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of <h1>Tribunal Denies Trademark Transfer in Beer Distribution Agreements</h1> <h3>United Breweries Limited Versus State of Karnataka</h3> United Breweries Limited Versus State of Karnataka - TMI Issues Involved:1. Whether the transactions between the appellant and the CBUs involve the transfer of the right to use the trademark or constitute a deemed sale of the trademark.2. Whether the FAA erred in concluding that there is no transfer of the right to use the trademark to the CBUs.3. Whether the royalty received for the use of the 'Kingfisher' trademark for packaged mineral water constitutes a transfer of the right to use the trademark.4. What order should be passed.Issue-wise Analysis:1. Transfer of Right to Use Trademark with CBUs:The Tribunal analyzed the agreements between the appellant and the CBUs, highlighting that the agreements are for brewing and distribution of beer, not for the transfer of the right to use the trademark. The agreements include technical know-how, supervision, and control by the appellant over the brewing process, marketing, and distribution. The appellant retains ownership of the trademarks, and the CBUs are granted only a limited, non-exclusive right to use the trademarks under strict conditions and supervision. The Tribunal concluded that there is no transfer of the right to use the trademark, following the principles laid down by the Supreme Court in the BSNL case, which requires five attributes for such a transfer, including exclusive use by the transferee, which is absent here.2. FAA's Conclusion on Transfer of Right to Use Trademark:The Tribunal upheld the FAA's decision that the transactions do not involve the transfer of the right to use the trademark. The Tribunal noted that the FAA correctly analyzed the agreements and applied the law declared by the Supreme Court in the BSNL case. The Tribunal also referred to the judgment of the Kerala High Court in Malabar Gold Pvt. Ltd., which supports the view that granting permission to use a trademark under strict control and supervision does not constitute a transfer of the right to use the trademark.3. Royalty for 'Kingfisher' Trademark for Packaged Mineral Water:The Tribunal examined the technical know-how and license agreements related to the 'Kingfisher' trademark for packaged mineral water. It found that these agreements are composite in nature and involve the appellant providing technical know-how and granting permission to use the trademark under strict conditions. The Tribunal noted that the royalty received by the appellant has been offered to service tax under the Finance Act, 1994, indicating that the transactions are considered as providing intellectual property services rather than a transfer of the right to use the trademark. The Tribunal concluded that there is no transfer of the right to use the trademark for packaged mineral water.4. Order:The Tribunal allowed the appeals filed by the appellant and dismissed the cross appeals filed by the State. It set aside the orders of the FAA and AA regarding the levy of tax, interest, and penalty on the royalty received from licensees manufacturing packaged mineral water. The Tribunal directed the Registrar to comply with the necessary regulations and communicate the order to the relevant parties. The lower authorities' records were to be sent back immediately.
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