When it comes to trademark assignments, there are no specific provisions in the Trade Marks Act, 1999 that dictate the valuation of trademarks or the consideration for which they should be assigned. Similarly, neither the Paris Convention for the Protection of Industrial Property nor the TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) mandate member countries to make any specific provisions in this regard.
This lack of specificity allows for flexibility in determining the terms of a contract between parties, including the consideration for a trademark assignment. It is up to the parties to mutually agree on the terms of the contract, including the consideration, which can even be nominal.
While the Trade Marks Act, 1999 does not provide for specific valuation guidelines, we can infer from the provisions of Section 25 of the Indian Contract Act, 1872, which states that the adequacy of consideration does not invalidate a contract. This means that even if the consideration for a trademark assignment is nominal, as long as some consideration is present, the contract is legally binding.
Furthermore, in the case of “Wonderweld Electrodes (Pvt) Ltd. v. Ahura Welding Electrodes Manufacturing Ltd.”, the Madras High Court rejected the argument that the deed of assignment in that case was a sham transaction entered into to bypass the agreement. The court held that the parties were free to enter into a contract on mutually agreed terms, and the mere fact that the consideration was nominal did not invalidate the contract.
This case highlights the importance of parties agreeing on the terms of the contract, including consideration, and the court’s willingness to uphold contracts even if the consideration is nominal. The absence of specific valuation guidelines for trademarks and the flexibility in determining the consideration in the contract allows for a smooth and efficient transfer of trademark ownership.
In conclusion, the absence of specific provisions regarding the consideration and valuation of a trademark in the Trade Marks Act, 1999 allows for flexibility in determining the terms of a contract between parties. Parties can rely on the provisions of the Indian Contract Act, 1872, and the court’s willingness to uphold contracts that are entered into on mutually agreed terms. It is important for parties to carefully consider the terms of the contract, including the consideration, to ensure that it is mutually beneficial and legally binding.