Article: Can A Trademark Can Be Assigned Retroactively?

Author: Former Intern - Gazal Sancheti 

Introduction

Section 38 of the Trade Marks Act, 1999, starting with a non-obstante clause, states that “…a registered trademark shall, subject to the provisions of this Chapter, be assignable and transmissible, whether with or without the goodwill of the business concerned…” Section 2(c) states that “assignment” means an assignment in writing by act of the parties concerned.” Does ‘assignment’ subsume an assignment with retroactive effect?  Can a registered trademark be assigned with retroactive effect? Does the ‘assignment’ have to be only prospective? This is the statutory interpretational issue explored in this article. 

Retroactivity versus Recordation of Retrospectivity

Assignment of trademarks is a mechanism whereby the owner of a trademark transfers his ownership to another person or entity, either with or without the associated goodwill. When such an assignment becomes operative at a date earlier than the date of entering into the assignment agreement, it is called a retroactive assignment of trademark. It creates a new assignment effective from a past date. It should not be confused with merely recording the retrospective effect of a previous oral agreement for trademark assignment, called a nunc pro tunc (Latin) assignment.

While the Act makes provisions for the assignment of trademarks, it is silent on the legality of retroactive assignments. Judicial precedents in this regard are also limited, and lack unambiguity. This article examines the scheme and framework of the Act as elucidated by the few relevant judicial pronouncements, to determine if retroactive assignment of trademarks is permissible. Does the Act countenance retroactive trademark assignment? Are they legal or void and non-est?

Validity of Trademark Assignment

Providing for assignment and transmission of trademarks, the Act under Section 37 gives the registered proprietor of a trademark the “…power to assign the trade mark, and to give effectual receipts for any consideration for such assignment”. This right is only “…subject to the provisions of this Act and to any rights appearing from the register to be vested in any other person…”. Section 45(1) of the Act states that “Where a person becomes entitled by assignment or transmission to a registered trade mark, he shall apply in the prescribed manner to the Registrar to register his title, and the Registrar shall, on receipt of the application, register him as the proprietor of the trademark…”. As per Section 45(3), “Where the validity of an assignment or transmission is in dispute between the parties…” the Registrar has been given the discretion to refuse registration of the assignment “…until the rights of the parties have been determined by a competent court…”. Assignment, thus, must not only be in writing, it must also be registered.

Prejudice Against Anti-Dating 

Clearly, there is no statutory bar upon retroactive assignment of trademarks. The Act explicitly neither recognises nor bars retroactive assignments. The intention of the legislature, too, is not discernible from any other provision of the Act.

Keeping in mind the statutory requirement of assignment agreement being written, what about a written agreement recording a prior oral prospective trademark assignment? The IPAB, in the case of Ramesh L. Vadodaria vs Assistant Registrar of Trade Marks [2005 (30) PTC 297 IPAB], observed that “…there cannot be any assignment with retrospective effect unless there is some oral agreement between the parties earlier in point of time and under written agreement, the parties had confirmed such terms of oral agreement were acted upon. The later written document is only to confirm the rights of the parties arising and accrued in accordance with the earlier oral agreement.” Thus, no scope is left for anything other than a nunc pro tunc assignment.

Anteriorization of the effective date of a trademark assignment through a subsequent written agreement has, however, also been ruled out in the case ofM/s. Eveready Industries India Limited vs Mrs. Kamlesh Chadha [ORA/97/2009/TM/DEL, ORA/98/2009/TM/DEL], wherein the impugned agreement was held defective and contrary to law, as “There is no procedure in the Act to anti-date the document”. This blanket observation, going beyond the facts of the case, seemingly bar both retroactive and nunc pro tunc assignments.

The aforementioned observation made by the IPAB leads to confusion as it does not specify whether only the retroactive trademark assignment agreements which themselves assign the trademark are invalid, or even nunc pro tunc assignments are impermissible under the Act. Whereas allowing the former under the Act inherently poses various legal issues, disallowing the latter threatens to reverse precedents to the contrary. Given inherent evidentiary challenges in proving genuine nunc pro tunc assignments on strength of subsequent written agreements and distinguishing them from sham agreements, making the latter permissible would raise its own different set of legal issues. 

Conclusion

With regards to the validity of nunc pro tunc trademark assignments, the position is now doubtful. Until the question is answered by the courts in a more definitive judgment, or a legislative amendment is brought in this regard, high evidentiary standards are expected for proving nunc pro tunc assignments. Regarding the validity of true retrospective assignment of trademarks, neither the statute nor the judgements consider it permissible and legal.

Endnotes

1.      Ramesh L. Vadodaria vs Assistant Registrar of Trade Marks [2005 (30) PTC 297 IPAB]. https://indiankanoon.org/doc/1481762/

2.      M/s. Eveready Industries India Limited vs Mrs. Kamlesh Chadha [ORA/97/2009/TM/DEL ORA/98/2009/TM/DEL]. https://www.ipab.gov.in/ipab_orders/delhi/ORA-97-&-98-2009-TM-DEL.pdf

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

Copyright: ALG India Law Offices LLP