Trademark

A Response to the Alternate Interpretation on Permissibility of Sub-licensing under Indian Trademark Law


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Last week, Kapil had written a guest post giving an alternate interpretation to the arguments in my post on the impermissibility of sub-licensing arrangements under the Trade Marks Act, 1999 (‘the TM Act’). The main counter points by Kapil against my argument that the TM Act does not permit sub-licensing, as I understand, are listed below:

  1. The TM Act does not explicitly restrict the provision of sub-licensing clauses in an agreement between a proprietor and a user.
  2. Section 2(1)(r)(i) read with section 49(1)(a) requires a written agreement specifically between the proprietor and the user. In comparison, the language of section 2(1)(r)(ii)(c) is broader because in any agreement between a proprietor and a user under this section, the proprietor can provide consent to the user to further sub-license the mark. The language of the section does not specifically require that an agreement be signed directly between the proprietor and a user.  The same principle can be extended to sub-licensing involving unregistered marks where the agreement can provide consent to the licensee to enter into sub-licenses.
  3. As for quality control, the same can be provided in the agreement between the user and the sub-licensee or even in the agreement between a proprietor and a user.

I disagree with Kapil on all of the above points for the reasons I explain below:

Historical Perspective

It is important to look at the history of the trademark statutes in India while debating this issue. The first trademark statute in India, namely, the Trade Marks Act, 1940 was based on the UK Trade Marks Act, 1938. Post-independence, India repealed the 1940 Act and enacted the Trade & Merchandise Marks Act, 1958 (“the TMM Act”). Section 28(4) of the UK Trade Marks Act, 1994, which superseded their 1938 Act, provides for the option of a sub-licence in a manner similar to Kapil’s interpretation of “consent” under 2(1)(r)(ii)(c).

The TMM Act was repealed in 1999 by the TM Act (notified into effect in 2003), four years after the 1994 UK statute was enacted.  Kapil very rightly points out that the TM Act does not use the term ‘license’. Even its predecessor, the TMM Act, did not use that term. Instead, the term used is ‘permitted use’, which was borrowed from the 1938 Act of the UK into the 1940 Act of India and passed on to the successive statutes. While the UK, in its 1994 Act, has since replaced ‘permitted use’ with the expression, ‘license’ (see section 28) in its 1994 Act, the remnants of this historical connection with the UK law continues in the Indian Act of 1999 which still sticks to ‘permitted use’.

More importantly, in the TM Act, the meaning of ‘permitted use’ has been expanded to include unrecorded licenses. Considering that this was a big statutory shift from the past as far as ‘permitted use’ is concerned, if the legislators were so minded, a provision similar to Section 28(4) of the 1994 UK Act could also have been added through specific language. But this was not done. Given this background, the limits of interpretation are conveniently, but wrongly stretched, when the provision for a sub-license is suggested to be read into the provisions of the TM Act.

Judicial Interpretations to Sub-License and Permitted Use

While analysing the provisions regarding ‘permitted use’ under the TM Act, it is also imperative to bear in mind the case law jurisprudence in India on permitted use. I did not see any discussion by Kapil on the observation by the Delhi High Court in Rob Mathys India Pvt. Ltd. v. Synthes Ag Chur which specifically rejected user by a sub-licensee.

The TMM Act recognized only recorded licensees.  However, three years prior to the enactment of the TM Act in 1999, which repealed the TMM Act, the Supreme Court of India issued an order in Cycle Corporation of India Ltd. v.  T. I. Raleigh Industries Pvt. Ltd. and Ors. One of the issues in that case was whether the bona fide use by an unregistered licensee could be considered use for the purposes of section 46(1) (non-use cancellation) of the TMM Act. The Supreme Court found that the legislature did not intend the owner to be deprived of his property at the instance of a person who has been authorised to use the mark by the owner himself merely because the user is not registered. A quote from the order is below:

“13. In K.R. Beri & Co. v. The Metal Goods Mfg. Co. Pvt. Ltd. and Anr. MANU/DE/0324/1980, the Division Bench construed Section 48(2) and held that an unregistered user of the trade mark even with the consent of the proprietor cannot be construed to be a registered user under Section 48(1) and such construction renders Sub-section (2) of Section 48 surplusage or otiose, which is impermissible by statutory construction. We have given anxious consideration to the reasoning therein. On strict interpretation, the view of the Division Bench may be correct but it is not correct to hold that a bona fide user of an unregistered user when connection between the proprietor of the trade mark and the permitted user in relation to passing off of the goods under the trade mark are proved, renders Sub- section (2) of Section 48 surplusage or otiose.

This order of the Supreme Court, which recognized the use by an unrecorded licensee appears to have heralded the inclusion of section 2(1)(r)(ii) to the TM Act. The only difference in the language of the respective subsections (i) and (ii) to section 2 (1)(r) is that while subsection (i) requires the agreement to be recorded with the Registry, (ii) does away with such a requirement and accepts an unrecorded agreement from the proprietor in writing. The points that are common to both the subsections are that: (i) the user and the goods/ services in respect of which the mark is used must be connected in the course of trade with the proprietor, (ii) that the mark must be a registered mark; and (iii) that the use must comply with the conditions of registration.  In view of the above, 2(1)(r)(ii) was introduced into the TM Act to provide recognition to unrecorded licenses.  As such, I believe that there is no room to accept an interpretation that the language of 2(1)(r)(ii)(c) is broad enough to include sub-licensing, especially in the absence of express language.

Need for a Connection in the Course of Trade

Another problem with interpreting a sub-licensing provision into the language of the statute, in my view, is that it does not address the issue of a connection of the owner of the mark in the course of trade with the relevant goods or services in the context of a sub-licensing arrangement.

For a valid trademark license, there must be a connection in the course of trade between the proprietor and the goods which he puts into the market.  Such a connection is established through quality control exercised by the proprietor. In the case of a license under section 2(1)(r)(i), the agreement that is recorded with the TM Office requires explicit provisions for demonstrating that there is quality control by the ‘proprietor’. I disagree with Kapil’s argument that quality control can be contracted out. It has been held by the Indian courts [the Supreme Court in American Home Products Corporation v. Mac Laboratories Pvt. Ltd., and Madras High Court in Fatima Tile Works & Anr v. Sudarsan Trading Co. Ltd. & Anr.] that if there is no real trade connection between the proprietor of the mark and the licensee or his goods/ services, there is room for conclusion that the grant of the licence amounts to trafficking in the mark. Trafficking of a trade mark conveys the notion of dealing in a trade mark primarily as a commodity in its own right rather than for the purpose of identifying or promoting merchandise in which the proprietor of the mark is interested. Besides stretching the language of the statute to read the permissibility of an agreement between the user and a sub-licensee, Kapil has added a caveat that in such arrangements, if the proprietor has provided for stringent quality control of the sub-licensee, all would be well. If so, the proprietor could directly enter into another user agreement with the “sub-licensee”. Why would he resort to sub-licensing?

Unregistered Marks and Licensing

I agree with Kapil that the TM Act does not contain any provision prohibiting the licensing of an unregistered trademark. This issue has also been addressed by courts in India and I am citing a Calcutta High Court judgement in Caprihans India (P) Ltd. v. Registrar of Trademarks. It was held by the Court that a person who claims to be proprietor of a trademark would also mean a person claiming to be the proprietor of an unregistered trademark, using it through a common law licensee.

However, for the same reasons above, I disagree that a sub-licensing arrangement is justifiable in this case as well.

Latha Nair

Latha Nair

Latha is a partner with the Indian IP boutique, K&S Partners. An alumnus of NLSIU Bangalore, Latha’s practice in the firm focuses on prosecution and enforcement of trademarks, domain names and copyrights as well as advisory and transactional work relating thereto. A niche area of her practice also focuses on the protection of geographical indications. Latha has published several articles on trademarks, copyrights, geographical indications and data protection over the years and the same are available on her firm’s website www.knspartners.com. Currently, she serves as a Principal Editor to International Trademark Association’s online searchable guide on ‘Geographical Indications, Certification Marks & Collective Marks’. She is also a regular speaker at various national and international fora on issues relating to intellectual property.

10 comments.

  1. AvatarAnon

    Hi Latha,

    1. “As such, I believe that there is no room to accept an interpretation that the language of 2(1)(r)(ii)(c) is broad enough to include sub-licensing, especially in the absence of express language.” In the absence of express language to the contrary, one must presume that the arrangement of sub-licensing is permitted by the TM Act.

    2. “For a valid trademark license, there must be a connection in the course of trade between the proprietor and the goods which he puts into the market. Such a connection is established through quality control exercised by the proprietor.” The quality control is certainly being exercised by the licensor through his written contract with a licensee which allows for sub-licensing on same or more restrictive terms as the licensee itself is being subjected to, and quality control is the foremost among those standards.

    Honestly, I’ve read both your posts with great interest and cannot find myself agreeing with your points in any way. Or, indeed, understanding the logic behind the exclusion of the sub-licensing model for TMs under the Act. Kapil’s post succinctly summarizes my own understanding and interpretation of the Act.

    Sub-licensing helps reduce transaction costs and is a way for proprietors to expand their reach through trusted licensees and stringent contractual conditions. It has been accepted as a part of the industry and there is no basis in my reading of the Act which supports your interpretation.

    Reply
    1. Latha R NairLatha R Nair

      Dear Anon,

      Thank you for your comments. I respond to both in seriatim below.

      1. You say that, “In the absence of express language to the contrary, one must presume that the arrangement of sub-licensing is permitted by the TM Act”. How do you say that we can presume this? Is there any case law or any historical aspect of the Indian trademark law or even parliamentary debates that you can cite and guide me to as a basis for this presumption? As I understand, we cannot read words into the provisions of a statute. To support what I am saying here, I am citing from two Supreme Court orders:

      a. Nusli Neville Wadia vs. Ivory Properties and Ors. (04.10.2019 – SC):

      “27. The court has to keep in mind the fact that, while interpreting the provisions of a statute, it can neither add, nor subtract even a single word. The legal maxim “A verbis legis non est recedendum” means, “from the words of law, there must be no departure.” A Section is to be interpreted by reading all of its parts together, and it is not permissible to omit any part thereof. The court cannot proceed with the assumption that the legislature, while enacting the statute has committed a mistake; it must proceed on the footing that the legislature intended what it has said; even if there is some defect in the phraseology used by it in framing the statute, and it is not open to the court to add and amend, or by construction, make up for the deficiencies, which have been left in the Act”.

      b. F. Hoffmann-La Roche Ltd., Switzerland and OSI Pharmaceuticals, Inc., New York vs. Cipla Ltd., Mumbai Central, Mumbai (07.09.2012 – DELHC) : MANU/DE/4182/2012

      “It is well settled principle of law that the Courts cannot under the premise of interpretation can read into the words in the provisions of the statute when they are not specifically legislated. The Court also cannot enlarge or limit the scope of the provisions by reading into something which is not present in the wordings of the Section”.

      So I think it is incorrect to read words into the TM Act to support the premise that the TM Act permits sub-licensing – however prevalent a practice it may be.

      2. To respond to your second comment, I take support from my response above to your first comment. When sub-licensing is not permitted by the statute explicitly, how can the proprietor provide for it in a license agreement? Such a contract would be contrary to the law and hence not enforceable. You say that, “it has been accepted as part of the industry”. But I don’t believe that it would be a reason to read sub-licensing into the provisions of the Act.

      Reply
      1. AvatarAnon

        I think I finally understand your position and finally understand why we differ. In my opinion, you don’t even need to go to the historical debates for the enactment of the TM Act because all you need is the rule of literal interpretation – my own reading of s. 2(1)(r)(ii)(c) is that its language and natural meaning allows for sub licensing as long as there is written consent from the proprietor through whatever contractual arrangement it has with its licensee.

        In fact, your interpretation which suggests that this only means “direct” written consent from the proprietor to the permitted user (and to no one further in the chain), requires ‘reading of words in the provisions of the statute when they are not specifically legislated.’ As you correctly said “The court has to keep in mind the fact that, while interpreting the provisions of a statute, it can neither add, nor subtract even a single word.” So I’m not sure how you’ve imported this requirement.

        Let’s agree to disagree 🙂

        Reply
  2. Latha R NairLatha R Nair

    Dear Anon-

    – In my post, I have argued against sub-licensing by citing legislative history, among others. I am curious to know why you brushed it aside because even courts often resort to legislative history while interpreting provisions.

    – I note your comment that, “all you need is the rule of literal interpretation”, and your statement that, the “language and natural meaning [of section 2(1)(r)(ii)(c)] allows for sub licensing as long as there is written consent”. I have two comments regarding your reading and “literal interpretation”: (i) the word “sub-licensing” does not appear in that section; and (ii) there is nothing in the section that explicitly permits an interpretation that the word “consent” therein gives the licensee a right to further license. Hence, even using “the rule of literal interpretation” (which means plain reading without adding words or meaning), I am not sure how you attribute “natural meaning” to say what you are saying in your comment.

    – While responding to your comments, I had quoted a couple of Supreme Court judgments on the rules of interpretation that state that one cannot add or subtract words or read words into a statute while interpreting. I don’t see you discussing the ratio of these rulings in your comments? Instead, I see in your comment that you are adding words and meaning to the language of section 2(1)(r)(ii)(c). And yet you say that it is a literal interpretation… 🙂

    – If you strongly believe that the concept of sub-licensing exists in the Indian Trade Mark statute, could you also point me to some Indian case law that discusses this point along the lines of your argument? My research did not indicate anything to support your point – so the question.

    Thanks again for reading and commenting.

    Reply
    1. AvatarSidharth

      Ma’am, with all due respect, I ask this as a rather inexperienced law student – you say, with the help of case law, that words cannot be added or subtracted into the legislature. But isn’t that exactly what the court did in its judgment in Cycle Corp., by inferring the acceptance by the legislature of the concept of an unregistered licensee? Isn’t that what caused the change in the legislature in the first place? If the law continues to be read exactly as it is, there is no scope for any change in the law, is there?
      I have another more important question – you say that there does not exist a connection in the course of trade between the RP and the sub-licensee. However, let’s look at it this way – you quoted the case law of Fatima Tile Works, in order to show that if there is no connection in the course of trade, then it may amount to trafficking, and that is a very sensible argument. However, I would like to point out an observation by the court in this very case. The court, when identifying what exactly amounts to a real connection in the course of trade, observed that a proprietor of a trademark who does not manufacture or apply the mark, but retains the power to control activities of the licensee; or to ensure compliance with manufacturing specifications or of standards of quality that he/she sets down is said to be “sufficiently connected in the course of trade” with the goods. My question is this – if the RP puts in specific conditions relating to ensure QC by the sub-licensee in the agreement, isn’t he/she retaining the power to control the activities of the licensee? If the sub-licensee does not work according to these restrictions, I imagine this would amount to an infringement of the provisions laid out in the licensing agreement and would give the RP the right to revoke the license. Isn’t the licensee, as some sort of an agent of the RP, ensuring QC, AS PER the conditions of the RP, on his/her behalf?
      With regard to Rob Mathys, if I have read it right, the court does say that it may be too much to allow sub-licensing, but it also says that this must be read in the light of common law.
      “In view of this limited and restricted meaning of “permitted use”, it may not appear plausible to accept user by a sub-licensee (who is not a registered user) as user by the proprietor of the trademark. But this has to be seen and appreciated in the light of rights under common law.”
      Common law clearly does accept the concept of SL, it’s used in countless other jurisdictions and countries.
      It is also to be kept in mind that this judgment was delivered before even the concept of unregistered licensee was legislatively recognized. A sub-licensee is undoubtedly an unregistered licensee – if not even an unregistered licensee had been accepted, I fail to see how far the court would have been able to go in its interpretation of the concept of a SUB-licensee, an even more radical, yet very connected concept.
      I’m absolutely open to learning more, please do not take this as a rebuttal or disrespect to your extensive research. These are merely questions I have in my mind. Please do reply as soon as possible – they will hugely contribute to me making a good impression on my IPR professor in law school!

      Reply
  3. AvatarAnonymous

    Again, very informative and well reasoned post. However, I believe your post does not address or counter Kapil’s argument with respect to Section 49(1)(b)(i). The relevant text of section 49(1)(b)(i) is:

    “…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;…”

    It has to be noted that the above provision relates to an affidavit to be furnished by the registered proprietor, and in the affidavit the registered proprietor is required to expressly declare whether there are any restrictions as to proposal for other persons for registration as registered users. In view of Section 49(1)(b)(i), and further considering that there is no provision to the contrary, is it appropriate to say that Act nowhere expressly envisages a possibility of a sub-license.

    Reply
  4. AvatarAnon T(w)oo!

    I agree with Anon and Kapil. Yes, it is correct that courts are not required to read words into the statute. At the same time it is a settled principle that interpretation cannot result in absurdities. By stating because the act “literally” does not state sub-licenses”, hence it cannot be read into the act is not harmonious construction or the intention of the legislature.

    Cycle Corporation is good law. It reiterates what TM Act enshrines- common law rights cannot be taken away. If TMA allows licensing, then it cannot be inferred TMA takes away sub licensing from its ambit. Whichever way you approach the situation, licensee/sublicensee/sub-sub-licesnee- the logic and law remains the same. The licensor is the owner barring naked licensing situation.

    Principles stated by you are correct and there is no quarrel there. It is the understanding of sub licensing that is incorrect.

    Reply
  5. Latha R NairLatha R Nair

    @Anonymous
    As regards Kapil’s argument with respect to Section 49(1)(b)(i), my response is as follows:
    – 49(1)(b)(i) is contemplating a situation of more than one registered user. A proprietor can license his trademark to more than one user and can record more than one licensee under the Act. To quote Kapil:

    “The Act does not give a specific format for such an agreement between RP & RU. Nor does the Act provide any restrictions for such an agreement to provide for a sub-licensee. As to the degree of control to be exercised by RP, the same can be detailed in the SL agreement between RU & SL or even mentioned in the agreement between RP & RU. Such a SL can be argued to be a valid permitted user under section 2(1)(r)(ii). The agreement between RP & RU allowing for sub-licensing can also amount to ‘consent’ of the RP as required for permitted use under section 2(1)(r)(ii)(c). The affidavit requirements also contemplate the existence of more than one RUs in section 49(1)(b)(i), therefore such sub-licensing can be formalised as another RU by complying with section 49”.

    I am not sure how you are reading it to mean that sublicensing is contemplated. Is it the reference to more than one registered user? If so, that refers to more than one licensee, not sub-licensee. Had that been the case, why didn’t the section use the words ‘a person further permitted by the registered user’, or such similar words to indicate further licensing by the user, instead of the words ‘registered user’?

    – Secondly, you ask, “In view of Section 49(1)(b)(i), and further considering that there is no provision to the contrary, is it appropriate to say that Act nowhere expressly envisages a possibility of a sub-license”?

    o Even assuming without agreeing with you that the reference to more than one registered user is to ‘sublicensee’, can you read 49(1)(b)(i) in isolation to argue the existence of a provision permitting sub-licensing? I believe you should read it in the context of the rest of the sections I discussed in my first post on the subject, including Section 2(1)(x) which defines ‘registered user’.

    @Anon T(w)oo
    – You say that, “it is correct that courts are not required to read words into the statute. At the same time it is a settled principle that interpretation cannot result in absurdities”. I am not sure what is the absurdity you are referring to here. In any event, a Division Bench of the Delhi High Court in Rob Mathys India Private Limited v. Synthes AG Chur has already held that the object of the TMM Act is to prevent trafficking in trademarks and in view of the limited and restricted meaning of “permitted use” under that Act, it would not appear plausible to accept user by a sub-licensee as user by the proprietor of the trademark. In other words, if sub-licensing were permitted under the Act, the licensor would never be able to claim the use made by the sub-licensee as his. Isn’t this a very important point from a trademark use perspective? In practical terms, to give you an example, let’s say that an MNC which is sourcing goods from India through a licensee permits such licensee to sublicense the marks. The sublicensee has been manufacturing and affixing the marks on the goods. Would the use by the sublicensee inure to the user? Not as per Section 48(2). How would you overcome this in a sub-licensing situation? What is your view or to quote you, “the logic and law” on that?

    – Since you are referring to the intention of the legislature, I would also like to know what your views are on the legislative history that I have discussed in my post. Why didn’t the 1999 Act depart from the words ‘permitted use’ or provide specifically for ‘sub-license’ a la Section 28(4) of the UK Act?

    – You say that, “By stating because the act “literally” does not state sub-licenses”, hence it cannot be read into the act is not harmonious construction or the intention of the legislature”.

    o My argument is not that the Act does not literally refer to sub-license, rather that the language of the Act does not permit sub-license. The Act is consistently referring to an agreement between the proprietor and the user and not a person further permitted by the user. The use by a sub-licensee would not even inure to the proprietor. I have cited several sections in my first post and discussed case law including Rob Mathys from where I am drawing my inference. Besides there is legislative history.

    @Anonymous and Anon T(w)oo – thank you both for reading and commenting!

    Reply
  6. AvatarSidharth

    “Besides stretching the language of the statute to read the permissibility of an agreement between the user and a sub-licensee, Kapil has added a caveat that in such arrangements, if the proprietor has provided for stringent quality control of the sub-licensee, all would be well. If so, the proprietor could directly enter into another user agreement with the “sub-licensee”. Why would he resort to sub-licensing?”
    I am too inexperienced to know the reason by myself, but I do think sub-licensing is allowed in quite a few other countries. If the law in those countries added that in, then doesn’t that mean it saw that companies were gaining something out of doing so/missing out on something by not being able to do so?

    Reply
    1. Latha R NairLatha R Nair

      Dear Sidharth – thank you for reading commenting. I apologize for the delay in responding to your comments – I was preoccupied with work in the last couple of months.

      As for the last part of your comment, please feel free to rebut my arguments. I do not consider your or anyone’s contrary views as any offense! 😊

      Reading your comments, i get the feeling that you did not read my first blog on this. (https://spicyip.com/2020/04/is-sub-licensing-of-a-trademark-permitted-under-the-indian-trade-marks-act.html?unapproved=206590&moderation-hash=eb78401f69d2e6bba2bdce73c93fe2a6#comment-206590) Many of your queries would be clarified if you read that one first.

      In any event, let me answer your queries in the order in which they are appearing in your two sets of comments:

      (i) Whether the court in Cycle Corp., inferred acceptance of the concept of an unregistered licensee? Isn’t that what caused the change in the legislature in the first place? If the law continues to be read exactly as it is, there is no scope for any change in the law, is there?

      My response: I don’t believe the court went beyond the statute in interpreting so in Cycle Corporation. There is a difference between recognizing the rights of an unregistered licensee and recognizing the concept of sub license. License is a concept that was recognized under the TMM Act (the applicable statute in this particular case) and could, therefore, be extended to unregistered licence too. I don’t believe that it can be equated with something that is not recognized under the Act, namely, sub-license. I would request you to read that part of my blog above where I discuss the legislative history and conclude that despite opportunities to change the law, the Indian legislators have not done anything to include language that suggests the permissibly of a sub-license.

      Of course, law has to change with times. Post liberalization, corporations are involved in large scale franchise operations in India and the legislative vacuum in sub-licensing in India comes in the way. The law needs to be amended to reflect global practices. But still, there are ways to get around it without breaching the provisions of the law. You may read my response to Viji in my first blog (https://spicyip.com/2020/04/is-sub-licensing-of-a-trademark-permitted-under-the-indian-trade-marks-act.html?unapproved=206590&moderation-hash=eb78401f69d2e6bba2bdce73c93fe2a6#comment-206590) as to how this can be addressed.

      (ii) If the RP puts in specific conditions to ensure QC by the sub-licensee in the agreement, isn’t he/she retaining the power to control the activities of the licensee?

      My response: There is a requirement under 2(1)(r) that the license agreement must be in writing between the RP and the user, who is the licensee. Secondly, the use by the sub-licensee will not inure to the RP – see Sec. 48(2).

      (iii) If the sub-licensee does not work according to these restrictions, I imagine this would amount to an infringement of the provisions laid out in the licensing agreement and would give the RP the right to revoke the license. Isn’t the licensee, as some sort of an agent of the RP, ensuring QC, AS PER the conditions of the RP, on his/her behalf?

      My response: This would not violate the provisions of the license agreement between the RP and permitted user, because the sub-licensee is not privy to that agreement. However, it would infringe the rights of the RP in the mark, as the sub-licensee is not acting under authority from the RP, but from the permitted user (licensee) under a sublicense agreement.

      (iv) With regard to Rob Mathys, if I have read it right, the court does say that it may be too much to allow sub-licensing, but it also says that this must be read in the light of common law.

      My response: While the court may have said so, I am yet to see a case law where it is permitted by the court. I don’t even believe that, what you are referring to is the ratio of the case. That said, I would be happy to get more enlightened on this issue.

      (v) Common law clearly does accept the concept of SL, it’s used in countless other jurisdictions and countries.

      My response: I agree that it is a practice in other countries to permit sub license. But based on my reading of the provisions of the TM Act, it is not envisaged under our Act. Nor do I agree that there can be common law practice largely varying from the established principles. Again, I would be happy to hear your reasons as to why you believe that common law accepts the concept of sub licensing and it is permissible in India.

      (vi) A sub-licensee is undoubtedly an unregistered licensee – if not even an unregistered licensee had been accepted, I fail to see how far the court would have been able to go in its interpretation of the concept of a SUB-licensee, an even more radical, yet very connected concept.

      My response: A sub-license is granted by an already existing licensee to its sub-licensee. So it is perhaps incorrect to say that a sub-licensee is undoubtedly an unregistered licensee. When the Act stipulates that an agreement to license a trademark is only that between a registered proprietor and his user, recorded or unrecorded, it is not clear to me where you are bringing a sub-licensee from. Especially, when there is a bar on the licensee to further transmit the rights granted under the agreement (See section 54).

      (vii) I am too inexperienced to know the reason by myself, but I do think sub-licensing is allowed in quite a few other countries. If the law in those countries added that in, then doesn’t that mean it saw that companies were gaining something out of doing so/missing out on something by not being able to do so?

      My response: If you go to my first blog on this issue, I state that, based on my research, India is perhaps the only country where a trademark licensee cannot further license the rights in the license. In my view, the law needs amendment to make it easy for trademark holders to do business in India.

      Reply

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