Trademark registration as registered user – Trademark registration in Tirupur

Notes on Clauses -This clause provides for trademark registration as registered user and largely corresponds to the existing sections 49 and 52. The clause sets out the procedure for making application and such registration, on completion of which the Registrar may register the proposed user for the goods or services for which he is satisfied. Licensing of trade mark is recognized universally as an important industrial property right and as such the procedure for registration of registered user is proposed to be made simple to encourage such registration. Consequently, the consideration for the registration of registered user of a trademark is not proposed to be extended to aspects which may affect the registration and better protection of trademarks. It is, proposed, therefore, to delete sub-sections (2) and (3) of section 49 of the existing Trade and Merchandise Marks Act, 1958.

Comments -This section provides for registration as registered user and broadly corresponds to section 49 of the 1958 Act with certain fundamental changes. This section sets out the procedure for making application for Trademark registration as a registered user. It will be useful to set out briefly the historical development of law in India in this respect.

Licensing of trade mark

At common law, licensing of trade mark by the proprietor for use by other persons was not considered permissible, as it was opposed to the basic function of trade mark which was to indicate trade origin. Such licensing was considered to endanger the validity of trademark registration. It was therefore that the old U.K. Trade Mark Act, 1905 did not recognize licensing of trade mark. However, by the U.K. Trade Marks Act, 1938 licensing of trade mark through a system of registration of registered user was introduced in the United Kingdom. This was on the recommendation of Goschen Committee which suggested the relaxation of the common law principle that there could be no separation or splitting up between the proprietorship of the mark and trade origin of the goods bearing such mark.

The Goschen Committee felt that, “The trend of modern commercial development requires some relaxation of the existing restrictions on the use of the registered trade mark by persons other than the proprietor. We don’t recommend a system of unrestricted licensing, as we are apprehensive that such a system would result in deception and confusion to the purchasing public; and we consider it essential that the right to use another trade mark should not be obtainable merely at the will of the registered proprietor but subject to control in the public interest. On the other hand, with such a safeguard we do not think that any provisions on the subject need be limited in their application to the case of parent and subsidiary companies, since such provisions will, we think, often be found of value in other circumstances, when the application would not result in deceiving purchasers.”

Based on the above, section 28 of the U.K. Trade Marks Act, 1938, was enacted and the same was adopted in India as section 39 of the Trade Marks Act, 1940. Thereafter based on the recommendations of Mr. JUSTICE AWANGAR in 1955 in his Report on Trade Marks Law Revision, the law was amended in 1958, vesting the final authority for permitting registration of registered user on the Central Government, having regard to the public interest and development of industry and trade.

In this connection, Mr. JUSTICE AYYANGAR had recommended that “it will be for the Central Government to consider whether any registered proprietor is trafficking in a mark by permitting too large a number of registered users……I might also point out that under the Industries (Development and Regulation) Act, 1951, the Foreign Exchange Regulation Act, 1947, in the matter of exercise of control over capital issues and under Import Control Regulations, Government are exercising powers to secure a planned economy in which there is no exploitation of Indian industries and of the Indian consumer by foreign interest and they take steps to safeguard against oppressive agreements. The suggestion I have made above regarding the control that the Central Government should exercise in the matter of according their approval to licenses by way of registered user would fit into that pattern and would in fact be complementary to the other pieces of legislation and executive action I have set out.”

The above recommendations were given statutory shape in 1958. In a controlled economy, indeed the Trade &Merchandise Marks Act, 1958, had served its purpose over the last four decades. However, much has happened since 1958, and it was felt that a comprehensive review of the existing law (1958 law) be made in view of developments in trading and commercial practices, increasing globalization of trade and industry, the need to encourage investment flows and transfer of technology, and need for simplification or harmonization of trademark management systems. Accordingly, substantial changes have been made in the new Trade Marks Act, 1999.

Main changes introduced

1. The final authority for disposal of registered user application is now transferred from the Central Government to the Registrar. The Central Government has now no role in this matter.
2. The concept of trafficking in trademark, which was the foundation of law of registered user in the 1958 Act, has been dropped.
3. The definition of “permitted use” has been enlarged to cover both registered user as well as an unregistered licensee under a written agreement.
4. To facilitate registration of the licensee of the registered user, the procedure has been simplified. The recording of licenses is considered to be of value both to the proprietors and licensee and to the public in general. Accordingly, considerations will be limited only to the scrutiny of the details required to be given under section 49. Circumstances such as the development of industry, trade or the interest of general public are omitted, as being not relevant Sub-sections (2) &3) of section 49 of the 1958 Act have therefore been deleted.
5. A new provision has been introduced empowering the Registrar to require a confirmation at any time from the proprietor whether the registered user arrangement is still in force. This is intended to keep the register of trademarks in this respect up to date. With the introduction of this provision, there may be a change in the present practice for limiting the period of registration of the registered user for seven years, whether or not the agreement between parties provide for longer period or without any limit of period.

Procedure for registration of a user

Where it is proposed that the person is to be registered as a registered user of a trademark, the registered proprietor and the proposed user will have to make an application jointly to the Registrar on Form TM-U, together with the prescribed fees. An application will be filed in triplicate and accompanied by the following documents:-

1. Agreement in writing between the registered proprietor and proposed user or duly authenticated copy thereof with respect to the permitted use of the trade mark
2. Document and correspondence, if any mentioned in the agreement or authenticated copies thereof.
3. An affidavit of the registered proprietor or by some person authorized, testifying to the genuineness of the documents accompanying the application and containing-

(a) The particulars and statements required by clause (1) of section 49;

(b) The precise relationship between the registered proprietor and proposed user, if any, for instance whether the relationship is as principal and subsidiary company or whether there is common control between their businesses;

(c) a statement as to the goods or services in which the registered proprietor is dealing, together with details as to whether the trademark which is the subject of the application has been used by him in the course of trade before the date of the application and if so the amount and duration of such user.

4. Such further or other documents and evidence/information, as the Registrar may call for.

Where more than one application for registration as registered user is made by the same registered proprietor and the same proposed registered user in respect of trademarks covered by the same agreement, the documents may be filed with anyone of the applications and a cross reference to such documents given in the other application or applications.

Particulars to be given in the agreement

Under section 49

1. The agreement between the parties shall be in writing entered into between the registered proprietor and the proposed registered user with respect to the permitted use.
2. Affidavit made by registered proprietor or on his behalf giving particulars of the relationship between the proprietor and the proposed user including particulars showing control to be exercised by the proprietor over the permitted use; whether it is a sole registered user arrangement or whether there are any other restrictions; and
3. Set out all the particulars specified in sub-section (1) of section 49. Application under section 49 is to be made jointly by the registered proprietor and the proposed user and accompanied by necessary documents specified in section 49(I). In addition, the Registrar may require any other documents or evidence as may be required by him. The application shall be filed within 6 months from the date of agreement made between the parties under section 49(1).

Rule 86(4) provides that “Where more than one application for Trademark registration as registered user is made by the same registered proprietor and the same proposed registered user in respect of trademarks covered by the same agreement, the documents mentioned in sub- section (1) of section 49 may be filed with anyone of the applications and a cross reference to such documents given in the other application or applications”.

Once the requirements are complied with to the satisfaction of the Registrar, the Registrar shall register the proposed user in respect of goods or services as to which he is so satisfied. It will follow therefore once a joint application is made by the proprietor and the proposed user, complying with all the requirements, the Registrar will be bound to register the proposed registered user in respect of the goods or services as to which he is so satisfied.

The Registrar under sub-section (3) will issue a notice in the prescribed manner of the fact of registration of the person as a registered user, to other registered users of the trade mark, if any. Though there is generally no room for refusal of an application of registered user, the provisions under rule 88 give an enabling power to the Registrar to refuse or to order conditional acceptance after giving an opportunity of hearing to the parties.

After determination of the contract or franchise agreement between the parties, a total prohibition on the franchisee from entering into similar business for all time to come is void under section 27 of the Contract Act, 1872. However, restriction to the effect that the franchisee shall not at any time during or after the contract period keep or use any name which is in any way identical or deceptively similar to the name or logo of the trademark proprietor is in accordance with the trade marks law.

Conditional acceptance

Imposition of any conditions or restrictions in the case of a registration of registered user will be generally with reference to the conditions or limitation attached to the basic registration of the trade mark or those arising out of the agreement between the parties themselves.

The “permitted use”, as defined, enacts that the licensed use must comply with any conditions or restrictions to which the registration of the trademark is subject. Further, if the agreement between the parties contains any condition, such as for instance, about the period of permitted use, the period of registration of registered user will also be limited accordingly.

Where the Registrar proposes to accept the application subject to any conditions, restrictions or limitations, he will issue a notice in writing to the applicants, stating the grounds on which he proposes to issue such orders. The applicants will be entitled for a hearing before final orders are passed in the matter. If the registered proprietor and the proposed registered user do not apply for a hearing within one month from the receipt of the notice, the Registrar may accept the application subject to those conditions and limitations. The power of the Registrar to refuse an application is just an enabling one and will be exercisable, only where the parties do not agree to the conditions or limitations, It may also arise in a rare case where the registered proprietor has already granted an exclusive licence to a party and, in contravention of the terms of such licence, is proposing to appoint another licensee.

Hearing

On a notice issued by the Registrar under Rule 88 of the Trade Marks Rules,2017, the parties may apply for a hearing. The Registrar may then appoint time for the hearing within two months and shall give them not less than a month’s notice of the time so appointed. In the light of the hearing, the Registrar may decide whether to accept the application or accept it conditionally or refuse the application. The Registrar will communicate his order in writing to the applicants and to other registered users of the trademark, if any.

Entry in the Register [Rule 89]

Where an application is accepted for registration, the Registrar will register the proposed registered user as a registered user in the Register. When registered, the date on which the application was made will be deemed to be the date of trademark registration as registered user. In addition to the particulars and statements mentioned in paragraph (i) to (iv) of sub-clause (b) of clause (1) of section 49, the entry will contain the name, description and principal place of business in India of the registered user and if he does not carry on business in India his address for service in India.

Payment of royalties, involving transmission of funds abroad

In a case where the licensee is under obligation to pay any royalty or other consideration to the licensor in respect of the use of the trade mark in terms of the agreement, it is to be noted that the licensee has to take steps separately in accordance with the relevant law or regulation. Rule 90 thus makes it explicitly clear that the trademark registration of registered user of a trade mark shall not be to imply an approval of the agreement in so far as it relates to the transmission of any money as consideration for the use of the said trademark to any place outside India.

Notification of registration as registered user [Rule 91]

A notification in writing of the trademark registration of a registered user shall be sent by the Registrar 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 trade mark and shall also be inserted in the Journal within three months of such entry in the register.

Period within which application is to be made

Ordinarily an application jointly by the proprietor and the proposed user will be made to the Registrar soon after the parties entered into an agreement and the agreement is signed. However, sub-rule (3) of 86 provides that no application shall be entertained unless the same has been filed within 6 months from the date of agreement. Under the earlier law, the period was 18 months from the date of agreement.

Confidentiality of information

Sub-section (4) mandates that the Registrar shall, on request by the applicant, take steps to secure that the information given for the purpose of trademark registration of registered user is kept confidential. Accordingly, except matters which are entered on the register, the Registrar will not make available other matters to any other person. In this context, the sub-section uses the words “is not disclosed to rivals in trade”. Apparently, it may not be possible for the Registrar to identify that the person is a rival in trade. The expression therefore is to be construed as generally as “any other person”. Unless authorized, such information is preserved confidential and not disclosed to any other person. For more clarification about Trademark registration in Tirupur, kindly visit our website and feel free to contact us.. We are here to help you.. Thanks for reading!!!