I am a 74-year-old man, running a business of spices for the past 40 years and both my legal heirs are involved in the business. We have a registered trademark for our spice brand. Our mark is generally termed as a “Family Trademark.” How is it different from an ordinary trademark?
– Name withheld on request
The Trade Marks Act, 1999 (hereinafter referred to as the “Act”) does not specifically classify or define “family trademarks”. Trademarks used by and belonging to individuals or entities engaged in businesses owned or operated by family members are therefore subject to the provisions of the Act in the same way as other trademarks.
The difference lies in how the mark is held and used. Typically, in a family business, a trademark is used or claimed by several relatives and carries goodwill built up over generations. This shared history, along with the interests of multiple stakeholders, often shapes how disputes over ownership or use of such trademarks are contested or resolved.
In Shri Ram Education Trust v. SRF Foundation PLR (2016) 182 Del 3, a Division Bench of the Delhi High Court held that goodwill and reputation in a trademark adopted by a grandfather would inure to the benefit of all heirs, unless something to the contrary was shown to exclude the other heirs. One member of the family cannot, without further evidence to the contrary, claim exclusive ownership of the mark.
All heirs of the person who first adopted a mark, put it to use, and built goodwill and reputation in it would, prima facie, have equal rights to adopt and use it. Something more than mere prior adoption by one of the heirs would have to be shown to extinguish the rights of the others.
Transfer restrictions
Under the Act, a trademark is assignable or transmissible, with or without the goodwill of the business. However, Section 40 of the Act restricts an assignment or transmission that would grant exclusive rights over the mark to more than one person for the same or related goods or services, where such use is likely to deceive or confuse the public.
Trademark rights, being intangible property, may also pass to legal heirs through testamentary or intestate succession, subject to applicable succession laws and the Act. If a trademark is an individual’s self-acquired property, the owner may generally transfer or bequeath it as they deem fit, subject to law. However, where the trademark forms part of inherited or coparcenary property, the rights of the heirs or coparceners would be determined in accordance with the applicable succession and personal laws.
Four succession routes
There are four legal routes to effectively transfer trademark rights during the owner’s lifetime. Section 40 of the Act only restricts an assignment or transmission that would leave more than one person with exclusive rights over the same or related goods or services where their use of the mark would be likely to deceive or cause confusion.
The mark can be assigned to a company, limited liability partnership (LLP) or family trust, in which both legal heirs may hold shares, partnership interests or beneficiary rights.
Alternatively, both legal heirs can be registered as joint proprietors under Section 24(2) of the Act. In such a case, neither may use the mark except on behalf of both, or where both are connected in the course of trade with the goods or services.
A third option is to grant ownership of the trademark to one legal heir and give the other written consent or a perpetual licence covering specified products and quality standards.
Finally, the family can divide the use of the same mark across different products, with clear differentiation, or specify geographical limits for use of the same brand.
Aditya Chopra is the managing partner and Anshita Kohli is an associate at The Victoriam Legalis (TVL).