Module-4

Subject: Intellectual Property Rights

[Link] 6TH SEM EEE

DEFINITIONOF TRADEMARK:

A trade mark is a word, phrase, symbol or design, or combination of words, phrases, symbols
or designs used in the course of trade which identifies and distinguishes the source of the
goods or services of one enterprise from those of others.

As stated above, the definition of "trade mark" under Section 2(1) is “A mark capable of
being represented graphically and which is capable of distinguishing the goods or
services of one person from others and may include shape of goods, their packaging and
combination of colours and covers both goods and services”.

“Mark” includes a device, brand, heading, label, ticket, name, signature, word, letter,
numeral, shape of goods, packaging or combination of colours or any combination thereof”.
[Section 2(1)].

PURPOSE AND FUNCTION OF TRADEMARKS

A trade mark (popularly known as brand name in layman‟s language) is a visual symbol
which may be a word to indicate the source of the goods, a signature, name, device, label,
numerals, or combination of colours used, or services, or other articles of commerce to
distinguish it from other similar goods or services originating from another. It is a distinctive
sign which identifies certain goods or services as those produced or provided by a specific
person or enterprise. Its origin dates back to ancient times, when craftsmen reproduced their
signatures, or "marks" on their artistic or utilitarian products. Over the years these marks
evolved into today's system of trade mark registration and protection. The system helps
consumers identify and purchase a product or service because its nature and quality, indicated
by its unique trade mark, meets their needs.
A trade mark provides protection to the owner of the mark by ensuring the exclusive right to
use it or to authorize another to use the same in return for payment. The period of protection
varies, but a trade mark can be renewed indefinitely beyond the time limit on payment of
additional fees. Trade mark protection is enforced by the courts, which in most systems have
the authority to block trade mark infringement.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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Subject: Intellectual Property Rights
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In a larger sense, trademarks promote initiative and enterprise worldwide by rewarding the
owners of trademarks with recognition and financial profit. Trade mark protection also
hinders the efforts of unfair competitors, such as counterfeiters, to use similar distinctive
signs to market inferior or different products or services. The system enables people with
skill and enterprise to produce and market goods and services in the fairest possible
conditions, thereby facilitating international trade.

Trademarks perform two critical functions in the market place:

 They provide assurance that goods are of a certain quality and consistency, and
 They assist consumers in making decisions about the purchase of goods.

The main purpose of trademark is to show the difference about the quality of goods and
service. For example: If a trademark such as NIKE could be counterfeited (imitating) and
used by another on inferior merchandise (goods), there would be no incentive for the owners
of the NIKE mark to produce high-quality shoes and to expend money establishing consumer
recognition of the products offered under the NIKE marks.

The value inherent in achieving consumer loyalty to a particular product or service through the
maintenance of consistent quality of the products or service offered under a mark is called
goodwill.

 They identify one maker‟s goods or services and distinguish them from those offered
b y others
 They indicate that all goods or services offered under the mark come from a single
producer, manufacturer, or “source”
 They indicate that all goods or services offered under the mark are of consistent quality
and

 Theyserveasanadvertisingdevicesothatconsumerslinkaproductorservicebeingofferedwit
hamark

TYPESOF MARKS

There are four different types of marks. They are:

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-4
Subject: Intellectual Property Rights
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1. Trademark
2. Service mark
3. Certification mark
4. Collective mark

Trademark

The term trademark thus refers to some physical and tangible good and servicemark refers to
an intangible service, in common usage the term trademark is often used to refer to marks for
both goods and service. The key point in this legal description is that a trademark is a visual
mark that may use any combination of letters and imagery to aid a company in differentiating
itself from other entities.

The purpose of a trademark is to visually represent a person, company, or product and

trademark should be designed to provide easy and definite recognition. The term mark will
be used as a synonym for both trademark and servicemarks. The federal statute ((law) an act
passed by a legislative body) governing trademark law, the U.S. Trademark Act (Lanham Act,
found at 15 U.S.C 1051etseq.) itself states that the term mark includes any trademark,
servicemark, collectivemark, or certificatemark.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-4
Subject: Intellectual Property Rights
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Service mark

A service mark is the same as a trademark, but instead of a particular product, it identifies
and differentiates the source of a service. A service mark is nothing but a mark that
distinguishes the services of one proprietor/owner from that of another. Service marks do not
represent goods, but the services offered by the company.

They are used in a service business where actual goods under the mark are not traded.
Companies providing services like computer hardware and software assembly, restaurant and
hotel services, courier and transport, beauty and health care, advertising, publishing, etc. are
now in a position to protect their names and marks from being misused by others. The rules
governing for the service marks are fundamentally the same as any other trademarks.

Certification mark

A certification mark is a word, name, symbol, device, or combination thereof used by one
person to certify that the goods or services of others have certain features inregard to quality
material mode of manufacture or some other characteristic (or that the work done on the goods
or services was performed by members of a union or other organization). For example:
Hallmark, ISO mark and in U.S Under writers Laboratory seals of approval (Underwriters

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-4
Subject: Intellectual Property Rights
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Laboratory is the large stand best known independent, not for profit testing laboratory in the

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 Module-4
Subject: Intellectual Property Rights
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world based in Northwood, Illinois, UL conducts safety and quality tests on abroad range of
products, from firedoor’s to CCTV cameras seals of approval).

Collective Mark

Acollectivemarkisoneusedbyacollectivemembershiporganization,such as a labor union,

fraternity, or professional society, to identify that the person displaying the mark is a member
of the organization. These are the trademarks used by a group of companies and can be
protected by the group collectively. Collective marks are used to inform the public about a
particular characteristic of the product for which the collective mark is used. The owner of
such marks may be an association or public institution or it may be cooperative. Collective
marks are also used to promote particular products which have certain characteristics specific
to the producer in a given field. Thus, a collective trademark can be used by a more than one
trader, provided that the trader belongs to the association.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
Subject: Intellectual Property Rights
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ACQUISITIONOF TRADEMARKRIGHTS

In a global scope, obtaining a trademark right through Use or through Registration

are two major legislative models of system for the grant of trademark rights.

 By Use

 By Registration

The “use” model is based on the objective facts of trademark use, and decides the
ownership of a trademark according to the time that the trademark was first used.

While the “registration” model grants trademark rights according to registration

and the first applicant will obtain the trademark right.

In history, the earliest trademark legislations all took “use” principle, for instance,
the first statue of trademark-Law of Manufacturing Signs and Trademarks
concerning the Content of Use and Non-examination Principle enacted by France
in 1857 took the “use” model.

However, since there are many defects of the “use” principle, France abandoned
this principle which was already implemented for more than one hundred years in
1964 and shifted to adopt the “registration” model which was succeeded by the
current Code of Intellectual Property. Article 712-1 of the code provides:
“trademark rights shall be obtained through registration”.

In India one can acquire and claim a Trademark only by Registration and not by Use

The registration of a trade mark confers on the registered proprietor of the trade
mark the exclusive right to use the trade mark in relation to the goods or services
in respect of which the trade mark is registered. While registration of a trade mark
is not compulsory, it offers better legal protection for an action for infringement.
As per Section 17 of the Act, the registration of a trade mark confers the following
rights on the registered proprietor:

(i) It confers on the registered proprietor the exclusive right to the use of

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 Module-3
Subject: Intellectual Property Rights
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the trade mark in relation to the goods or services in respect of which
the trade mark is registered.

(ii) It entitles the registered proprietor to obtain relief in respect of infringement of

the trade mark in the manner provided by the Trade Marks Act, 1999 when a
similar mark is used on (a) same goods or services, (b) similar goods or services,
(c) in respect of dissimilar goods or services.

(iii) Registration of a trade mark forbids every other person (except the
registered or unregistered permitted user) to use or to obtain the
registration of the same trade mark or a confusingly similar mark in
relation to the same goods or services or the same description of goods
or services in relation to which the trade mark is registered.

(iv) After registration of the trade mark for goods or services, there shall not
be registered the same or confusingly similar trade mark not only for
the same goods or services but also in respect of similar goods or
services by virtue of Section 11(1) of Trade Marks Act, 1999.

(v) Moreover, after registration of the trade mark for goods or services,
there shall not be registered the same or confusingly similar trade mark
even in respect of dissimilar goods or services by virtue of Section
11(2) in case of well-known trademarks.

(vi) Registered trade mark shall not be used by anyone else in business
papers and in advertising. Use in comparative advertising should not
take undue advantage of the trade mark. Such advertising should not be
contrary to honest practices in industrial or commercial matters. The
advertising should not be detrimental to the distinctive character or
reputation of the trade mark.

(vii) There is a right to restrain use of the trade mark as trade name or part of
trade name or name of business concern dealing in the same goods or
services. The registered trade mark continues to enjoy all the rights
which vest in an unregistered trade mark. By registration the proprietor
of an unregistered trade mark is converted into proprietor of the

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
Subject: Intellectual Property Rights
[Link] 5TH SEM EEE
registered trade mark. An application for registration may be based on a
trade mark in use prior to such application and such a trade mark is
already vested with rights at Common law from the time the use of the
mark was commenced.

TRANSFER OF TRADE MARK

The intellectual property rights assignment is a transfer of the rights of the owner,
title and the interest in certain intellectual property. The party transferring the
rights are called assignor and the party receiving the rights are called assignee.
The assignor transfers to the assignee its property in intellectual property rights
such as trademarks, patents etc.

The owner of the rights may transfer all of his rights or part of his rights. Like the
copyright owner could assign only some of his economic rights. The license
agreements, grants permissions to use the intellectual property rights under certain
conditions. Likely, the general rule assignments are transfers of property rights
without any condition under which rights will be used.

An intellectual property assignment agreement is a contract to transfer intellectual

property ownership from assignor to assignee. It empowers the assignor to
permanently consign all of his intellectual property rights to the willing candidate
in exchange for a defined amount. This agreement makes the owner sell his rights
similarly as he could sell a physical property marking a permanent transfer. It
means he will no longer hold any control, involvement, or claim on the transferred
rights.

Section 37 of the Trade Mark Act, 1999 recognizes the right of registered
proprietor to assign the trade mark for any consideration and to give receipt. It
provides that subject to the provisions of the act and to any right appearing from
the register to be vested in any other person, the proprietor of a trade mark has the
power to assign the trade mark and to give effectual receipt for any consideration
for such assignment. It is a settled principle that the assignor cannot possibly
transfer more rights to the assignee that what he himself has.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
Subject: Intellectual Property Rights
[Link] 5TH SEM EEE
A registered trade mark is only assignable, whether with or without the goodwill of
the business concerned and in respect either of all the goods or services in respect
of the trademark which is registered for those goods or service.

Section 2(1)(b) of the Trade Mark Act,1999 defines the “assignment” to mean “an
assignment in writing by act of the parties concerned”. In view of this definition,
an assignment has to be in writing and by the act of the parties concerned. Both the
assignor and the assignee must execute the document. Such document will be
known as the assignment agreement. There cannot be a unilateral execution of
document by one party alone.

Type of Assignment of Trademark

Complete Assignment of a Trademark: Here the owner of the trademark

transfers his ownership and rights completely to the assignee related to the
trademark. Such also includes the right to make any further transfer to other person
as assignee. After the complete assignment of the trade mark the owner loses his
rights over the trademark and the assignee retains all the respective rights.

Partial Assignment of a Trademark: Here the transfer of the ownership is done

to certain products and services only. The assignor holds the rights over the part
which he has not transferred to the assignee in terms of assignment. The assignor
has the right to make choice related to the partial assignment. The assignor can use
such exclusive rights in his business and administration.

Trademark Assignment with Goodwill: Here the assignor can transfer the rights
of ownership as well as the image valued rights over the trademark. Then the
assignee can use such representation in the market reputation of the trademark for
the promotion of the product.

Trademark Assignment without Goodwill: Here lies the restriction over the
usage of the trademark product on the part of the assignee i.e the assignor can
restrict the assignee for not using the trademark in business. The same trademark
can be used by both, the assignor and the assignee in their different business filed.
This assignment is also called as gross trademark assignment.
Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
Subject: Intellectual Property Rights
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Registration of Assignment

Section 45 of the Trade Mark Act, 1999 lays down the procedure for the
registration of the assignment. Where a person becomes entitled by assignment to a
registered trade mark, he shall apply in the prescribed manner to the registrar to
register his title. Registrar shall upon the receipt of the application, register him as
the proprietor of the trade mark in respect of the goods or services in respect of
assignment.

Registrar may require further evidences and statement in proof of title if there is
any reasonable doubt about the veracity of the statement or any document
furnished.

The assignment agreements are always considered important in the intellectual

property. It allows the property owner to transfer his ownership rights for the
commercial returns and

ensures the monetary gains to him. It is a written, enforceable contract that pertains
to transfer the rights in a formalize agreement between two persons. It protects
and regulates the rights of all the parties that are engaged in the agreement.
Assignment agreement involves the exclusive sale of the rights which gives the
assignee complete ownership over the marks of the assignor in whatever way,
shape, or form it is in.

SELECTING AND EVALUATING TRADEMARK

Selecting a Mark

The selection of mark occurs in a variety of ways companies hold contests and
encourages employees to create a mark for a new product line or service.
Companies engage sophisticated research. Branding firms that will conduct
surveys and create a mark and a logo or design for the company.
Once the mark is selected, it must be screed and evaluated for use and
registrability, if failed then it leads to wastage in expenditure of time and money in
advertising, using and applying for a mark that is rejected for registration by the
PTO or, in the worst case scenario, might subject the owner to damages for trade

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
Subject: Intellectual Property Rights
[Link] 5TH SEM EEE
mark infringement and unfair competition.
Once a mark is selected, it should be carefully scrutinized to ensure that it will not
be excluded from protection under the Lanham Act.
 Firstly they have check whether the mark contains scandalous (giving
offence to moral sensibilities and injurious to reputation)
 Whether consent from a living person will be required,
 Whether the mark is generic,
 Whether it is statutorily protected

 Whether the mark is descriptive of some feature of the goods and services
offered under the mark,
 It also see that the mark includes foreign terms
 Many law firms specializing in trademark work use a questionnaire form or
datasheet to gather questionnaire form or datasheet together basic
information from clients about their marks.
Evaluating Trademark

Trademarks are not only used to provide legal protection to a company's name,
design, word, etc. rather are intangible assets. Evaluating the exact value of the
trademark is challenging.

Till a decade or two ago, no one used to evaluate the value of their intangible
assets of the company. However now, brands create the reputation of a product;
motivates the purchasing power; and makes the product different from other
generic products. In fact, almost every brand fetches a good amount of value. But
evaluating the exact value of the trademark is a big challenge, and one must know
the correct way to evaluate it.

Valuating intangible assets of your company like trademark or patent is a complex

task which can turn your head upside down, and thus makes the selling transaction
adversative. But the need to evaluate a brand is essential for many business
activities, like a merger or acquisition; sale or purchase of the trademark or if you
want to sell your company.

The first step in evaluating the trademark is to examine the historical prospects of
Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
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the trademark like the total cost invested in it; profit margin associated with the
products and the time it was first used, etc.

After considering these options, one must follow the methodologies and different
approaches as listed below:

The Income Approach

The most crucial element on which a trademark's value is determined is the income
generating power of the business. The more the earning power, the higher the
value of the brand would be.

Through future estimates of economic benefit, cash flows and risks involved, and
converting this analysis into simple information; the income approach enables you
to evaluate your company trademark.
Market Approach

In this method, the price of similar marks is considered and compared. It uses
market-based indicators of value and takes similar marks into account; it analyses
royalty rates and transaction prices to determine what the market is paying for
similar intangible assets. In this approach, market trends are considered, and other
transactions are analyzed.

Cost Approach

Cost approach considers the implicit as well as explicit cost incurred in creating
the Trademark. Cost approach also covers the cost accrued in promoting the
company and its brand promotion. A particular focus on forecasts of market
transactions is employed and estimated time and cost that would be required to
make a similar trademark are considered.

Other Factors

Along with the ones listed above, there are other factors which a company should
consider while evaluating a trademark or trademarks and to maximize their values:

 Qualitative and quantitative characteristics of the trademark.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
Subject: Intellectual Property Rights
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 If there is any contract assigned or associated with the trademark.
 Sustainability of the trademark in the market in future.
 Market position a trademark holds in the current business.
 The capital structure of the company and its modifications according to the needs.
Trademark carries a significant value in the business, and a company should
evaluate its brand and know the exact value of their intangible assets. A company
should work towards the goal of enhancing the value of trademark and other
intangible assets for long-term profits.

TRADEMARK REGISTRATION PROCESS:

⚫ Investing your time and money to build a particular brand and seeing the
same brand name being used by another, robbing you of your hard-earned
brand reputation is not an agreeable state of affairs.

⚫ Many a time, trademark (TM) owners end up in protracted litigation

because when the time was right, they did not do trademark registration in
India of their brand name.

⚫ Trademark registration process of the brand name is not a difficult task.

⚫ A few simple steps, as explained below and you would have the much-
needed legal protection of your brand name registration in India.

A trademark application can be made by:

 Private firms
 Individuals
 Companies- Limited Liability Partnership, OPC, Private limited, Public,
Partnership, etc.
 NGO‟s

Note: In the case of NGOs and LLP companies the trademark has to be applied for
registration in the name of the concerned business or a company.

Any person, pretending to be the proprietor of a trademark used or intended to be

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
Subject: Intellectual Property Rights
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applied by him, may apply in writing in a prescribed manner for registration. The
application must include the trademark, the goods or services, name and address of
the candidate with power of attorney, the time of use of the mark. The application
must be in English or Hindi. It must be registered at the appropriate office.

Step 1: Trademark Search

⚫ Many entrepreneurs do not comprehend the importance of a TM search.

⚫ Having a unique brand name in mind is not good enough reason to avoid a
TM search.

⚫ TM search helps you to know if there are similar trademarks available and
it gives you a fair picture of where your trademark stands, sometimes, it
also gives you a forewarning of the possibility of trademark litigation.

⚫ Why waste your money in time-consuming trademark litigation later when

you can choose to avoid it in the first place?

Step 2: Filing Trademark Application

⚫ Based on the nature of product a class is chosen among 45 classes of trademark.

⚫ Once the chosen brand name or logo is not listed in the Trademark Registry
India, then we can opt for registering the same.

⚫ The first step is to file a trademark application at the Trademark Registry

India through online / offline.

⚫ Once the application is filed, an official receipt is immediately issued for

future reference with TM application number.

Step 3: Examination

⚫ The examination might take around 12-18 months.

⚫ The examiner might accept the trademark absolutely, conditionally or object.

⚫ If accepted unconditionally, the trademark gets published in the Trademark Journal.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
Subject: Intellectual Property Rights
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⚫ If not accepted unconditionally, the conditions to be fulfilled or the
objections would be mentioned in the examination report and a month's
time would be given to fulfill the conditions or response to the objections.

⚫ Once such response is accepted, the trademark is published in the Trademark

Journal.

⚫ If the response is not accepted, one can request a hearing. If in the hearing,
the examiner feels that the trademark should be allowed registration, it
proceeds for publication in the Trademark Journal.

Step 4: Publication

⚫ The step of publication is incorporated in the trademark registration process

so that anyone who objects to the registering of the trademark has the
opportunity to oppose the same.

⚫ If, after 3-4 months from publication there is no opposition, the trademark
proceeds for registration.

⚫ In case there is opposition; there is a fair hearing and decision are given by
the Registrar.

Step 5: Registration Certificate

⚫ Once the application proceeds for trademark registration, following

publication in Trademark Journal, a registration certificate under the seal of
the Trademark Office is issued.

Step 6: Renewal

⚫ The trademark can be renewed perpetually after every 10 years. Hence,

your logo or brand name registration can be protected perpetually.

While filing for the trademark registration, the documents required to provide are as follows:

Identity and business proofs: The trademark owner or the person who is
approved by the trademark owner requires presenting their identity proof. It can be
your Aadhar Card, Driving License, Passport, Ration card, or Voter‟s ID.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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Using Logo with Tagline: If a trademark application is prepared for a tagline with
only words, then there is no requirement for a logo. In cases where a logo is
applied, then it must be submitted in black and white format. The number of words
in the logo must exactly be the same as specified in the application for a trademark.

Brand Name & Logo: The logo must have the brand name.

User Affidavit: If a particular user data is to be claimed, the user affidavit is

expected to be submitted.

Proof of TM use: To demand specific user date, documentary proof like invoices,
registration certificates, etc. with the brand name must be given.

MSME or Start-up Recognition: A partnership firm or Corporate entities can

give a certificate of registration under MSME or Start-up India scheme to get a
50% rebate on the Government fee

Signed Form TM – 48: M-48 is a lawful document that enables the attorney to
file the trademark on your behalf with the trademark registry. The document will
be made by LW professionals for the signature.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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Flow Chart for Trade Marks Registration

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International Registration

The system of international registration of marks is governed by two treaties:

The Madrid Agreement, concluded in 1891 and revised at Brussels (1900),

Washington (1911), The Hague (1925), London (1934), Nice (1957), and
Stockholm (1967), and amended in 1979, and the Protocol relating to that
Agreement, which was concluded in 1989, with the aim of rendering the Madrid
system more flexible and more compatible with the domestic legislation of certain
countries which had not been able to accede to the Agreement.

The Madrid Agreement and Protocol are open to any State which is party to the
Paris Convention for the Protection of Industrial Property. The two treaties are
parallel and independent and States may adhere to either of them or to both. In
addition, an intergovernmental organization which maintains its own Office for the
registration of marks may become party to the Protocol. Instruments of ratification
or accession must be deposited with the Director General of WIPO. States and
organizations which are party to the Madrid system are collectively referred to as
Contracting Parties.

The system makes it possible to protect a mark in a large number of countries by

obtaining an international registration which has effect in each of the Contracting
Parties that has been designated

CLAIMS

Intellectual property claims are legal actions brought by one party against another
when a party feels its intellectual property (IP) rights have been infringed upon.
India being a mixed market has many industries that operate under the free market
concept. The competition in the market system is extreme. For any enterprise to
thrive in the open market, they have to create brand recognition and brand value.
The simplest way through which this is achieved is via trademarks.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
 Module-3
Subject: Intellectual Property Rights
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The need for trademarks can be considered a three-prong approach to represent
goods or services by:

 Helping consumers recognize the source

 Helping consumers determine the quality
 Helping consumers make a purchasing decision
Once such value is attached to the trademark, it is imperative to protect it from
misuse and infringement by others.

What is Trademark Infringement

The Trademarks Act, 1999 (hereinafter referred to as the Act) is the legislation that
protects trademarks in India. The Act lays down the rules dealing with registration,
protection and penalties against infringement regarding trademarks. Trademarks
are given the status of intellectual property across the globe. There are many
organizations, both international and national, that endeavor to protect intellectual
properties such as trademarks.

In India, the organization that deals with the protection of trademarks is the Indian
Patent Office administered by the Controller General of Patents, Designs and
Trademarks. In simple words, trademark infringement is the unauthorized usage of
a mark that is identical or deceptively similar to a registered trademark. The term
deceptively similar here means that when an average consumer looks at the mark,
it is likely to confuse him/her of the origin of the goods or services.

Types of Trademark Infringement

When looking into trademark infringement, one must know that are two types of
infringement:

1. Direct infringement

Direct infringement is defined by Section 29 of the Act. There a few elements that
have to be met for a direct breach to occur; they are as follows:

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Use by an unauthorized person: This means that violation of a trademark only
happens when the mark is used by a person who is not authorized by the holder of
the registered trademark. If the mark is used with the authorization of the holder of
the registered trademark, it does not constitute infringement.

Identical or deceptively similar: The trademark used by the unauthorized person

needs to either be identical to that of the registered trademark or deceptively
similar to it. The term „deceptively similar‟ here only means that the common
consumer „may‟ be confused between the marks and may think of them being the
same. The operational word here being „may‟, it only needs to be proven that this
is a possibility and does not require proof of actually happening. As long as there
is a chance of misrecognition of the marks, it is enough for proving infringement.

Registered trademark: The Act only extends protection to trademarks that have
been registered with the trademark registry of India. In the case of breach of an
unregistered mark, the common law of passing off is used to settle disputes. It is a
tort law that is used where injury or damage is caused to the goodwill associated
with the activities of another person or group of persons.

Class of goods or services: For the infringement of the trademark, the unauthorised
use of the mark has to be used for the propagation of goods or services that fall
under the same class of the registered trademark.

2. Indirect infringement

Unlike direct infringement, there is no provision in the Act that deals with indirect
infringement specifically. This does not mean that there is no liability for indirect
infringement. The principle and application of indirect infringement arise from the
universal law principle. It holds accountable not only the principal infringer but
also anyone that abets, induces that direct offender to infringe. There are two types
of indirect infringement:

Vicarious liability: According to Section 114 of the Act, if a company commits an

offence under this Act, then the whole company will be liable. Therefore not only
the principal infringer but, every person responsible for the company will be liable

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for indirect infringement, except for a person who acted in good faith and without
knowledge of the infringement.

The elements for vicarious liability are:- When the person can control the
activities of the principal infringer – When the person knows of the infringement
and contributes to it – When the person may derive financial gains from the
infringement The only exception to vicarious liability of a company for
infringement is when the company has acted in good faith and had no idea about
the infringement.

Contributory infringement: There are only three basic elements to contributory

infringement:- When the person knows of the infringement – When the person
materially contributes to the direct infringement – When the person induces the
principal infringer to commit infringement In the case of contributory
infringement, there is no exception as there exists no chance of the contributory
infringer to act in good faith.

Penalties for Trademark Infringement

In India, the infringement of a trademark is a cognisable offence which means that

the infringer may also face criminal charges along with civil charges. It is also not
required by the Indian law for the trademark to be registered for the institution of
civil or criminal proceedings. As mentioned before this is due to the common law
principle of passing off. In the case of trademark infringement, the court may
award the following remedies:

 Temporary injunction
 Permanent injunction
 Damages
 Account of profits (damages in the amount of the profits gained
from the infringement)
 Destruction of goods using the infringing mark
 Cost of legal proceedings
In the case of a criminal proceeding, the court dictates the following punishment:

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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 Imprisonment for a period not less than six months that may extend to three years
 A fine that is not less than Rs 50,000 that may extend to Rs 2 lakh.
The type of information that must be kept confidential in order to retain its
competitive advantage is generally called a “Trade Secret”. A trade secret is
any information that can be used in the operation of a business or other enterprise
that is sufficiently valuable and secret to afford an actual or potential economic
advantage over others.
The trade secret constitute a recipe, a formula, a method of conducting
business, a customer list, a price list, marketing plans, financial projection and a
list of targets for a potential acquisition.
Generally, to qualify for trade secret protection, information must
 be valuable;
 not be publicly known; and
 be the subject of reasonable efforts to maintain its secrecy
The rapid pace of technology advances the ease with which information can now
be
rapidly disseminated and the mobility of employees require businesses to devote
significant effort to protecting their trade secrets. If trade secrets were not legally
protectable, companies would have no incentive for investing time money and effort
in research and development that ultimately benefits the public at large.

Trade secrets law not only provides an icentive for companies to develop new
methods and processes of doing business but also, by punishing wrongdoers,
discourages improper conduct in the business environment.

The Law Governing Trade Secrets:

 Trademarks, copyrights, and patents are all subject to extensive federal

statutory schemes for their protection, there is no federal law relating to
trade secrets, and no registration is required to obtain trade secret
protection.

 Most trade secret law arises from common law principles, namely, judge-
made case law.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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 The first reported trade secret case in the United States was decided in 1837
and involved manufacturing methods for making chocolate.
 In 1939, the Restatement of Torts (a wrongful act or an infringement of a
right) adopted a definition of a trade secret, and many states relied on that
in developing their body of case law, leading to greater consistency in the
development of trade secrets law.
Additionally 1979, the National Conference of Commissioners on Uniform State
laws drafted the uniform Trade Secrets Act (UTSA) to promote uniformity among
the states with regard to trade secrets law. The UTSA was amended in 1985. The
following definition of trade secret has been adopted by the UTSA:
 Trade secret means information, including a formula, pattern, compilation,
program, device, method, technique or process that:
 Derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or
use, and
 is the subject of efforts that are reasonable under the circumstance to
maintain its secrecy.

DETERMINATION OF TRADE SECRET STATUS:

Restatement of Torts (a wrongful act or an infringement of a right) §757 cmt.b lists
six factors to be considered in determining whether information qualifies as a
trade secret. Courts routinely examine these factors to determine whether a
company‟s information constitutes a trade secret.

The extent to which the information is known outside the company:

Although information may be known to other outside the company and still
qualify as a trade secret, the greater the number of people who know the
information, the less likely it is to qualify as a trade secret. Secrecy need not be
absolute.

The extent to which the information is known within the company:

Although an employer or company is permitted to disclose confidential
information with a demonstrated “need to know” the information. If the
Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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information is widely known within the company, especially among those who
have no business need to know the information, it may not qualify as a trade
secret.

The extent of the measures taken by the company to maintain the secrecy of
the information:

 One claiming trade secret protection must take reasonable

precautions to protect the information.
 Courts are unlikely to protect information a company has not bothered to protect.
 A company is not obligated to undertake extreme efforts to protect
information, but reasonable precautions are required.
 Some experts predict that courts will likely require advanced security
measures to protect trade secrets transmitted via e-mail, including
encryption and protocols to ensure confidentiality.

The extent of the value of the information to the company and its competitors:

 If information has little value either to its owner or to the owner‟s

competitors, it is less likely to qualify as a trade secret.

 Conversely, information that is valuable to a company, such as the

recipe for its key menu product, and that would be of great value to the
company‟s competitors is more likely to be protectable trade secret.

The extent of the expenditure of time, effort, and money by the company in
developing the information:

 The greater the amount of time, effort, and money the company has
expended in developing or acquiring the information, the more likely it is
to be held to be a protectable trade secret.

The extent of the ease or difficult with which the information could be
acquired or duplicated by other:

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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 If information is easy to acquire or duplicate, it is less likely to qualify a trade secret.

 Similarly if the information is readily ascertainable from observation or can

be easily reproduced, it is less likely to be a trade secret.

 On the other hand, if it can be reverse engineered only with significant

expenditures of time, effort, and money, the product may retain its status as
a trade secret.

LIABILITY FOR MISAPPROPRIATION OF TRADE SECRETS:

 Misappropriation of a trade secret occurs when a person possesses,

discloses, or uses a trade secret owned by another without express or
implied consent and when the person used improper means to gain
knowledge of the trade secret.

 knew or should have known that the trade secret was acquired by improper means; or

 Knew or should have known that the trade secret was acquired under
circumstances giving rise to a duty to maintain its secrecy.

 The term improper means includes bribery, theft, and misrepresentation,

breach of duty to maintain secrecy, or espionage (the practice of spying or
of using spies, typically by governments to obtain political and military
information) or other means.

 Thus, misappropriation occurs either when a trade secret is lawfully acquired but
then Improperly used or when the trade secret is acquired by improper means.

Absence of Written Agreement:

 A written agreement prohibiting misappropriation of trade secrets can be

enforced through an action for breach of contract; a company‟s trade
secrets can be protected against misappropriation even in the absence of
any written agreement between the parties.
 A party owning trade secrets can bring an action in tort for breach of the

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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duty of confidentiality, which duty can arise even without an express
agreement.
 Courts will impose a duty of confidentiality when parties stand in a special
relationship with each other, such as an agent-principal relationship (which
includes employer- employee relationship) or other fiduciary (involving
trust, especially with regard to the relationship between a trustee and a
beneficiary) or good faith relationship.
 Courts have consistently held that employees owe a duty of loyality,
fidelity, and responsibility to their employers.
 In fact, more trade secret cases are brought in tort for breach of
confidentiality than in contract for breach of written agreements.
For example: If XYZ company is attempting to make a sale to Jones and
informs Jones that the XYZ product is superior to that of competitors because it
involves a new breakthrough in technology and explains the trade secret, courts
would likely find that Jones is subject to a duty not to disclose the information.
Similarly, if XYZ co., explains its trade secrets to its bankers in an attempt to
obtain financing, the bankers would likely be precluded from disclosing or using
the information. Such implied contracts to protect the information generally arise
when the parties‟ conduct indicates they intended the information to be kept
confidential or impliedly agreed to keep it confidential.

Misappropriation by Third Party:

A number of other parties may also have liability for misappropriation of trade
secrets if they knew or should have known they were the recipients of protected
information.

For example:

1. Assume Lee is employed by XYZ co., In course of time [Link] learns

valuable trade secret information. If [Link] resigns jobs and begins working for
new company and it prohibited for both in using the information. He may not
misappropriate the information because he was in an employee-employer
relationship with XYZ company. New company should not use the information
Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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if Mr Lee reveals, if it happen so, then XYZ Company would generally prefer to
sue New Company inasmuch as it is far likelier to have deep pockets, meaning it is
more able to pay money damages than is an individual such as Lee.
2. If New Company has no reason to know the information was secret or that
Mr. Lee may not reveal it, New Company would not have liability for such
innocent use of the information. Similarly, if trade secret information were
innocently obtained by New Company by mistake, New Company would have no
liability for subsequent use or disclosure of the information.

Written Agreement:

Employers are generally free to require employee, independent contractors, and

consultants to sign express agreements relating to the confidentiality of
information. These agreements are usually enforced by courts as long as they are
reasonable. The agreements usually include four specific topics:
 Ownership of Inventions

 Non-disclosure Provisions

 Non-solicitation Provisions

 Non-competition Provisions

 Purpose

 Reasonableness

 Consideration
PROTECTION FOR SUBMISSION:

Submission to Private Parties:

 In may instance individuals wish to submit an idea for an invention,

process, game, or entertainment show to a company or business in the hope
that the company or business in the hope that the company will market and
develop the idea and the individual will be compensated for the idea?
 Idea submission disputes frequently arise in the entertainment industry. In
oen case an individual claimed that the producers of the Cosby Show
Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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(American comedian) misappropriated her idea for a television program
portraying a wholesome and loving African American family. A court held
there were no people and the idea was so general as to lack the element of
concreteness to be protectable.
 The solution to such a dilemma is for the “inventor” to submit the idea
pursuant to an evaluation agreement, or submission agreement, whereby
the other party agrees to evaluate the idea only for the purpose of
considering a future transaction between the parties and further agrees
not to circumvent the submitter or to disclose the idea to others.

Submission to Government Agencies:

 Private companies that present bids to government agencies in the hope of

obtaining a government contract are often required information to the
agency.
 Under freedom of information act (both at the state and federal levels),
the proposal might later be released to any member of the public requesting
the document, thus resulting in loss of confidential information to possible
competitors.
 The protected information is usually blocked out.
 If a government agency discloses trade secret information, the owner may
have a cause of action for an unconstitutional taking of private property
and may be awarded compensation if the owner had a reasonable
expectation of confidentiality.

REMEDIES FOR MISAPPROPRIATION:

A trade secret owner may request a variety of remedies from a

court. Among them are the following:

 Injective relief: In many cases, a trade secret owner is more interested in

ensuring the defendant cease use of the trade secret (or is precluded from
commencing use) than in recovering damages. In cases in which money
damages are not sufficient to protect a trade secret owner, a court may issue an

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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injection. A court may also issue an injuction to compel the defendant to surrender
or destroy trade secret information. In fact, courts may issue injunctions‟ to prevent
inevitable disclosure, reasoning that even if a former employer cannot show a
particular secret has been taken, it is inevitable that key employees will eventually
disclose what they know to a new employer.

 Money damages: A trade secret owner whose information has been

misappropriated may recover money damages from the defendant. The Plaintiff
may recover its lost profits as well as the profits made by the defendant.
Alternatively, the plaintiff may seek and recover a reasonable royalty arising
from defendant‟s use of the trade secret. Punitive damages may also be awarded
in cases in which the defendant‟s conduct is reckless, willful, and intentional. The
USTA provides that punitive damages not exceed more than twice the
compensatory damages awarded.

 Attorneys’ fees and costs: In most cases, the parties bear their own
attorneys‟ fees and costs. The UTSA, however, provides that reasonable attorneys‟
fees and costs may be awarded to the prevailing party if bad faith or willfulness is
shown.

TRADE SECRET LITIGATION:

 If a trade secret is disclosed in violation of a written confidentially

agreement, and the parties cannot resolve the dispute themselves, an action for
breach of contract may be brought, similar to any other breach of contract action.
 The plaintiff may add other causes of action as well, for example, for
misappropriation in violation of a state trade secret law. If no written agreement
exists, the

plaintiff must rely upon case law or state statutes protecting trade secrets, or both.
 To protect itself against a lawsuit by another alleging trade secret violation,
companies should require new employees who will have access to confidential

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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information to acknowledge in writing that accepting employment with the new
company does not violate any other agreement or violate any other obligation of
confidentiality to which the employee may be subject.

 If grounds for federal jurisdiction exist (the parties have diverse

citizenship and the claim exceeds $75000), the action may be brought in federal
court.
 The UTSA [Uniform Trade Secrets Act] provides that an action for
misappropriation must be brought within three years after misappropriation is
discovered or reasonably should have been discovered.
 In federal court, the action will be governed by the Federal Rules of Civil
Procedure relating to federal civil actions generally.
Most states have rules relating to civil procedure that are modeled
substantially after the Federal Rules of Civil Procedure and likewise govern the
litigation.

 If the defendant has a cause of action to assert against the plaintiff

relating to the trade secret, it must be asserted by way of a counterclaim in the
litigation so that all disputes between the parties relating to the information can
be resolved at the same time.
 After the complaint, answer, and counterclaim have been filed, various
motions may be made. Discovery will commence. The plaintiff and defendant will
take depositions to obtain testimony from those who may have information about
the case.

 Ultimately, if the matter cannot be resolved by private agreement, it will

proceed to trial. The trade secret owner must prove misappropriation by a
preponderance of the evidence. Ether party may request a jury trial; otherwise,
a judge will render the decision. Appeals may follow.
 One of the difficult issues in trade secret litigation arises from the fact
that the trade secret sought to be protected often must be disclosed in the
litigation so the judge or jury can evaluate whether the information is sufficiently
valuable that it affords its owner a
Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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competitive advantage.
 Similarly, the owner‟s methods of protecting the information often
must be disclosed so the fact-finder can determine whether the owner has
taken reasonable measures to protect the alleged trade secrets.
 The dilemma faced by trade secrets owner is that they must disclose the
very information they seek to protect.
 As technology progresses and the value of certain communication and
entertainment inventions increases, trade secret litigation is becoming an
increasingly common and high- stakes occupation.

TRADE SECRET PROTECTION PROGRAMS:

Trade secrets are legally fragile and may be lost by inadvertent disclosure or
failure to reasonably protect them, companies should implement trade secret
protection programs to safeguard valuable information. Because trade secret
protection can last indefinitely, businesses should devote proper attention to the
methods used to ensure confidentiality of information. Developing programs
and measure to protect trade secrets is an easy way to demonstrate to a court
that an owner values its information and takes appropriate measures to maintain its
secrecy.

Physical protection

There are a variety of tangible measures a company can implement to protect trade
secrets, including the following:

Safeguarding information under lock and key;

 Protecting the information from unauthorized access;

 Forbidding removal of protected information from the company premises
or certain rooms;
 Retaining adequate security during evening and weekends either
through alarm systems or security services;
 Ensuring tours of the company premises do not expose outsiders to valuable
Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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processes

or information;
 Using check-out lists when valuable equipment or information is
removed from its normal location;

 Monitoring employees‟ use of e-mail and the Internet to ensure

confidential information is not being disseminated;
 Using encryption technology and antivirus protection programs to protect
information stored on computers;
 Educate employees on trade secrets and protection of trade secrets;
 Ensuring information retained on computers is available only on company
networks so that access can be easily tracked.

Most companies will not need to implement all of the measures described above.
Courts do not require absolute secrecy or that extreme measure be taken to
protect information. Rather, reasonable measures will be sufficient to protect the
status of information as trade secrets.

Contractual Protection

 Another method of protecting trade secrets is by contract, namely,

requiring those with access to the information to agree in writing not to disclose
the information to other or use it to the owner‟s detriment.

 Similarly, in licensing arrangements, trade secret owners should ensure the

license agreements contain sufficient protection for trade secret information.

 Employers should use noncompetition agreements to ensure former

employees do not use material gained on the job to later compete against the
employer.

 With the advent of the Internet and the increased ease of electronic
communications, employers have become concerned about the loss of trade secrets
Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand
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through dissemination over the Internet.

Dr. Binod Kumar Choudhary, Associate Professor , ARKA JAIN University Jharkhand