Reynolds Versus Rorito: Recognizing Rights of Trademark Licensee

28 Dec 2018

Categories: Intellectual Property News

December 28,2018:

A trademark licensee is generally seen as the one who by virtue of an agreement withholds a permission to temporarily use the mark in connection with specific goods and/ or services.

In general parlance, a consumer may not recognize/ differentiate the mark as such in terms of its owner and licensor and thereby the corresponding rights to that effect; however, there may be some co-relation w.r.t. its manufacturer.

However, in terms of legal acumen, recently the Delhi High Court in Luxembourg Brands S.A.R.L. and Another v. G.M. Pens International Private Limited, CS(COMM) 1120/2016 has recognized that the licensee of a trademark product had a right to be identified by consumers as its manufacturer.

Case Insight

In this case, the dispute between the Parties arose on the ground that the Defendant who in this scenario was its licensee for a brief period, and after the expiry of the licensing arrangement between them aggressively promoted its product in a manner to give the general public a perception that the mark “REYNOLDS” was re-branded as “RORITO”. In considering the Plaintiff’s argument of passing off, the Court observed that the Defendant did not commit any action of passing off as there was no misrepresentation in its advertisements and that the Defendant merely sought to sell its goods under its bona fide mark “RORITO”.

Herein, the Court rejected the Complainant’s plea that the licensor exclusively owned trademark rights created by the licensee’s use of the REYNOLDS trademark.

The Court also considered the Plaintiffs’ argument that the Defendant had undertaken a campaign to indicate that “REYNOLDS” was re-branded to “RORITO”, and stated that the evidence filed before it was insufficient to arrive at such a conclusion.

With this, the Hon’ble Delhi High Court ruled that the use of a licensed trademark by the licensee creates trademark rights for both the licensee as well as the licensor and just the licensor/ owner.

Impact

This case is an interesting take on the overshadowed, licensee’s rights, whoby virtue of this judgement; would be recognized through its goods and/ or services it used to manufacture.

The direct impact of this judgement would be directly over the points to be negotiated/ considered while drawing out a trademark licensing arrangements, especially for overseas licensing agreements.

It is necessary that the owner/ licensor to be aware about their rights and the immediate step would be to revisit and dwell on the already drawn agreements. Also, what would be interesting to note that; how this judgement would impact non-exclusive licenses & franchise agreements.