 held that “ Not only a “registered user” but even an unregistered licensee could validly use the trademark on the fulfilment of the three conditions of not causing confusion or deception to the public; not destroying the distinctiveness of the trademark in the public; and maintaining a connection between the proprietor and the goods under the mark and this type of license would be governed by common law.”
Licensing of the trademark in these times has become a win-win situation. The registered proprietor (licensor) who has already established himself in the business arena and the registered user or permitted user who might be a start-up company (licensee) can benefit from this. The use of the registered trademark by a registered user is subject to fulfilling a simplified process under section 49 of the Act. However, a permitted user or unregistered licensee can also use the trademark by consent of the registered proprietor in a written agreement. This licensing process thus not only widens the product’s scope but also helps in the growth of trademark in terms of value and reputation.
SHRUTI KAKKAR AUTHOR OF THE ARTICLE Junior Legal Research Associate, Indian Law Watch Shruti is BA LL.B from Guru Gobind Singh University pass out. She has been in top three winner positions in several reputed competitions of law.
