Assignment Of Trademarks Shall Not Take Effect Unless Assignee Applies To Registrar U/S 42 Within Maximum 9 Months: Calcutta High Court

The Calcutta High Court recently restrained an assignee to use the trademarks made under the assignment of trademarks on the ground that the assignee did not apply to the Registrar within the maximum time frame of 9 months prescribed under Section 42 of the Trade Marks Act, 1999.

The single judge bench of Justice Moushumi Bhattacharya observed:

“In the present case, the assignment was made on 3rd April, 2017 and there is nothing on record to show that the respondent no. 6 took the steps as required under section 42 or the Registrar of Trade Marks effected the conditions under section 42 for assignment of the trade marks in question. Therefore, prima facie, the petitioners have made out a case under section 42 with regard to the impugned assignment.”

The petitioners claimed to be in the pharmaceutical business and the auction purchasers of 14 trademarks through public auction conducted under the under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC).

The 14 trademarks related to medicinal products were owned by the respondent no. 3- Duckbill Drugs Private Limited which went into liquidation by an order of the NCLT dated April 13, 2021.

The above mentioned 14 trademarks were subject matter of an e-auction notice published on April 23, 2022 as part of a public auction of sale of the respondent no. 3.

The Union of India (petitioner no. 1) participated in the e-auction and was declared as the successful bidder. Subsequently, a sale certificate was issued by the liquidator in favour of the petitioner no. 1 on May 11, 2022 confirming the sale of the respondent no. 3 as a going concern including the assets mentioned in the annexure to the Sale Certificate.

The sale certificate mentioned the trademarks registered in the name of the company and include the 14 trademarks. However, the petitioner later came to know that 7 of the 14 trademarks mentioned in the sale certificate were registered in the name of the respondent no. 6 who is the daughter-in-law of one of the erstwhile Directors of the respondent no. 3 (company in liquidation).

It was also came to notice of the petitioners that the 7 trade marks were assigned in favour of the respondent no. 6 by a Deed of Assignment dated April 3, 2017 for a sum of Rs. 7000/-.

The Respondent no. 6 had filed Title Suit in the Alipore Court against the company in liquidation claiming a decree of declaration that the respondent no. 6 is the registered proprietor of the trademarks and a permanent injunction restraining the defendant (respondent no. 3) from infringing or misappropriating the intellectual property i.e., the trademarks of the respondent no. 6.

However, the said court did not grant any ad-interim relief to respondent no. 6 to which she filed an appeal before the High Court in the year 2023.

The division bench of the High Court vide order dated January 24, 2023 restrained the respondent in the appeal (respondent no. 3) from using the concern trademarks till March 31, 2023 which was further extended till April 6, 2023.

The present petitioners approached the High Court praying for a writ of mandamus against the Trade Marks Registry, Kolkata to revoke the assignment of 7 of the said 14 trade marks in favour of the respondent no. 6 and also to restore the trade marks in favour of the respondent no. 3 (Duckbill Drugs Private Limited) being a company which went into liquidation on April 13, 2021.

The counsel appearing for the respondent no. 6 raised an objection that the petitioners have a statutory recourse under section 91 of the Trade Marks Act, 1999 under which a person aggrieved by an order of the Registrar of Trade Marks may file an appeal to the High Court and further under section 57(2) which provides that any person aggrieved by the any entry made in the register without sufficient cause may apply to the High Court or to the Registrar of Trade Marks for expunging and varying the entry.

It was further contended that the petitioners are setting the Court up against the Division Bench by inviting orders which would be inconsistent with the interim order passed by the Division Bench.

The Court noted:

“In the present case, the charge of abuse or giving birth to multiple litigations in respect of the subject matter of dispute is not on the petitioners but on the respondent no. 6.”

The Court further asserted that respondent no. 6 rushed to file proceedings only after the petitioners filed the present writ petition.

With regard to the contention of alternative remedy, the Court noted that the petitioners have a right under section 57(2) of the Trade Marks Act to apply to the High Court for expunging an entry made in the register of Trade Marks without sufficient cause and the petitioners have done same in the instant case.

It was further reiterated by the Court that presence of an alternative and efficacious remedy including a statutory remedy is not an absolute bar on the jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution.

The Court highlighted that the issue in the instant matter is whether the petitioner no. 1, as the auction purchaser of the 7 trademarks, has a right to be protected against the alleged unauthorised use of these trademarks which were part of the assets of the company sold to the petitioner no. 1

The Court opined:

“It is an established principle of law that a third party auction-purchaser’s interest in the property which has been sold to the auction-purchaser continues to be protected. Once the hammer falls, certain rights accrue to that purchaser which cannot be extinguished other than in exceptional circumstances such as fraud.”

It was further highlighted by the Court that the above mentioned protection is necessary to give sanctity to court sales where the expectation is to fetch the best and most fair price for the property.

“Law makes a clear distinction between a stranger who is a bona fide purchaser of the property at an auction sale and a decree-holder purchaser at a court auction. The protection given to the former is of a higher order”, the Court said.

The Court observed that the official liquidator (respondent no. 7) wrote to the Trade Mark Registry on June 29, 2021 requesting the latter to maintain status quo with regard to the trademarks and not entertain any request for transfer of the trade marks from the erstwhile promoters of the company in liquidation.

However, the Court noted that the trade marks were registered in the name of the respondent no. 6 on January 18, 2022 despite the Registry being put on notice that the Official Liquidator has stepped into the shoes of the respondent no. 3 company.

Thus, the Court restrained the respondent no. 6 from using the said 7 trademarks till the matter is heard out on affidavits.

Case Title: Paul Brothers & Anr. v. Union of India & Ors.

Coram: Justice Moushumi Bhattacharya

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