Manmeet Kaur Sareen 
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The Arbitration Practitioner’s Series by MKBAC: Arbitrability of Trademark Disputes - Part II

The article provides fundamental principles that pertain to assessing arbitrability of trademark disputes.

Manmeet Kaur Sareen

In the first part of this article series, we had a look at the principles surrounding the arbitrability of trademark disputes and the reasons behind the lingering conundrum. In this part, my attempt is to provide the fundamental principles that pertain to assessing arbitrability and move on to applying them to some exemplified possible disputes. 

Trademark Disputes: When Arbitrable?

Arbitration agreement and defined legal relationship: The sine qua non

The first and foremost criterion that has to be satisfied for parties to be subjected to arbitration is for the parties to be in a defined legal relationship. The second criterion is for such parties in a defined legal relationship to have a valid arbitration agreement between them by which they submit to arbitration in respect of the disputes that arise between them. These requirements are mentioned in Section 7 of the Arbitration and Conciliation Act, 1996 (‘the Act’). Therefore, naturally and logically, the foundation of invoking arbitration even in case of trademark disputes would be the existence of an agreement between two parties, who are in a defined legal relationship and who agree to settle their disputes by arbitration. A third party cannot be bound by a decision by an arbitrator who derives his power from the private agreement between two parties.

Common agreements concerning trademarks

There are various kinds of agreements that can be executed between two or more parties which, in one way or another, determines the manner in which the trademark will be used and exploited same between them. The three kinds of agreements that are widely executed in the landscape of trademarks are the following:

1. Assignment Agreements: Assignment agreements are agreements by which one party, which owns the trademark and the rights thereof, agrees to completely transfer the right and title of the trademark. The same can be with or without goodwill. For example: Sole proprietor, ‘Mr. A’, who owns the trademark ‘Heavens’ for its cakes and desserts, now has established a company ‘A Pvt. Ltd.’ where he is one of the directors and through which he wants to continue his business. He, therefore, completely and entirely transfers his rights and interests in the trademark ‘Heavens’ to the company ‘A Pvt. Ltd.’ by entering into an assignment agreement with the company. This contract is regarding assignment of trademark ‘Heavens’ from ‘Mr. A’ (assignor) to the company ‘A Pvt. Ltd.’ (assignee) which now sells cakes and other desserts under the mark ‘Heavens’ and owns all rights therein.

2. Licence Agreements: Licence agreements are agreements by which the trademark proprietor grants another person the right to use a trademark and also stipulates the manners and conditions on such use. A license agreement can be of two kinds:

a. In the nature of a simple license agreement where rights are derived from and regulated by way of the agreement.

b. In the nature of granting rights to a registered user whereby the license agreement is registered with the Registrar of Trademarks and certain rights accrue to the licensee from the statute.

Ordinarily, in a license agreement, the proprietor usually retains the ownership of the mark and the corresponding rights like right to sue for infringement and passing off, right to grant further licenses etc. For example: ‘A Pvt. Ltd.’ collaborates with ‘CS Pvt. Ltd.’, which owns a restaurant chain called ‘CS’, and grants a licence to ‘CS Pvt. Ltd.’ to use its trademark ‘Heavens’ to the extent required to sell its cakes and desserts at CS’s restaurants. For this, ‘A Pvt. Ltd.’ (licensor) enters into a license agreement with ‘CS Pvt. Ltd.’ (licensee) permitting the latter to use the trademark ’Heavens’ in accordance with the terms of the contract.

Licence agreements could be partial as well, i.e., for specific products or product categories, specific territories etc.

For the illustrations provided hereinafter in this article, it shall be assumed that the agreements that are referred to / relied on contain an arbitration clause whereby the parties to the respective agreements have agreed to resolution of dispute by way of arbitration under the laws of India in New Delhi. Further, the trademark(s), in respect of which the agreement is being executed, shall be referred to as ‘Subject TM’. Based on this premise, we shall look at the possible

Assignment Agreement: Possible Disputes

In an assignment agreement, the assignor assigns, i.e., completely transfers, the trademark and all the corresponding rights therein to the assignee for a consideration. Therefore, it is different from a license and / or franchise agreement inasmuch as, inter alia, it grants exclusive rights, and it does not have an expiry period.

The possible disputes that can arise in an assignment agreement are provided hereunder:

At the outset, it would pertinent to mention that fraudulent representation in and of itself does not prohibit the invocation of arbitration, unless the fraud is of such a nature that vitiates the arbitration clause in itself.

Possible Disputes

Fraudulent Representation / Misrepresentation

Possible Dispute in Clause A(1)(a)
Possible Dispute in Clause A(1)(b)

In the next part, we shall continue to look at other possible disputes in respect of assignment agreements

Manmeet Kaur Sareen completed the LL.M. course in intellectual property law from University of Cambridge and currently runs her independent law practice in New Delhi.

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