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Trademark Rights Post-License Termination

The recent judgment by the Hon'ble High Court of Delhi in the trademark dispute concerning the mark BACHPAN sheds light on the critical legal aspects surrounding the fate of a trademark user after the termination of a license user agreement. This article explores the implications of such terminations and the court's stance in safeguarding the rights of the licensor.

Since 2004, the plaintiff has been offering play school services across India under the trademark BACHPAN. With registered trademarks dating back to 2003 and holding copyrights, the plaintiff established a significant presence in the market. A Franchisee Agreement was executed with the defendant, granting them the right to operate play schools under the BACHPAN mark, contingent on payment of license fees. The agreement naturally expired on January 31, 2021, and due to default in fees, it was not renewed, leading to the defendants losing their right to use the registered trademarks.

Legal Analysis:
The central issue revolves around the defendants' alleged continued use of the plaintiff's trademarks post the agreement's expiry. The Hon'ble High Court of Delhi, in granting the interim injunction, reaffirmed the settled legal position that an ex-licensee is not entitled to use the licensor's trademark after the termination of the license user agreement.

The court's observations:
  1. Prima Facie Infringement: The court acknowledged a prima facie case of trademark infringement by the defendants. The continued use of the registered trademarks by the ex-licensee, post-agreement termination, was seen as a violation of the exclusive rights held by the plaintiff.
  2. Passing Off: The court also noted an attempt by the defendants to pass off their services as those of the plaintiff. Despite losing the right to use the trademarks, the defendants were allegedly misleading the public by presenting themselves as affiliated with the plaintiff.
The Case Law:
The interim injunction granted by the Hon'ble High Court of Delhi serves as a powerful reminder of the legal remedies available to licensors when faced with trademark infringement and passing off by ex-licensees. This judgment further solidifies the principle that the expiration or termination of a license user agreement extinguishes the rights of the licensee to use the licensor's trademarks, reinforcing the sanctity of contractual obligations in the realm of intellectual property law.

The Concluding Note:
This case underscores the importance of adhering to the terms of license agreements and the legal consequences that follow termination. It emphasizes the court's commitment to protecting the rights of trademark owners against unauthorized use by former licensees.

The Case Law Discussed:
Case Title: Vicky Aggarwal versus Sumeet Agarwal
Date of Judgement/Order:17/11/2023
Case No. CS(COMM) 715/2023
Neutral Citation No:N.A.
Name of Hon'ble Court: Delhi High Court
Name of Hon'ble Judge: C Hari Shankar, HJ

Ideas, thoughts, views, informations, discussions and interpretation expressed herein are being shared in the public Interest. Readers' discretion is advised as these are subject to my subjectivity and may contain human errors in perception, interpretation and presentation of the fact and issue involved herein.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor - Patent and Trademark Attorney
Email: [email protected], Ph no: 9990389539

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