Chapter V of Trademark Law in India deals with the assignment and transmission of trade marks, enabling owners to transfer rights efficiently. A key element in this chapter is Section 39 of Trademark Act which specifically addresses unregistered trade marks. This section ensures that even without formal registration, trade marks can be assigned or transmitted, reflecting the Act's recognition of common law rights. In this article, we explore Section 39 of Trademark Act in detail, its implications, related provisions, along with the judicial interpretations.
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What is Section 39 of Trademark Act
Section 39 says an unregistered trademark can be assigned or transferred with or without the business’s goodwill. This simple rule means unregistered marks, valued for their use and reputation, can be transferred like physical assets.
Meaning and Scope
Section 39 treats trademarks as intangible property that can be transferred. Assignment happens voluntarily, like through a sale or license. Transmission occurs involuntarily, such as through inheritance or bankruptcy. For unregistered marks, this is crucial because their value comes from market reputation, not a registry.
The section allows transfers “with or without goodwill.” This means a mark can be sold alone (gross assignment) or with the business’s reputation. However, the Act includes rules to prevent confusion among consumers. The assignee takes on the same rights and limits as the original owner, based on prior use.
Comparison with Registered Trademarks (Section 38)
Section 38 of Trademark Act, 1999 covers registered trademarks, allowing them to be assigned or transferred with or without goodwill, for all or some goods or services. Like Section 39, it permits flexible transfers. However, registered marks have an advantage because registration proves their validity, simplifying disputes.
Unregistered marks under Section 39 depend on proof of use and reputation, which can make enforcement harder, like in passing-off cases. This shows why registration is preferred, but Section 39 ensures unregistered marks can still be used in business deals.
Restrictions on Assignment (Sections 40 and 41)
Section 39 allows assignments but Sections 40 and 41 add protections to avoid confusion. Section 40 prevents assignments that create multiple exclusive rights for similar goods or services which could deceive consumers. For example, splitting identical marks for related products is not allowed unless restrictions, like geographic limits, prevent confusion. Owners can get a Registrar’s certificate for clarity.
Section 41 stops assignments that split rights for similar marks across different parts of India, which could confuse consumers in various regions. These rules apply to both registered and unregistered marks, ensuring Section 39 transfers protect the public.
Conditions for Assignment without Goodwill (Section 42)
Assignments without goodwill under Section 39 face extra rules. Section 42 says the assignee cannot use the mark for the same goods or services as the original owner unless the Registrar approves. The assignee must advertise the assignment within six months (or longer if extended) to inform the public and avoid deception.
This rule ensures businesses stay distinct after a transfer. Failing to follow it can cancel the assignment, so legal experts must ensure timely compliance.
Registration of Assignments and Transmissions (Section 45)
Section 39 deals with unregistered marks, but assignments can be recorded with the Registrar using Form TM-P. This step is optional but helps by providing public notice and proof of ownership.
For clarity in disputes, lawyers often suggest registering assignments. The process requires submitting the assignment deed, affidavits, and fees. The Registrar of trademarks checks for conflicts with Sections 40 and 41.
Case Laws on Section 39 of Trademark Act
Judicial interpretations have clarified the practical application of Section 39 of Trademark Act, emphasizing its role in upholding common law rights. These cases show Section 39 supports transfers while ensuring no confusion or harm to goodwill:
In Caterpillar Inc. v. Jorange (Delhi High Court), the court upheld a trademark assignment before formal registration. It said Section 39 assignments must not mislead the public, supporting the section’s purpose.
In Sun Pharmaceutical Industries Ltd. v. Cipla Ltd., the Supreme Court said title passes with the assignment, not registration. This applies to Section 39, allowing immediate rights transfer via the deed.
In N.R. Dongre v. Whirlpool Corporation (1996), the court protected an unregistered mark’s international reputation, suggesting Section 39 assignments carry forward goodwill if proven.
In Century Traders v. Roshan Lal Duggar & Co. (1977), the court valued prior use over registration, important for Section 39 assignments where the assignee must show continued use.
In S. Syed Mohideen v. P. Sulochana Bai (2016), the court said passing-off claims can work against registered owners, showing unregistered marks’ strength after assignment.
Implications for Businesses and Lawyers
Section 39 gives businesses flexibility in deals like mergers or sales involving unregistered marks. It lets them profit from brand value without registration, but proving goodwill in disputes can be risky.
Lawyers must draft clear assignment agreements, covering goodwill, restrictions, and guarantees. Checking prior use is key to avoid issues under Sections 40-42.
In today’s digital world, where brands change fast, understanding Section 39 helps manage intellectual property effectively.
Read about the role of Trademark in Cyber Law.
Differences: Registered vs. Unregistered Trademarks
Registered trademarks under Section 38 of Trademark Act benefit from legal proof of ownership and easier enforcement through trademark infringement lawsuits. Unregistered trademarks under Section 39 rely on proving use and reputation, with enforcement through passing-off claims. Both can be assigned with or without goodwill, but unregistered marks face tougher proof requirements and optional registration. Let’s find out more:
Aspect | Registered Trade Marks (Section 38) | Unregistered Trade Marks (Section 39) |
Assignability | Assignable with/without goodwill, full or partial for goods/services | Assignable with/without goodwill, but relies on common law rights |
Proof of Title | Statutory presumption from registration | Based on evidence of use and goodwill |
Restrictions | Subject to Sections 40-42, easier enforcement | Same restrictions; harder in disputes without registration |
Registration of Assignment | Mandatory for full benefits; Form TM-P | Optional but recommended for evidence |
Enforcement | Infringement suits under Section 29 | Passing-off actions under common law |
Examples from Case Law | Sun Pharma v. Cipla (title passes on assignment) | Caterpillar v. Jorange (valid even pre-registration) |
Summary
Section 39 of Trademark Act allows unregistered trademarks to be assigned or transferred. It bridges common law and legal protections, supporting business flexibility while preventing consumer confusion through related rules. Understanding Section 39 means knowing how it works with Chapter V and court rulings to protect the brand of the trademark owner. As businesses grow globally, Section 39’s role shows the Act’s ability to adapt, encouraging innovation and fair competition.
Related Posts:
Q1. What is Section 39 of the Trademark Act?
Section 39 of Trademark Act, 1999 (India) allows unregistered trade marks to be assigned or transferred with or without the business's goodwill.
Q2. What is Section 39 of Trademark Act 1995?
Section 39 of Trademark Act 1995 (Australia) restricts trade mark registration if it contains prohibited or scandalous matter or is likely to deceive or cause confusion.
Q3. What is Section 38 of the Trademark Act?
Section 38 of the Trade Marks Act, 1999 (India) permits registered trade marks to be assigned or transferred, fully or partially, with or without goodwill.
Q4. What is Section 40 of the Trademark Act?
Section 40 of the Trade Marks Act, 1999 (India) prevents assignment of trade marks that could create multiple exclusive rights, causing public confusion.
Q5. What is Section 39 of the Copyright Act?
Section 39 of the Copyright Act, 1957 (India) allows performers to claim royalties for commercial use of their performances, subject to agreements.
