ALG India Law Offices LLP
What's New
Court Case Bulletin (CCB): Disputes Pertaining to Infraction of Trademark License Agreement are Arbitrable
Author: Intern - Ayushi Suman
In the matter of M/s Golden Tobie Pvt. Ltd. v. M/s Golden Tobacco Ltd., a [I.A. No. 6080/ 2021 in CS(COMM) 178/2021], the High Court of Delhi [J Nath, J.] by judgement dated June 04, 2021, held that disputes related to Trademark License Agreement are arbitrable because the rights under a Trademark License Agreement emanate from a contract and is not a statutory right.
The Court in this case took note of Section 8 of the Arbitration and Conciliation Act, 1996, which gives “Power to refer parties to arbitration where there is an arbitration agreement” and Schedule-3 of the agreement, which mentions the exclusive brands of the Defendant, i.e., “Golden’s Gold Flake, Golden Classic, Taj Chhap, Panama and Chancellor”. The underlying question in this case is seen to be whether the Trademark License Agreement is arbitrable, or in other words, whether the dispute is prima facie arbitrable under a valid arbitration agreement.
The Plaintiff entered into a Master Long Term Supply Agreement with the Defendant by which the Defendant on an exclusive basis had supplied to the Plaintiff, the exclusive brands of the Defendant. The Defendant claims that the Plaintiff specifically sought to enforce the Trademark license Agreement and the Assignment Agreement through a suit, despite there being an arbitration clause in the agreement for mutually resolving their disagreements.
The Plaintiff contended the termination of the assignment and license of trademarks in favor of the Plaintiff is the issue and since the issue touched upon the validity of trademarks, it was outside the scope of arbitration. The Defendant has, on the other hand argued that the question raised by the Plaintiff in the suit was an arbitrable dispute and was liable to be referred to arbitration in view of the arbitration agreement between the parties.
The Court allowed for arbitration as the essential infraction as allegedly committed by the Defendant was not under the provisions of the Act but under the provisions of the agreements in question. The Court while allowing the application, referred the parties to the Arbitration as per the Arbitration Agreement. The Court further held that “the right that is asserted by the Plaintiff is not a right that emanates from the Trademark Act but a right that emanates from the Agreement… The assignment of trademark is by a contract and not by a statutory act. It does not involve any exercise of sovereign functions of the State. It cannot be said that the disputes are not arbitrable.”
Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.
Copyright: ALG India Law Offices LLP