Licensee's use enures to the proprietor's benefit, barring the licensee from asserting independent proprietary rights.

Ashiana Ispat Limited (AIL) and Kamdhenu Limited (KL) were historically managed by the Jain and Agarwal families, respectively

In 1997, KL licensed the mark "KAMDHENU" to AIL for three years

In 2002, the parties entered a new agreement (2002 Agreement) permitting AIL to use the mark "AL KAMDHENU GOLD," with the stipulation that AIL would become the "exclusive and absolute owner" only upon final registration of the mark

AIL's trademark application for the mark was abandoned in 2008

In 2021, the parties executed a "bare license" agreement (2021 Agreement) for TMT steel bars under the marks "KAMDHENU" and "KAMDHENU NXT," acknowledging KL's ownership

KL terminated all agreements in September 2024 citing defaults

AIL subsequently filed a suit alleging passing off and seeking specific performance of the 2002 Agreement, while KL filed a suit for trademark infringement and passing off regarding the mark "AL KAMDHENU GOLD"

1. Whether the 2002 Agreement constituted an assignment of the trademark or a permissive user license

2. Whether the 2021 Agreement novated and superseded the 2002 Agreement under Section 62 of the Contract Act

3. Whether AIL established prior use and independent goodwill in the mark "AL KAMDHENU GOLD" to sustain a passing-off action

4. Whether KL is entitled to an interim injunction based on its registered trademarks "KAMDHENU GOLD" and "KAMDHENU GOLD TMT"

The Court applied Section 2(1)(r) and Section 48(2) of the Trade Marks Act, 1999, which establishes that "permitted use" of a mark by a licensee enures to the benefit of the registered proprietor for all legal purposes

It relied on Classic Equipments (P) Ltd. v. Johnson Enterprises, distinguishing an assignment (permanent transfer) from a license (permissive, revocable use)

Section 62 of the Indian Contract Act, 1872 was applied to determine novation, where a new contract substitutes an old one by mutual intent, extinguishing prior obligations

The court further applied the "Triple Test" for interim injunctions (prima facie case, balance of convenience, and irreparable injury) as reaffirmed in Pernod Ricard India (P) Ltd. v. Karanveer Singh Chhabra

The Court determined that the 2002 Agreement was a license rather than an assignment because Clause 24 made AIL’s ownership contingent upon "final registration," a condition AIL never satisfied due to the abandonment of its application in 2008

Consequently, under Section 48(2) of the Trade Marks Act, any goodwill generated by AIL during this period enured to KL's benefit

The Court further found that the 2021 Agreement novated the 2002 Agreement because Recital E explicitly characterized the products covered by the 2002 Agreement (CTD bars) as "obsolete," substituting them with a new licensing regime for TMT bars

Regarding passing off, the Court found AIL failed to prove independent goodwill, as its historical use was as a licensee

Conversely, KL established a prima facie case for infringement because "AL KAMDHENU GOLD" incorporates KL's registered mark "KAMDHENU GOLD" in its entirety, causing a high likelihood of consumer confusion

The Court held that AIL, as an ex-licensee, has no independent proprietary right to the mark "AL KAMDHENU GOLD"

The Court granted an interim injunction restraining AIL and its affiliates from manufacturing, selling, or advertising any products (including TMT bars and steel pipes) under the mark "AL KAMDHENU GOLD" or any mark deceptively similar to "KAMDHENU," "KAMDHENU GOLD," or "KAMDHENU GOLD TMT"

The Court emphasized that given the safety-critical nature of reinforcement steel bars, any brand dilution or confusion constitutes irreparable harm that cannot be compensated by damages