BizRegime

Introduction

Personal liberty is fundamental and can be circumscribed only by some process sanctioned by law. Liberty of a citizen is undoubtedly important but this is to balance with the security of the community. A balance is required to be maintained between the personal liberty of the accused and the investigational right of the police. It must result in minimum interference with the personal liberty of the accused and the right of the police to investigate the case. It has to dovetail two conflicting demands, namely, on the one hand, the requirements of the society for being shielded from the hazards of being exposed to the misadventures of a person alleged to have committed a crime; and on the other, the fundamental canon of criminal jurisprudence viz., the presumption of innocence of an accused till he is found guilty. [1]

Bail is the rule and jail is an exception. It has also been observed that refusal of bail is a restriction on the personal liberty of the individual guaranteed under Article 21 of the Constitution. [2] Liberty is to be secured through the process of law, which is administered keeping in mind the interests of the accused, the near and dear of the victim who lost his life and who feel helpless and believe that there is no justice in the world as also the collective interest of the community so that parties do not lose faith in the institution and indulge in private retribution. [3]

In case of Non-Bailable offence(s), wherein the accused is arrested after registration of F.I.R., the accused may move an application seeking Regular Bail before the Court of Magistrate [4] or before the High Court or the Court of Session. [5] The Regular Bail may be moved at any stage i.e. during the investigation or after the filing of the final report/charge-sheet. [6]

Hon’ble Supreme Court, has also issued a direction that Bail applications shall be disposed of normally within one week. [7]

With respect to the concept of grant of bail in non-bailable offences, as upheld, it cannot be denied that any person accused of any non-bailable offence, is entitled to his/her liberty, and the right of an accused person should not be dealt with by a court in a superficial manner. [8] In fact, CrPC provides that in case the court has sufficient reason to believe that the case in hand requires further investigation to prove the guilt of the accused; such person should be enlarged on bail. It has also been the opinion of courts that since the right to liberty is an imperative right of a person, an application seeking Bail should not be decided in a mechanical and perfunctory manner. [9]

Key Considerations While Granting Bail

The Hon’ble Supreme Court in several matters, [10] prescribed several factors to be considered in an application for bail, and which are as follows:

(i) Existence of any prima facie / reasonable ground, and or, evidence in support of the made leading to believe that the offence was committed by the Accused;

(ii) nature and gravity of the charge/offence;

(iii) severity of the punishment in the event of conviction;

(iv) danger of the Accused absconding or fleeing, if released on bail;

(v) character, behaviour, means, position, and standing of the Accused;

(vi) likelihood of the offence being repeated by the Accused;

(vii) reasonable apprehension of the witnesses being tampered with; and

(viii) danger, of course, of justice being thwarted by a grant of bail.

(ix) At the stage of granting bail, an elaborate examination of evidence and detailed reasons touching upon the merit of the case, which may prejudice the accused, should be avoided. [11]

Other Factors affecting grant of Bail

Some other considerations, which have been prescribed by the Hon’ble Courts of India, are:

(i) The likelihood of a person being imprisoned, for long durations, while still an undertrial. [12]

(ii) Delay in concluding the trial.

(iii) As Sec. 437 CrPC specifically states “previous conviction”, and thus, merely the fact that the Accused is having previous involvement or facing Trial is not sufficient. Previous involvement refers to a case that may be pending investigation or where the Trial is pending in a Court. [13]

(iii) Refusing bail as a mark of disapproval of former conduct, whether the accused has been convicted for it or not, or to refuse bail to an un-convicted person for the purpose of giving him a taste of imprisonment as a lesson an improper conduct. [14]

(iv) Merely on the basis of criminal antecedents, bail cannot be denied. [15]

Bail when Offences punishable with death/life imprisonment

In all cases of non bailable offences, except for offence punishable with death or life imprisonment, Judicial decision shall always be exercised by the Courts in favour of granting bail to the Accused. Further, where there are reasonable grounds for believing that the person accused of an offence punishable with death or life imprisonment has been guilty of such offence, bail shall be allowed only upon reasons being recorded for the same [16]. Bail shall not be denied merely because the offence alleged against the Accused is punishable with death or imprisonment for life or that there is a prima facie case as these are not sufficient grounds for denying bail. [17]

Imposing Conditions for Bail

The Court has the power to impose conditions while granting the Regular Bail, and on furnishing personal bond with one or more sureties, as per Form 45 of CrPC. At the time of granting Regular bail, the Court may impose conditions upon the accused like [18]:

(a) To attend the Trial regularly,

(b) Not to commit any similar offence

(d) Desist from Tampering any evidence

(e) Any other conditions as the Court may deem fit.

Implicit in every bail is the condition that the accused shall not tamper with the evidence. [19] However, at the stage of consideration of bail, the conditions like repayment of alleged wrongful loss amount are onerous and unwarranted, as the liability of the accused is yet to be determined in appropriate proceedings. [20]

Limitations on Section 437 CrPC, 1973

The Court of Magistrate does not have any power to release on bail any person against whom there are reasonable grounds of believing that he has been guilty of the offence punishable with death or imprisonment for life. [21] In cases like murder (Sec. 302 IPC) the bail application needs to be moved either before the Court of Session or before the concerned High Court. [22] The Court of Magistrate does not have any power to adjudicate Bail in said cases. However, as an exception, the Magistrate may hear the bail application in aforesaid cases where the accused is a person aged less than 16 years or a woman or sick or infirm. [23]

References

[1] Vaman Narain Ghiya v State of Rajasthan [(2009) 2 SCC 281].

[2] Sanjay Chandra v CBI [(2012) 1 SCC 40].

[3] Shahzad Hasan Khan v. Ishtiaq Hasan Khan [1987 AIR 1613].

[4] Section 437, CrPC, 1973.

[5] Section 439, CrPC, 1973.

[6] Section 173, CrPC, 1973.

[7] Aasu v. State of Rajasthan [Appeal (Crl) No. 511/2017].

[8] Kashiram & Ors v. State [AIR 1960 MP 312].

[9] Ratan Singh Nihal Singh & Ors v. The State [AIR 1959 MP 216].

[10] State of UP v. Amarmani Tripathi [(2005) 8 SCC 21]; Prahlad Singh Bhati v. NCT of Delhi [2001 (4) SCC 280].

[11] P. Chidambaram v. CBI [Appeal (Crl) No. 1603/2019].

[12] State of Kerala v. Raneef [(2011) 1 SCC 784].

[13] Sumit v. State of U.P. [2010 Cri.L.J. 1435 (SC)].

[14] Sanjay Chandra v. CBI [(2012) 1 SCC 40].

[15] Maulana Mohmmad Amir Rishadi v. State of U.P. & Anr. [2012 (2) Mh.L.J.(Cri.) 412].

[16] Gurucharan Singh v. State (Delhi Administration) [1978 Cr.L.J. 129 (SC)].

[17] Venkataramanappa v. State of Karnataka [1992 CriLJ 2268].

[18] Section 437(3), CrPC, 1973.

[19] Rizwan Akbar Hussain Syyed v. Mehmood Hussain [(2007) 10 SCC 368].

[20] Shyam Singh v State [(2006) 9 SCC 169].

[21] Section 437(1)(i), CrPC, 1973.

[22] Section 439, CrPC, 1973.

[23] Proviso, Section 437(1), CrPC, 1973.

Do you know that the designs of the Coca-Cola bottles are protected and cannot be imitated by another rival company? Why do you ask? Because the design of the bottle has been associated with the Company. They have the designs of all their bottles, whether the glass ones or the plastic ones, the bigger bottles or the small ones, they have all of them registered under their name.

What purpose does it serve? Well, you see, like Patents and Trade Marks, Industrial Design (more or fewer Designs) is another aspect of Intellectual Property that needs to be protected as it has a commercial value and is created by someone from an idea. Businesses do it all the time to protect the design of their products from being copied by other opponents in the market and gain an unfair advantage.

Definition of Industrial Design and Importance of its Protection

The word ‘Design’ may be defined as the “way in which something is planned and made or arranged”, but under the ambit of Intellectual Property Rights, it has a specific definition. Generally, there are some specific criteria that have to be satisfied in order for a design to be considered as a ‘Design’ under the Intellectual Property Laws. These criteria are as follows:

It must contain features if shape, configuration, pattern, ornament, or composition of lines and colors;

Which can be applied to any article;

1. In two dimensional, or three dimensional, or in both forms;

2. Have to be created by any industrial process or means whether manual or mechanical, separate or combined.

3. The finished article appeals to and is judged solely by the eye.

Having said that, a Design does not include something which is

1. Any mode or principle of construction

2. Anything which in substance is a mere mechanical device

3. Any Trade Mark

4. Any article of work as defined in Copyright Laws.

The definition under the US Code for Design is the simplest among all the laws in the world. Under the US Code Title 17, Chapter 13, Sec. 1301(a)(1), the definition states, “The designer or other owners of an original design of a useful article which makes the article attractive or distinctive to in appearance to the purchasing or using the public may secure the protection provided by this chapter upon complying with and subject to this chapter”.

In today’s era where everything is appealing and involves creativity and aesthetics, the visual appeal of any product has become substantial. While making the product stand out from the crowd, the proprietor will also be able to restrain others imitating, or copying his original work on the article (his ‘Design’), and commercialize them in the market without his consent and giving consideration for the same. The protection of Industrial design also promotes creativity and the industrial and manufacturing sectors which can help in expanding commercial activities.

The dilemma of Industrial Design and an Artistic work under Copyright

A mere design on a paper without being applied to an article will not be a Design but can fall under copyright laws. In India, it falls under Sec 2(d) of the Copyright Act, 1957 which defines an ‘Article’ as, “an article of manufacture and any substance, artificial or partly artificial and partly natural and includes any part of an article capable of being made and sold separately”.

The Copyright Act in India excludes certain items from Sec 2(d) for the purpose of making it more clear on what an Article actually will be. This definition limits the meaning of ‘Article’ to anything which is not:

1. Any substance or principle of construction which in substance is a merely mechanical device.

2. Any Trade Mark

3. Any Property

4. Any Article work as defined under Sec 2(c) of the Copyright Act, 1957.

Who can file the Application?

Basically, under the Laws, a person who is the proprietor of the Design is eligible to file an application. The word Person in the Laws contains a set of legal entities recognized by the Law. These are:

1. Individual

2. Firm

3. Partnership

4. Corporate Body

5. Legal Entity

Industrial Design Registration for a Set

The design of a ‘Set’ is registrable. In India for example, the word ‘Set’ is defined under Rule 2(e) of Design Rules 2001. It defines ‘Set’ as “a number of articles of the same general character ordinarily sold together or intended to be used together; all bearing the same design, with or without modification, not sufficient to alter the character or substantially to affect the identity thereof”. So basically, if you have to define a set, you can take a crockery set as an example.

Ambit of Protection under Industrial Design

There are many criteria under which an article cannot be protected under the Industrial Designs, but because different countries have different criteria, there are some general ones which are listed below:

1. Any design which is opposing the moral values of the public.

2. Any design which describes any process of construction of an article.

3. Designs of Books, Jackets, Calendars, Certificates, Forms, and Other Documents, Dress-Making Patterns, Greeting Cards, Postcards, Stamps, Medals.

4. Designs including flags, emblems, or signs of any country.

5. Designs of integrated circuits.

Registration of Industrial Design

There are two types of registration in all types of Intellectual Property Registration, the first one is National which means that the registration will be applicable only within the country in which the proprietor of the company wants to get the registration. The second one is International registration, where the registration protection will be applicable to most or all parts of the world.

1. National Registration – Let us take India for example. In India, the Registration for a Design can be applied for before the design Registry in New Delhi, or before any of the Patent Offices, subject to the geographical Jurisdiction. The process for registration in India is as follows:

(a) The application will be filed first.

(b) The Office concerned will determine if the Design is not eligible for registration

(c) If it is, the Office will issue a statement of objections (called Examination Report), and the application is obligated to respond to the report within a period of three months from the date of receipt of the report.

(d) If the response by the Applicant is not received within the time period specified, the application will be abandoned.

(e) If the response has been received, the Controller of Design determines whether an application should be refused, accepted, or to be put up for a hearing based on the response of the Applicant.

(f) If the application is accepted by the Controller of Designs, it will be then processed for registration.

(g) The particulars of the application, along with the article, will be published in the Official Gazette after the registration.

(h) In India, the registration of an Industrial Design will be applicable for a period of 10 years which can be renewed for an extent for up to 5 years.

(i) If you have to appeal against the decision of the Controller of Design, you will have to move to the High Court.

2. International Registration – There are two different ways of getting international design protection. The first is a national design application in each individual country of interest, and the second is to file an ‘international’ design application via the Hague Systems for the International Registration of Industrial Designs. The main difference between the two methods is that the Hague Systems allows you to file a single design application for design protection in any of the territories which are a party to the Hague Agreement. Otherwise, separate design applications are needed for each country for which design protection is needed. In either case, you need to file in all of your countries of interest within 6 months of first filing your design, and this can potentially be done more easily via a single ‘International’ application. Having said that, not all countries are a party to the Hague Agreement, so in some cases, you may only be able to obtain design protection via a direct national filing. The process of International registration via the Hague Systems is more or less similar to a general process of registration of the design in a country, except it covers various countries at once. For your help below is a picture of how an application is processed.

WIPO International Design Registration Process

Introduction

The Indian economic system has benefitted magnificently through Start-ups ever since its introduction. With the pooling of resources within the country and through aids provided by the Government, India has performed tremendously well. Such has been the growth that India has around 30 Unicorns with many more adding to the list at present.

A Start-up operates in a volatile business environment and statutory compliances play a key role in their struggle to survive the highly competitive market climate. This article shall discuss certain staple compliances which are imperative to adhere to in order to make the market position of a Start-up concrete in the Indian economic setup.

Registration

For a Start-up to be eligible in the view of a government, it is essential that it:

(i) Is registered as a Company, Partnership Firm, or a Limited Liability Partnership ("LLP"),

(ii) Has a turnover of less than INR 100 Crores in the previous financial year, and

(iii) Shall not be an entity formed by splitting up or reconstruction of an existing enterprise.

The primary stage which brings the Start-up into existence is its registration. Therefore, in order to operate freely and avail the status of a "Start-up", registering the entity is indispensable. The registration process of a Start-up can be encapsulated in the following points:

(i) Incorporation of the Business Entity which, involves several steps further.

(ii) Registration as a Start-up on the Start-Up India Website in order to get promoted and avail benefits out of State and Central Policies.

(iii) Availing recognition from the Department for Promotion of Industry and Internal Trade ("DPIIT") in order to secure various perquisites under the taxation policy, intellectual property rights protection, and many others.

(iv) Filling in the required details in the Start-up Recognition form. It is important to keep documentation such as Director Details, Certificate of Incorporation, PAN Number, etc. during the registration process.

(v) Having furnished the above details and verified the information submitted, the Start-up receives a recognition number along with a DPIIT certificated for recognition as a Start-up.

Licensing Obligation

Before a business, no matter what kind, is up and running, it needs to procure certain licenses and approvals from the regulating authorities. Failing to comply with these norms would lead to unnecessary lawsuits and tarnish the brand in the infant stage. These licenses vary with the type of business activity a Start-up is operating in. For instance, a Start-up operating in the food industry would require a Food Safety License issued by the Food Safety and Standards Authority of India ("FSSAI"); a company dealing with coaching services will have to present a Shop and Establishment Certificate. Hence, it is advisable that thorough research is done in this aspect or hire professionals who would be able to carry out this mandatory license compliance work for the Start-up.

Contractual Obligation

A Start-up belongs to the same genus as the business entity. If we are to represent the classification of business organizations, a Start-up, and a Business Entity are likely to fall within the same portion. Like any other Business Entity, whether Sole Proprietorship or Partnership, a Start-up can also be diced into multiple variations.

A Start-up involves more than one mind while it operates, therefore it is advisable to adhere to a contract that spells out the objectives, activities, profit-sharing, liabilities, and duties of the people associated with the Start-up. Such pre-existing contracts minimize the possibility of a potential feud in the near future. Hence, a valid and robust contract is of great essence in order to fuel a Start-up and function without any fuss of litigation, midway, or after the termination of the Contract.

Company Law Compliances

Under circumstances where a Start-up is in the form of a Private Limited Company, it shall be registered under the Companies Act, 2013 and adhere to the provisions contained therein. Some of the norms to be observed under the Companies Act, 2013 are:

(i) Annual General Meeting

(ii) Board Meeting

(iii) Appointment of an auditor

(iv) Other Compliances such as filing annual return details to the Registrar of Companies ("RoC"), filing of financial statement for each year with the RoC, filing form MBP-1 by the directors with the RoC.

Labour Law Compliances

All operations of a Start-up begin with the founders incepting the idea and recruiting people to accomplish the collective vision and transforming the idea into a reality. The entire cycle of production of service is driven through the recruitment process. Employers play a vital role in this process by working and protecting the basic rights of their employees. Therefore, the Start-up has to keep a tab of all the statutes made in connection with Labour Laws. Previous legislations provided security to labours and employees such as The Industrial Disputes Act, 1947; The Trade Unit Act, 1926; The Employees Provident Funds and Miscellaneous Provisions Act, 1952; The Employees State Insurance Act, 1948.

However, with the enactment of 4 new Labour Codes [Code of Social Security, 2020; Industrial relations Code, 2020; Code on Wages, 2020; and Code on The Occupational Safety, Health and Working Conditions, 2020] ("Codes"), there is need for people who are thorough with the compliances under the new Codes and can help Start-up with the same.

Start-ups are required to submit a self-declaration in order to be exempted from the labour inspection conducted during the nurturing years.

Taxation Compliances

The taxation policy is an indispensable aspect of the numerous compliances which every individual and business has to adhere to. In order to bolster a Start-up friendly economic environment, the government came up with certain relaxations related to taxation.

(i) Provision of 100% tax rebate for Start-ups incorporated after 1st April 2016.

(ii) Exemption from tax on Long-Term Capital Gains ("LTCG")

(iii) Tax exemptions on investments above the fair market value

(iv) Tax exemptions to Start-ups operating as individual/HUF on LTCG from equity shareholding

(v) GST Regulation: The GST regime was introduced with keeping the Start-ups in focus mainly. It was brought into action to eradicate all indirect taxes and bring forward a unified tax system. Through the GST apparatus, the government has increased the ceiling turnover for registration under GST. Any business whose turnover exceeds INR 40 lakhs in a financial year is required to register under GST. This limit is INR 20 lakh for service providers. GST returns through the Input Tax Credit system introduced by the new taxation policy have made it possible for sellers to nullify their purchases with their sales. It is logistically easier with simplified calculations contrary to the prior regime. Therefore, the GST regime has put into light major advantages for Start-ups which can be availed with ease.

Intellectual Property Compliances

A Start-up is synonymous with innovation. It involves innovation in every tier of its functioning. From the very existence, an innovative step is a part and parcel of a Start-up. Ranging from the name under which it operates to the protection of its product, it has a paramount role to play in a Start-up. Complying with intellectual property regulations is crucial for Start-ups as IP protection to their business or product does not allow any dominant player to seize the product. Therefore, timely registration of trademark and copyrights, having a confidentiality clause in the parent contract helps in reducing the chances of an infringement issue. Start-ups are given benefits under the Start-up India Policy wherein they can register their patents, trademarks, designs, etc by only paying a statutory fee.

RBI Guidelines for Start-ups

The RBI plays a prominent role to provide Start-ups a conducive environment for carrying out their business with ease. In order to promote and encourage novice entrepreneurs, the RBI issues guidelines that promoted guidelines that relaxed external commercial borrowing policies.

This has been a welcome step for young entrepreneurs to develop their Start-ups. A recent introduction of the Additional Factor Authentication (AFA) and other rules to enhance security while making online payments by the RBI is sure to disrupt the functioning of various Start-ups. Therefore, keeping a closer look for RBI Guidelines is essential in order to gain first-mover advantages.

Other Compliances

There have been instances where Start-ups require tailor-made solutions for a particular circumstance or industry-specific results in which they operate. Even though Start-ups belong to the same genus, they have different compliances to adhere to in different stages of their functioning. If it is to be considered that a Start-up has expanded its horizon into the Import and Export domain, it has to mandatorily comply with the Foreign Exchange Management Act ("FEMA") Regulations. In case of a merger, unfair means of gaining a monopoly in the market, or abuse of dominant power, the role of the Competition Commission of India ("CCI") is brought to light. Start-ups have to comply with the thresholds provided in the Competition Regulation.

When we put it in simpler terms, every Start-up operating is unique and innovative in nature, likewise, they require separate solutions for separate obstacles. There is no standard format that illustrates which rules are to be followed by Start-ups.

Conclusion

The above-stated compliances are just a glimpse into the plethora of complex obligations while opening up a Start-up to operate in a full-fledged manner. There are even more intricacies involved while the entity starts functioning in full form. As iterated earlier, the ever-changing economic environment makes it difficult to cope up with the changes and focus on the core objective of the business. It is vital for the longevity of a Start-up to outsource its legal requirements.

Disclaimer

The above article solely remits information and discusses relevant issues, it shall in no way be used for soliciting legal solutions. The information and/or observations contained in this article do not constitute legal advice and should not be acted upon in any specific situation without appropriate legal advice.

This article has been co-authored by Shweta Pandey (Knowledge Partner) and Rishabh Shukla (Founder, BizRegime)

Introduction

A business’s trademarks and brands are among its most valuable assets. Through strategic trademark licensing arrangements brand owners can not only increase brand awareness but also generate significant income. Trademark Licensing, in essence, allows the Registered Proprietor (“Owner of the Trademark”) to let others use the trademark (“Mark”) without assigning the ownership of the Mark. Trademark license agreements can enhance brand equity and produce revenues for a brand owner. Each licensing structure is different and the reality of trademark license agreements can be complex. A well-structured licensing agreement is important to maximize the value of a trademark while safeguarding against possible ramifications and risks.

Trade Mark Licensing: Relevant Provisions under Trade Marks Act, 1999

(i) Sec 2(zb) r/w Sec. 2(m) of Trade Marks Act, 1999: Definition of Trade Mark

(ii) Sec 2(1)(r) of Trade Marks Act, 1999: Permitted Use

(iii) Sec 39 of Trade Marks Act, 1999: Assignability and Transmissibility of Unregistered Trade Mark

(iv) Sec 48 of Trade Marks Act, 1999: Registered User

(v) Sec 49 of Trade Marks Act, 1999: Registration of Registered User

(vi) Sec 50 of Trade Marks Act, 1999: Variation and Cancellation of Registered User

(vii) Sec 54 of Trade Marks Act, 1999: Registered User not to have right of assignment or transmission

Diff between Licensing and Assignment

(i) License: Allows others to use the Mark without assigning the ownership for all or some of the goods and services covered. Rights, Term, and Territory given to the Licensee can be restricted with respect to the products or services. Registration of License is not compulsory.

(ii) Assignment: The owner transfers all its rights with respect to a Mark to another entity, including the transfer of the rights such as the right to further transfer, to earn royalties, etc. Assignment can be complete or with respect to only some of the goods/ services. Assignment can also be with goodwill (the consumer perception of the brand) or without goodwill. Registration of Assignment is compulsory.

Types of License Users

(i) Registered User: A Licensee whose title as such is recorded with the Registrar of Trademarks.

(i) Unregistered User / Permitted User: An unrecorded or common law Licensee, who is permitted to use the registered Mark by consent of the proprietor through a written agreement.

Permitted Use other than Registered User

(i) If the permitted use is by a third party without registration as a registered user, then the following conditions must be met:

(ii) The Mark should remain in the register for the time being and;

(iii) Should be used by a permitted user in the course of his trade.

(iv) Permitted user has to take the consent of the registered proprietor in a written agreement.

(v) The permitted user must abide by the terms and conditions of which the registration of the Mark is subjected to and those which have been laid out by the Registered proprietor.

Benefits of Trademark Licensing

(i) Royalty: The Licensor enjoys its rights to the Mark by getting the royalties for its use.

(ii) Promotion of the Trademark: Licensee uses the Mark as an extension to the Licensor, and thus, the promotion of the Mark becomes more aggressive

(iii) Quality Workload Reduction: With the Quality Check Clause in the License, Agreement, the Licensor can reduce the quality standard workload by assigning the same to Licensee.

(iv) Easy to Set Up: A Licensee can benefit from this type of arrangement because it requires less money from them to start a business opportunity. They can purchase a license instead of outright ownership, then begin to make profits right away.

(v) Entry in Foreign Market: It is much easier to enter foreign markets in this manner, as the license allows for the brand/Mark to jump border requirements.

(vi) Freedom to develop Unique Marketing Approach: A Licensee knows their market much better than the average Licensor. This knowledge allows the Mark to be marketed in a way that is more attractive to the average consumer.

(vii) Quality Maintenance: With the Quality Check Clause in the License Agreement, the Licensor can reduce the quality standard workload by assigning the same to Licensee.

(viii) Brand Recognition: The Licensee may help the Mark be advertised in areas/territories where the Licensor could not.

(ix) Expansion of Trademark: IP Rights being territorial rights, License Agreements can help the Mark being recognized in other territories, which can convert it to Well-Known Mark.

(x) Market Operation Expansion: The Licensee is able to expand its market operations by using the brand and developing its reputation.

Requirements of Trademark Licensing

(i) Under Trade Marks Act, 1999: There must be a written agreement between the Licensor and Licensee regarding License of Mark. The Mark can be registered or unregistered at the time of entering into the agreement for the License. Licensor must be the Registered Proprietor / Owner of the Mark.

(ii) Under Indian Contract Act, 1872: Parties must be competent to enter into a contract. There must be lawful consideration. The contract must be made free from coercion, undue influence, abuse of bargaining power. Fraud and/or Misrepresentation, if committed by either of the parties to the Agreement, can make the contract void.

(iii) Competition Act, 2002: Section 3(5)(i) of the Competition Act, 2002 focuses on activities and agreements that hinder competition or unnecessarily hamper the functioning of the market forces, which are essential to healthy competition. It imposes strict bans on anti-competitive agreements and cartels that have, or are likely to have, an appreciable adverse effect on the economy.

Types of Trademark Licenses

(i) Exclusive License: An Exclusive License means that no person or company other than the named Licensee can exploit the relevant Mark.

(ii) Non-Exclusive: A Non-Exclusive License grants to the licensee the right to use the Mark, but means that the licensor remains free to exploit the same Mark and to allow any number of other licensees to also exploit the same Mark.

(iii) Sole License: Licensee is permitted to use the intellectual property, however, such rights cannot be transferred to any third party.

Trademark License: Procedure for Registration

Registration of Trademark License is not compulsory, as per Section 48(1) of Trade Marks Act, 1999 wherein it use of the word “may” implies that the parties have the option to register the license agreement. However, it is strongly suggested to register the license agreement to preserve it for use as evidence if any dispute arises out of it, or in relation to it, in the future. The process for registration is as follows:

Step 1: Parties have to file a joint application before the Registrar of Trademarks under Form TM-28, within 6 months from the date of entering into such an agreement.

Step 2: Registrar may accept the application completely or conditionally. If accepted completely, the registration of the application will be on an AS-IS basis. If accepted with some conditions, conditions/restrictions/limitations are put on the permitted use provided in the license and a notice is sent to the applicants.

Step 3: Parties can apply for a hearing in case they receive a notice from the Registrar regarding conditional acceptance. The time is appointed within 2 months from the date of such communication.

Step 4: If all goes well, the application is accepted. If not, Section 91 allows for appeal against the Order of Registrar of Trademarks, in the concerned High Court, within 3 months from the date of such Order.

[Note: By way of registration of the license agreement, a licensee becomes a "Registered User" as per Section 49 of Trade Marks Act, 1999.]

Cancellation of Trademark License

The Registrar of Trademarks is empowered to cancel the registration of the Registered User on the following grounds :

(i) On the application in writing in the prescribed manner by filling form TM-U of the registered proprietor or of the registered user or of any other registered user of the Mark.

(ii) That the registered user has used the Mark otherwise than in accordance with the agreement under section 49(1)(a) or in such way as to cause or to be likely to cause deception or confusion.

(iii) That the proprietor or the registered user misrepresented or failed to disclose, some fact material to the application for registration which if accurately represented or disclosed would not have justified the registration of the registered user

(iv) That the circumstances have changed since the date of registration in such a way that at the date of such application for cancellation they would not have justified registration of the registered user

(v) That the registration ought not to have been effected having regard to rights vested in the applicant by virtue of a contract in the performance of which he is interested.

(vi) The Registrar either on his own motion or on the application in writing in the prescribed manner by any person can cancel the registration on the ground that any stipulation in the agreement between the registered proprietor and the registered user regarding the quality of the goods or services in relation to which the Mark is to be used is either not being enforced or is not being complied with.

(vii) To cancel the License Agreement, form TM-U must be duly filled.

(viii) Refer to Section 50 of Trademarks Act, 1999 r/w Rule 94 of Trademarks Rules, 2017.

Leading Case Laws

(i) Gujarat Bottling Co. v. Coca-Cola Co. [(1996) PTC 89]: It was held that so far as a connection in the course of trade with the Trade Mark continues to exist between the goods and the proprietor of the mark, licensing of Trademarks, registered or unregistered may be permitted.

(ii) UTO Nederland BV v. Tilaknagar Industries Ltd [MANU/MH/1827/2011]: It was held that the license could have been rendered invalid, had the performance and terms of the agreement suggested the existence of facts that implied no quality control.

(iii) Bowden Wire v. Bowden Brake [RPC 45, p. 850]: It was held that a trademark license ceases to be valid if there is no connection in the course of trade with the registered proprietor

(iv) Himalaya Drug Co. Pvt. Ltd., Bangalore v. Arya Aushadhi Pharmaceutical Works, Indore [AIR 1999 MP 110]: It was held that if a company fails to prove that it is a registered user then the suit is liable to be dismissed.

(v) M/S Hilton Roulunds Ltd. v. Commissioner Of Income Tax, Delhi High Court [ITA 325/2005]: The High Court of Delhi framed questions that would aid in determining whether an arrangement is a license or an assignment.

(vi) Sant Lal Jain v. Avtar Singh [AIR 1985 SC 857]: Hon’ble Supreme Court held that "a Licensee, and could not, therefore, set up a title to the property in himself or anyone else". “The respondent was a licensee, and he must be deemed to be always a licensee. It is not open to him, during the subsistence of the license or in the suit for recovery of possession of the property instituted after the revocation of the license to set up title to the property in himself or anyone else."

Trademark License Agreements: Key Considerations

(i) Term: Duration for which the Mark is being licensed to the Licensee.

(ii) Scope of License: Purpose for which the Mark is being licensed to the Licensee.

(iii) Exclusivity: Whether the Mark License is exclusive to the Licensee or not.

(iv) Sub-License: Whether the Licensee has the right to sub-license the Mark to a third party.

(v) License Fee: Amount of Consideration to be paid by Licensee for availing the Trademark license from the owner of the Mark.

(vi) Royalty: If the Licensee will be paying a certain percentage of the total profit, to the Trademark Owner, generated from such Mark license provided by the Trademark Owner.

(vii) Confidentiality: It is important to keep all vital information of the companies as confidential to avoid any misuse of the information.

(viii) Dispute Resolution: Whether the parties will be referring the dispute to arbitration, or whether the dispute will be decided by a court of competent jurisdiction.

(ix) Indemnity: Whether the Trademark Owner will be indemnifying the Licensee for any damage to the Licensee due to wrongful representation by the Trademark Owner.

(x) Quality Control: The most direct method for demonstrating adequate quality control is through an express written licensing agreement obligating the licensor to actively monitor the nature and quality of products bearing the licensed mark. Because the license transfers some of the goodwill associated with the mark, the trademark owner must maintain quality control over the mark. Without such control, the agreement is called a "naked license" and it may be argued that the owner has abandoned trademark rights. Therefore all provisions for the licensing of trademarks should provide some means of regulating the nature and quality of the licensee's goods or services associated with the mark.

Sample Trade Mark License Agreement

Conclusion

Great trademark licenses do the heavy lifting. They can help you expand markets, brand recognition and valuable partnerships. License agreements must strike the right balance between safeguards and commercial viability. The Parties to the Trademark License Agreement must bear in mind the legal requirements and, as such, are strongly suggested to have lawyers help them out in their avoiding any risk regarding trademark licensing.

Disclaimer

[This article is only a general overview of licensing agreements; it's not intended to be complete and shouldn't be used to prepare a legal document. Using a template you find on the internet is dangerous because it can't address specific laws and your own situation.]

Introduction

In recent years, the technology has developed exponentially, while electronic devices continue to smaller form factor while being capable enough to manage to multitask and pack a wide variety of complex functions. One such function is the use of the internet for viewing videos or audio-visual content, which are available on some online platforms (such as Netflix, Amazon Prime, Voot, etc.) and provided by broadcasters.

While the technology is developing at such a rapid pace, the regulations are also catching up in order to keep in check the content being provided on the online platforms. While it indicates that the Government is being diligent enough to keep up with the changing technology, it also creates some doubts in the minds of consumers and service providers about the extent to which the online content will be censored or regulated by the Government.

Defining OTT

OTT is an abbreviation of Over-the-Top. What this means is that OTT is a means of providing television/film content ("Content") over the internet. The Content is provided at the request so that it suits the requirements of the customers. This method seems to be exactly the same as VOD (Video-on-demand) and is mostly considered to be one and the same thing because oftentimes they are. However, the terms are different from each other. While VOD is a media distribution system allowing its users to gain access to videos while eliminating the need for traditional playback devices, OTT, as explained before, provides requested Content over the internet. Thus, VOD can exist via satellite transmission too, indicating that VOD can exist without OTT and vice-versa. VOD, hence, is a defining feature of OTT.

For a better understanding of the difference between OTT and VOD, you can refer to the diagram below:

[Fig 1: Diagram depicting the difference between OTT and VOD]

Chronological Background of Law Regulating OTT in India

While the online streaming services, as well as online platforms, were taking over way before 2016, it was this year when the regulatory aspect of online streaming platforms first came to be noticed.

On October 25, 2016, an RTI Application was filed to seek information on the regulatory power of the Ministry of Broadcasting (“MIB”) over online streaming platforms. MIB replied on December 02, 2016, stating that it had no authority to regulate online content, while also not planning to enforce any guidelines to regulate the same.

Sometime during October 2018, a Public Interest Litigation (“PIL”) was filed before the Delhi High Court by an NGO. This PIL sought separate guidelines to regulate online streaming platforms. The Delhi High court dismissed the petition stating that MIB, as already stated in the reply to the RTI query, had the opinion that it did not such authority so as to regulate online content, and thus, online streaming platforms were not required to obtain any license for displaying their content. Furthermore, the Ministry of Electronics and Information Technology ("MeitY") also weighed in. MeitY stated that it does not regulate the content on the internet and that there was no provision for regulating and licensing content on the internet. This was applicable not only for all the organizations but also for establishments.

It was also stated that Information Technology Act, 2000 (“IT Act”) and the concerned statutory authority, as has been vested with power under Section 69 of the IT Act, would be appropriate for regulating the online content and platforms providing OTT services. The court also held that though there was no general power for the regulation of online content and OTT platforms, the IT Act provided enough safeguard for taking action in the event of any prohibited act being undertaken by broadcasters, and organizations on the online / internet platform.

Before this, there have been several case laws wherein it was held that online content would not fall within the ambit of the Cinematography Act, 1952. This led to the dismissal of many other petitions filed before the courts on the same subject matter. While this was happening, in September 2020, 15 big names in the OTT services had signed and adopted a self-regulatory code of best practices, known as Universal Self-Regulation Code for Online Curated Content Providers (“Self-Regulation Code”), while being backed by Internet and Mobile Association of India (“IMAI”), with an objective to provide guidelines to content providers to protect the interest of the consumers and conducting themselves in a reasonable manner. However, vide a letter by MIB to IMAI, the government rejected the Self-Regulation Code while stating that “the proposed self-regulatory mechanism lacks independent third party monitoring, does not have a well-defined Code of Ethics, does not clearly enunciate prohibited content and at second and third-tier level there is an issue of conflict on interests.” MIB also advised IMAI to refer to self-regulatory structures as adopted by Broadcasting Content Complaints Council (“BCCC”) and News Broadcasting Standards Authority (“NBSA”) for guidance.

The Change

Keeping in mind what has been mentioned above; it was a drastic change to see when in October 2020, a PIL was filed before the Supreme Court for the creation of an autonomous regulatory system for online content. The Supreme Court of India sent a notice to the Central Government regarding the PIL and the issue at hand.

Furthermore, a notification was issued on November 09, 2020, (“Notification”) amending the Government of India (Allocation of Business) Rules, 1961 which created a new sub-heading VA in the second schedule. The title given to the schedule was “Digital/Online Media”, and it contained two entries, namely:

i. Films and audio-visual programmes made available by online content providers; and

ii. News and current affairs content on online platforms.

Thus, by issuing this notification, the MIB now has the power to regulate policies for OTT platforms.

Conclusion

From what has been stated above, it can be inferred without any doubt that the IT Act provides for the regulation of obscene material on the internet. Along with this, as per Section 69A of the IT Act, the Central Government has been conferred with the power to issue directions to block public access to any information online. Furthermore, the IT (Intermediary Guidelines) Rules 2011 may be applicable on OTT platforms, as it mandates exercise of due diligence framework to be observed by any such intermediaries when it comes to publishing, or dissemination, or hosting of any such information on any computer resource of the intermediary. These platforms are also covered within the ambit of Indian Penal Code 1860, which provides for prohibition of defamatory content, and other such acts committed with an intention to spread hatred or outrage religious feelings. Due to the exponential shift from traditional cable televisions to OTT platforms during the COVID-19 pandemic, the regulators have been forced to establish a better regulatory framework for digital broadcasting. With the issuance of the Notification, the broadcasters, as well as the consumers, fear extreme regulation or censorship. Thus, the only thing that remains to be seen is the manner in and the extent to which the Government proposes to regulate online content.

Introduction
Whenever a decree [1] is passed in favour of one of the parties to the case (“Decree Holder”), that party has various methods [2] to execute the said decree against the other party (“Judgement Debtor”) by virtue of Order XXI of the Code of Civil Procedure, 1908 (“Code”). One such method, as prescribed in the Code, is by way of executing the decree against the Judgement Debtor by way of ‘Arrest and Detention’. This method of execution is permissible under specific circumstances, as stated in the Code, and listed below:
1. Where a decree is for the payment of money (including a decree for the payment of money as the alternative to some other relief). [3]
2. Where the decree is for a specific moveable property, or for any share in a specific movable property. [4]
3. Where a decree for the specific performance of a contract, or for restitution of conjugal rights, or for an injunction, was passed against the Judgement Debtor and he had an opportunity of obeying the decree but willfully failed to obey it. [5]
Usually, where the decree is for the installment of money, it tends to be executed by arrest and detention of the judgment-debtor. [6]
It may be noted that detaining a person by an order of Court is a violation of the human rights of the Individual. The method of arrest and detention cannot be resorted to arbitrarily, instead, a specific procedure has been laid down [7] and certain proviso given in various sections to allow a fair execution of the decree in the mode of arrest and detention, and give a chance to the Judgement Debtor to explain why he should not be arrested and detained for not complying with the decree. Thus, though the provisions of arrest and detention in the Code are enforceable, there are certain limitations to the powers of the executing Courts while giving an order for arrest and detention in civil cases. [8]
For example, a Judgement Debtor can be arrested at any day, and during any hour during the execution of the decree, and must be brought before the Court after such arrest. However, there are certain limitations regarding the entry and time for such arrest: [9]
That no dwelling house shall be entered after sunset and before sunrise.
That no outer door shall be broken in order to enter the house unless such a house is the occupancy of the judgement debtor, in case he refuses to prevent access thereto.
Where the room is in occupancy of a woman who is not the judgement debtor and does not appear in public due to the customs, the officer shall give reasonable time and facility to her to withdraw therefrom.
Where there is a decree for the payment of money, and the judgement debtor pays the full decretal amount and the costs of the arrest to the arresting officer, he shall not be arrested.
The Court must also keep in mind the classes of persons, and certain circumstances which are outside the purview powers of the Court with respect to arrest. Classes of persons who cannot be arrested are:
1. Women [10]
2. Judicial Officers [11]
3. Members of Legislatures [12]
4. Classes of persons, whose arrest according to the State Government, might be attended with danger or inconvenience to the public. [13]
While the circumstances in which the order for arrest cannot be given are:
1. Where a matter is pending, their pleaders, mukhtars, revenue-agents, and witnesses acting in obedience to a summons. [14]
2. Where the decretal amount is less than two thousand rupees. [15]

Issuing of Notice
In case of detention, either the Judgement Debtor is given notice and is asked to present himself before the Court, [16] or is brought before the Court after his arrest in case he does not obey the notice, [17] to allow him a rightful opportunity to give an explanation to the Court as to why he should not be committed to civil prison. This has been clearly stated in the case of Kasi Subbaiah Mudali v. Kasi Veeraswamy Mudali [18], wherein the Hon'ble Andhra High Court held that “according to Rule 37, which mandates that once the Judgement Debtor appears before the court in obedience to the notice or brought before it on being arrested, the Court shall proceed to hear the Judgement Debtor and take all evidence in the presence of the Judgement Debtor. The Judgement Debtor shall be provided with a fair opportunity of showing cause as to why he should not be committed to civil prison.”
This provision is in consonance with the principles of natural justice, which constitutes of two elements, namely:
1. Adequate notice; and
2. Rule against bias; and
3. The hearing of both sides (“audi alteram partem”)
If the Judgement Debtor complies with the show-cause notice issued by the Court in his name, and he presents himself before the court, the Court hears both the parties and inquires whether the Judgement Debtor should be committed to civil prison or not. [19]
However, it must be noted that the show-cause notice will only be given by the Court if the Decree Holder files an application in the Court accompanied by an affidavit stating the grounds for which the arrest and detention of the Judgment Debtor, is applied for. [20] The Court has to determine whether the reasons in the application are sufficient enough to issue a show-cause notice to the Judgment Debtor. Therefore, it is the Decree Holder who has to demonstrate that the Judgement Debtor has wilfully with the mala fide intention, to deprive the benefit of the decree, is refusing (refused) to pay the decretal amount in spite of having sufficient means to pay. [21]
Another objective behind enacting this provision, which is somewhat similar to the previous one discussed above, is that the court must find out the reason for non-payment of the decretal amount, and can abstain from issuing the order for arrest if the Judgement Debtor shows reasonable cause for his inability to pay the decretal amount and the court is satisfied that he is unable to pay, the court may reject the application of the arrest. Thus, a simple default is not enough, there must be an element of bad faith beyond mere indifference to paying; some deliberate refusal or the present means to pay a decree or a substantial part of it. [22]
However, there is an exception to this rule, wherein upon an application by Decree Holder for arrest and detention of the Judgment Debtor, the Court also has been vested with the power under the Code to order arrest without notice upon satisfaction that with the object and effect of delaying the execution of the decree the judgment-debtor is likely to abscond or leave the local limits of the jurisdiction of the Court, the Court can order arrest without notice. [23] Thus, while as a general rule it would be convenient and proper that an inquiry as to the liability of the judgment-debtor to be committed to civil prison should be made before the arrest is ordered, such determination is not a condition precedent for the order of arrest itself. [24]
Where a judgement debtor is arrested in execution of a decree for the payment of money and is presented before the court, the court shall inform him to declare himself as insolvent and he can be discharged if he has not done any act in bad faith regarding the subject of the application and if he complies with the law of insolvency which is in force at that time. [25]

Recording of Reasons
The Court, while enforcing the execution of a decree by detention, must state the reasons for issuing the order for the same in writing. [26] These reasons can be anyone among the following:
1. That the judgement debtor with the object of delaying the execution of the decree is likely to abscond of the jurisdiction of the court or has dishonestly transferred, concealed, or removed his property, or has done any other act done in bad faith, or
2. That the judgement debtor has the means to pay the amount or a substantial part of it and refuses to pay the same, or
3. That the decretal amount has to be paid on account of the fiduciary relationship
With respect to the reason as stated in point 2 above, it was held that “the Court must be satisfied that the judgment-debtor has, or has had since the date of the decree, means to pay the amount of the decree or some substantial part thereof and refused or neglected or has refused or neglected to pay. The decree-holder has to satisfy the Court that proviso to Section 51 applies under the facts of a particular case.” [27]

Period of Detention
The Code also limits the power of the executing Courts to detain the person in civil prison for a period, not more than what is stated in the Code itself. [28] This period is decided while keeping in mind the decretal amount passed against the Judgment Debtor, and where he has failed to pay the same. With respect to the decretal amount as a factor for deciding the period of detention, the following provisions have to be followed:
1. Where the amount is more than Rs. 5000, the Judgment Debtor can be detained for up to only 3 months.
2. Where the amount is more than Rs. 2000 but less than Rs. 5000, the Judgment Debtor can be detained for up to only 6 weeks.
3. Where the amount is less than Rs. 2000, the Judgment Debtor cannot be detained.
It should be noted that even if the Judgment Debtor is released upon completing the detention period specified, he will not be discharged from the liability to pay the decretal amount to the Decree Holder. Though, he will not be arrested again under the decree in execution of which he was detained in the civil prison.

Release
The Court has also been vested with the power to release the Judgment Debtor before the period of detention lapses, provided any of the following conditions are fulfilled: [29]
1. Where the decree against him has been fully satisfied,
2. Where the amount mentioned in the warrant for his detention has been paid to the police officer,
3. Where the person on whose application the person was detained requests so, or
4. Where the person on whose application such detention was made omits to pay subsistence allowance.
5. Other grounds of release which exist within the Code are:
(a) If there exists some infectious or contagious disease, or on the grounds of serious illness, provided that such order of release has been made by any court superior to the court which granted execution. [30]
(b) Where a person intends to apply to be declared as insolvent and fulfills the obligations thereafter. [31]
(c) Where an inquiry is pending [32] if the judgement debtor furnishes the security to the satisfaction of the court for his appearance before the court.
(d) The court, before ordering the detention of the person [33], can provide fifteen days to the judgement debtor for satisfying the decree, by leaving the person in custody of the police officer or may release him on furnishing security to the satisfaction of the court, provided that, if the decree is not satisfied before the end of the period, the person will appear in front of the Court.
(e) Where the court does not make an order of detention after inquiry [34], it can refuse the application, and if the judgement debtor is already under arrest, order for his release.

References
[1] Section 2(2), Code of Civil Procedure, 1908.
[2] Section 51, Code of Civil Procedure, 1908.
[3] Rule 30, Order XXI, Code of Civil Procedure, 1908.
[4] Rule 31, Order XXI, Code of Civil Procedure, 1908.
[5] Rule 32(1), Order XXI, Code of Civil Procedure, 1908.
[6] Ram Narayan v. State of U.P., (1983) 4 SCC 276.
[7] Section 55, Code of Civil Procedure, 1908.
[8] K. Prabhakara Rao, Execution of Decree, Order by Arrest and Detention of Judgement Debtor in Civil Prison, DLSA Nalgonda, available here
[9] Ibid.
[10] Section 56, Code of Civil Procedure, 1908.
[11] Section 135(1), Code of Civil Procedure, 1908.
[12] Section 135A, Code of Civil Procedure, 1908.
[13] Section 55(2), Code of Civil Procedure, 1908.
[14] Section 135(2), Code of Civil Procedure, 1908.
[15] Section 58(1A), Code of Civil Procedure, 1908.
[16] Rule 37(1), Order XXI, Code of Civil Procedure, 1908.
[17] Rule 37(2), Order XXI, Code of Civil Procedure, 1908.
[18] Kasi Subbaiah Mudali v. Kasi Veeraswamy Mudali, 2002 (3) ALT 240.
[19] Rule 40, Order XXI, Code of Civil Procedure, 1908.
[20] Rule 11A, Order XXI, Code of Civil Procedure, 1908.
[21] K. Karunkar Shetty v. Syndicate Bank, Manipal, AIR 1990 Kant 1.
[22] Jolly George Varghese v. Bank of Cochin, 1980 (2) SCC 360.
[23] Proviso of Rule 37(1), Order XXI, Code of Civil Procedure, 1908; B.K. Puttaramiah v. Hajee Ibrahim Essack & Sons, AIR 1959 Mys 94.
[24] Supra note 13.
[25] Section 55, Code of Civil Procedure, 1908.
[26] Section 51(c), Code of Civil Procedure, 1908.
[27] I.K. Merchants Ltd. v. Indra Prakash Karnani, AIR 1973 Cal 306.
[28] Section 58, Code of Civil Procedure, 1908.
[29] Ibid.
[30] Section 59, Code of Civil Procedure, 1908.
[31] Section 55, Code of Civil Procedure, 1908.
[32] Rule 40(1), Order XXI, Code of Civil Procedure, 1908.
[33] Rule 40(3), Order XXI, Code of Civil Procedure, 1908.
[34] Ibid.

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