Trademark Registry Cannot Register Deed Of Assignment Vis-a-Vis Proprietary Rights Presented After 5 Years Of Execution: Calcutta HC

The Calcutta High Court expressed its greatest displeasure observing that a deliberate attempt was made by the appellant (Poulami) and her father-in-law to divest Duckbill Drugs of its principal assets that is the trademarks and misappropriating them, by backdating a deed of assignment to 2017 and then filing it with the trademark registry five years later.

The Division Bench of Justice I.P. Mukerji and Justice Biswaroop Chowdhury stated that “Even if it is assumed that it was not the trademark registry had no power under Section 42 of the said Act to register the assignment when such assignment was presented after 5 years. The Act required notification of this assignment by the assignee within the stipulated period of six months which might be extended by the Registrar by three months only, and if no such notification was made, the assignment would not have any effect. The trademark registry could not have registered the purported assignment on 14th June 2022”.

Finding that the involvement of the Trademark Registry in this fraud also needed to be investigated, the Bench added prima facie, the purported assignment appears to be non-est and a nullity.

The Bench went on to state that “We are extremely suspicious about the authenticity of the deed of assignment for several reasons. Being allegedly executed in 2017 it did not come to light when the corporate insolvency resolution process was started on 17th December 2019, or on 13th April 2021 when the liquidation proceedings were commenced. On 12th February 2022 the father-in-law of Poulami, Swapan Kumar Mukherjee quietly handed over the possession and assets of the company to the Liquidator without informing him that on 18th January 2022, he had applied with the Registrar to record the assignment of the seven trademarks of the company purportedly made on 3rd April 2017.”

Advocate Debnath Ghosh appeared for the Appellant, whereas Senior Advocate Abhrajit Mitra appeared for the Respondent.

In the present case, an interim judgement was passed in an interlocutory application in a suit filed by Poulami Mukherjee against Duckbill alleging infringement of seven trademarks over which she had proprietary rights acquired through a deed of assignment executed in her favour by Duckbill, the registered owner of those marks. The order of liquidation of Duckbill was passed by the National Company Law Tribunal in the year 2021 and the liquidator had proposed to sell the assets of the company. The most valuable assets of the company were 7 out of its 14 trademarks. The Liquidator had asked the Trademarks Registry to maintain the status quo of the 7 trademarks. The Liquidator held an auction for this purpose under Section 35 (1)(f) of the Insolvency and Bankruptcy Code (IBC).

Later, an extraordinary situation had been created by the production of a deed of assignment under which 7 trademarks were purportedly assigned by Duckbill to Poulami for consideration of Rs.7,000/-, a letter dated 04-042017, by Poulami to Duckbill that she had become the owner of 7 trademarks. Accordingly, the Liquidator had asked the Registrar of Trade Marks to reverse the said transfer. The case of Duckbill was that a colossal fraud had been practised on them by Poulami as those 7 Trademarks were all along the assets of the company and were included in its assets proposed to be sold by e-auction by the Liquidator. Thereafter, the Paul brothers filed a writ application seeking mandamus for cancellation of the deed of assignment of the 7 trademarks in favour of Poulami and its restoration in favour of Duckbill. During the pendency of the writ, Paul Brothers applied Section 60(5) of IBC before the NCLT claiming that the assignment and transfer of the 7 trademarks by the deed of assignment was fraudulent and undervalued and that Duckbill was entitled to commercially exploit the trademarks.

After considering the submission, the Bench stated that there was every reason to believe that, as a statutory functionary the Liquidator had acted regularly in the usual course of his duties and found 14 registered trademarks in the name of the company.

Finding that the marks were assigned by the father-in-law on behalf of the company to his daughter-in-law for only Rs.7,000/- whereas about rupees 5 crores had been paid by Duckbill to purchase these marks, the Bench navigated through Chapter V of the Trade Mark Act which dealt with the assignment or transmission of the trademarks.

Noticing that the purported deed of assignment of 2017 was sought to be lodged with the Registrar in 2022 for registering the assignment, the Bench observed that “In the garb of making this application Poulami Mukherjee tried to record with the registry that Duckbill had assigned the seven trademarks to her and managed to get the assignment registered on 14th June 2022”.

“Prima facie there was gross irregularity involved in the alleged assignment and the registration thereof. From the prima facie findings arrived at by me there is every reason to believe that the deed of assignment was backdated”, added the Bench.

The High Court clarified that under Chapter V of the Trade Marks Act, the right of assignment and transmission was vested in the registered proprietor, and therefore, in the case of the seven marks, the registered proprietor was Duckbill, the custodian of whose assets was the liquidator, thus, the real proprietor was the liquidator.

“The dating of the alleged deed of assignment is 3rd April 2017 raises eyebrows for another reason. It was more than two years before the commencement of an insolvency proceeding on 17th December 2019 to take it out of scanner and scrutiny under the 2005 Insolvency and Bankruptcy Code, 2016, as a fraudulent preference. In those circumstances, the ultimate order passed by the learned trial Judge at the ad interim stage that he was not minded to pass an interim order of injunction was justified, though it should have been for the reasons given above. Whether our interim order in the appeal was obtained by suppression of material facts is redundant because we are ultimately setting aside our interim order on substantive grounds. It is true that if this suppression was not made the interim order may not have been passed at all”, added the High Court.

Cause Title: Poulami Mukherjee v. Duckbill Drugs Private Limited

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