‘Onida’ – A Brother’s Envy Owner’s Pride

The ET in an extremely detailed news item reports that the ‘Onida’ trademark may soon be the subject of an interesting legal battle between the Mirchandani brothers – Sonu Mirchandani & Gulu Mirchandani. Gulu had recently bought out Sonu’s holding in their company – Mirc Electronics – however Sonu is planning to launch a range of electronic products under the ‘Onida’ brand and through a company – Onida International in which Sonu has an 80% stake. Usually such buyouts involve the complete ownership of all IP associated with the company. This case however stands out for its facts.

The ET traces the origin of the ‘Onida’ trademark to Monica Electronics, a company which was incorporated in 1975 and which was owned by the Mirchandani family and which was acquired in 1998 by Mirc Electronics (also owned by the Mirchandanis) . In the 1990s Monica Electronics had allowed Onida International (through a letter) to use the ‘Onida’ trademark since the company was set up by the Mirchandanis themselves to export ‘Onida’ electronic products to the Middle East. As already mentioned above Sonu still owns 80% of the stake in Onida International while a minority stake is held by his brother. Sonu for his part has clearly stated that this initial letter is a valid license to use the ‘Onida’ trademark even in 2008. Also significant is ET’s observation that Sonu does not intend to manufacture the electronic products himself instead he is entering into a joint venture with a Japanese company to market their products under the ‘Onida’ trademarks.

As most of our readers must remember ‘Onida’ is one of the most popular Indian-grown brands not least because of its catchy advertisements featuring a devil incarnate (as a bald man with two horns and a tail) not to forget the catch-line – Neighbours Envy Owners Pride.

Clearly the ‘Onida’ trademark has turned out to be A Brother’s Envy Owner’s Pride. Given the popularity of the brand it is but obvious that the ‘Onida’ trademark and the goodwill associated with it is an extremely valuable asset to Mirc Electronics and it is unlikely that Gulu Mirchandani is going to sit by and let his brother exploit the trademark especially after paying him handsomely for his stake in Mirc Electronics. A license of course can be revoked at any time. The only caveat being that Mirc will have to pay damages as stipulated in the damages clause of the license. It is however unlikely that the initial license will even be held valid because this license seems to be contingent on Onida International exporting Monica Electronic’s products. I doubt whether the license would have been drafted so as to allow Onida International to use the trademark in conjunction with the products of any other company. However at this stage it is useless to speculate without an actual look at the initial license itself.