Trademark Licensing in India: Legalities, Registration, and Cancellation

The concept of trademark licensing refers to a legal arrangement where the owner of a trademark (known as the licensor) grants permission to a third party (the licensee) to use the trademark in commerce. However, under Indian law, the term "Licensing of Trademark" is not explicitly defined in the Trademarks Act, 1999. Despite the absence of a specific definition, the principle remains simple: trademark licensing allows a proprietor to authorize others to use their registered mark without transferring ownership.

This arrangement offers flexibility to trademark owners as they can impose certain limitations on the licensee’s use of the trademark through a licensing agreement. The proprietor can restrict the use of the trademark to specific products or services and establish terms for its usage. In return for granting such rights, the licensor typically receives a royalty or fee. If you are navigating legal complexities surrounding trademark licensing and need expert advice, the Indian Lawyers Association is the best platform to find trusted legal professionals. With its comprehensive directory, you can easily connect with experienced lawyers specialized in intellectual property and trademark law.

Advantages of Trademark Licensing

Trademark licensing benefits both the licensor and the licensee. The licensor can expand their brand's reach and generate revenue through royalties, while the licensee gains access to an established and recognized brand, reducing the time and resources needed to build their own reputation. Additionally, licensing helps companies collaborate and enter new markets where the trademark owner may not have a direct presence.

Types of Trademark Licensing

1. Exclusive Licensing: The trademark owner grants exclusive rights to the licensee, preventing the owner or any other third party from using the trademark during the license term.

2. Non-Exclusive Licensing: The trademark owner retains the right to use the mark and can grant the same license to multiple parties simultaneously.

3. Sublicensing: The licensee, with permission from the licensor, can grant a sublicense to another party to use the trademark under the same conditions.

Legal Framework and Importance of Registration

Although the registration of a trademark license is not mandatory in India, it is highly recommended for legal protection and clarity in the event of a dispute. Registering the license creates a public record of the arrangement, which can be used as evidence in legal proceedings.

A critical case highlighting the importance of registration is Himalaya Drug Co. Pvt. Ltd., Bangalore v. Arya Aushadhi Pharmaceutical Works, Indore. In this case, the court ruled that failure to prove the registration of a trademark user may result in the dismissal of a lawsuit. This serves as a reminder of the significance of registering a trademark license with the Trademark Office (TM-O).

Trademark License Registration Process in India

To legally register a trademark license in India, both the owner of the trademark and the licensee must comply with the provisions of the Trademarks Act, 1999, specifically Section 49, which deals with the registration of trademark users.

Here’s a step-by-step breakdown of the registration process:

1. License Agreement: A written agreement outlining the terms and conditions of the license must be drafted and signed by both the licensor and licensee.

2. Joint Application: The trademark owner and the licensee must file a joint application to the Registrar of Trademarks for registration of the license.

3. Form TM-U: The application must be made in Form TM-U, which is specifically designed for registering trademark users.

4. Affidavit: An affidavit authenticated by the licensor (trademark owner) must accompany the application. This affidavit should include critical details such as:

   • The relationship between the licensor and licensee.

   • The duration of the license agreement.

   • The specific goods or services covered by the license.

5. Fees: The government-prescribed fee for each mark is Rs. 4500/-. This fee applies per mark, meaning that if the license covers multiple trademarks, the corresponding fee must be paid for each.

Duration and Renewal of License

A trademark license agreement usually specifies the duration of the license. Once the duration expires, both parties can either renew the agreement under new terms or terminate the license. In the case of non-renewal, the licensee loses the right to use the trademark.

Circumstances Leading to Cancellation of Trademark License

Cancellation of a trademark license can occur for several reasons, and it can be initiated by either the licensor, licensee, or another registered user of the trademark. Some of the key grounds for cancellation include:

1. Breach of Agreement: If the licensee violates any terms of the written license agreement, the licensor can apply for cancellation.

2. Misuse of Trademark: If the licensee’s use of the mark causes deception, confusion, or dilution of the brand, the license may be revoked.

3. Misrepresentation: If either party fails to disclose crucial facts or makes false statements, the license can be canceled.

4. Changed Circumstances: If circumstances have changed since the original registration in a way that would have justified a denial of the registration, cancellation may be pursued.

5. Conflict of Interest: The cancellation may also occur if the registration of the license impacts the rights vested in the applicant by virtue of a contract, and the contract has not been performed.

When the Trademark Office (TM-O) cancels or modifies a registered license, it notifies all registered users likely to be affected by the change, including the trademark owner.

Cancellation Process

The process to cancel a trademark license involves the following steps:

1. Application for Cancellation: Either the licensor or the registered user may submit an application for cancellation. The application must state the grounds for seeking cancellation.

2. Form Submission: The application is to be filed in the appropriate form with the Registrar of Trademarks.

3. Fees: A fee of Rs. 4500/- per mark is required when filing the cancellation request.

4. Notice to Affected Parties: All registered users and the proprietor of the trademark will be notified about the application for cancellation.

Conclusion: Ensuring Legal Safeguards in Trademark Licensing

Trademark licensing is a valuable tool for both trademark owners and businesses looking to benefit from a reputable brand. However, it is essential to handle licensing agreements with proper legal diligence, including registering the license with the Trademark Office. A registered trademark license not only provides legal clarity but also ensures that the interests of both parties are safeguarded in case of disputes or conflicts. By adhering to the registration and cancellation procedures outlined above, businesses can create strong, enforceable agreements that protect their intellectual property while maximizing their commercial potential.