Written by Amit Kumar, a final-year student of Campus Law Centre, Faculty of Law, Delhi University, Delhi

INTRODUCTION

Worldwide, legal frameworks universally support some version of exclusive design rights, whether they are solely centred on ornamentality, as seen in India, or involve a combination of special protection that integrates copyright, trademarks, and other elements. Shared provisions among these models empower rights owners to completely transfer ownership through assignments or grant licenses to partners. These licenses delineate usage rights against fees structured in accordance with market dynamics.

As an illustration, Walt Disney’s expansive merchandising empire flourishes by permitting the licensed reproduction of beloved fictional characters across an extensive array of products. In a similar vein, Samsung regularly engages in the exchange of technology patents and design cross-licenses with industry giants like Apple and Intel. This exchange is crucial for the adoption of interoperability standards, playing a pivotal role in reaching a broader consumer base.

 

These legal constructs, which separate absolute ownership from bounded utilization spheres, provide a framework for risk-managed market expansion. They also contribute to commercial optimization and sustain the growth of enterprises through strategic partnerships. Importantly, these constructs enable pioneering creators to retain revenue streams while fostering collaboration and innovation in the market.

India’s Design law structures tailored protection for applied industrial designs – solely assessing ornamental or aesthetic appeal aspects applied to articles without covering functional/ technical merits, better addressed through separate patents route. Registered Design proprietors enjoy 10 years of exclusive rights production and adoption in India, extendable by further 5 years upon renewal by paying prescribed fees just before current term expiry. Clear segregation from technical inventiveness narrows protection specificity, allows calibrated circumscribed transfers aligned with commercialization scopes through assignments and licensing.

 

ASSIGNMENT

The term “assignment” in legal contexts signifies a significant process involving the transfer of rights, property, or assorted benefits from one party to another party. This legal concept holds relevance in both Contract Act and Transfer of Property Act, embodying not only the physical act of transferring but also encompassing the rights, property, interest, or benefits undergoing the transfer.

Under India’s Design Act, registered proprietors enjoy the flexibility of complete ownership transfer and controlled licensing of usage rights, enabling them to monetize their assets without forfeiting legal exclusivity.

 

The assignment provisions within the act facilitate the outright transfer of proprietorship of registered rights. This transfer occurs through written contracts, typically involving lump sum considerations. This transfer encompasses all interests, including the copyright associated with the design, which are also effectively assigned to the new rights holder. Every assignment must adhere to the stipulated requirements outlined in both the Indian Contract Act 1872 and the Indian Stamp Act 1899. These statutory regulations impose specific conditions and formalities that must be fulfilled for an assignment to be legally valid.

 

Section 30 of the Design Act of 2000, and Rules 32, 33, 34, and 35 of the Design Rules of 2001, specifically addresses design assignment contracts and outlines a procedure for their formal recording. According to Section 30(1) of the Design Act, if an individual acquires the copyright in a registered design through assignments, transmission, or other legal means, they have the option to apply to the Controller in the specified form to register their title.

 

It’s essential to note that Section 30(3) of the Design Act mandates that any assignment must be in writing. The agreement between the involved parties must be documented in the form of an instrument that encapsulates all the terms and conditions governing their respective rights and obligations. Furthermore, an application for the registration of title under such an instrument must be filed with the Controller in the prescribed manner within six months of the execution date.

Section 30(4) of the Design Act emphasizes that the person registered as the proprietor of the design holds the absolute right to assign the design rights. This provision underscores the significance of the registered proprietor in determining the assignment of design rights.

 

It’s crucial to highlight that the protection of design copyright is contingent upon statutory recognition under the requirements of the Designs Act, 2000. Any third-party rights acquired through assignments or licenses gain efficacy only when properly registered in accordance with the Act’s stipulations and the accompanying Rules. Notably, design law does not entertain the concept of a common law license, reinforcing the importance of adherence to the statutory requirements for effective protection and transfer of design rights.

 

This significantly reduces risks for commercial production partners seeking to explore new products or diversify their offerings. Assignees, having acquired full ownership through assignments, are empowered to maximize the potential of design rights. This includes large-scale production, re-licensing opportunities, and the ability to initiate infringement claims when necessary. The process of assignment creates valuable opportunities for companies with specialized strengths in manufacturing or distribution to acquire commercially viable aesthetic designs. This allows them to expand their product lines without the need for separate investments in the design creation process.

 

Moreover, even proprietor partnerships or teams can strategically allocate ownership interests internally through assignments. It provides a structured mechanism for optimizing ownership arrangements within such collaborations. It’s crucial to note that all transactions must be officially recorded with the Design Office for validity against third parties. Following the verification of documentation and the payment of required fees, assignees are duly recognized as Subsequent Registered Proprietors, solidifying their legal standing in the ownership and exploitation of the design rights.

The procedure for assigning rights under the Designs Act, 2000 involves several steps. 

Once a design is officially registered, the concerned party to register documents under sub-section (3) of section 30, must submit an application in the specified Form-10. This form is designed for the purpose of applying for the registration of documents as outlined in sub-section (3) of section 30.

Individuals seeking ownership must initiate an application under Rule 33 of the Design Rules, 2001. This application is submitted to the Controller in the specified Form-11 for entry of name of proprietor or part proprietor in the Registe,  Form-12 for r entry of mortgage or licence in the Register and form- 13 for entry of notification of a document in the Register. as the case may be to register the title in the name of the new owner.

In adherence to Rule 37 of the Design Rules, the assignment agreement (not already provided for), purporting to affect the proprietorship of a registered design can filled in form 13. 

This application must be directed to the Controller of Designs and should be filed within six months from the date the instruments were executed. In certain circumstances, an aggregate extension of up to six months may be permitted.

This documentation is crucial for the official registration of the transfer, ensuring that the legal requirements are met and providing a comprehensive record of the transaction. Adhering to these guidelines facilitates a smooth and valid registration process for the transfer of design rights.

 

LICENSING 

In the realm of intellectual property, licensing arrangements play a pivotal role, offering flexibility through exclusive or non-exclusive licenses. The former grants sole rights to the licensee, while the latter allows multiple entities to share the designated property. However, the validity of any license hinges on its articulation in a written instrument, outlining the specifics of the licensing terms comprehensively.

The individual who becomes entitled through such a license has the option to submit an application to the Controller to register their title. This application must be made in the prescribed form, specifically Form-12, and should be accompanied by the original instrument or copies of the instrument duly certified. This process facilitates the official registration of the individual’s entitlement following the grant of the license.

Crucially, only the registered proprietor of a design holds the authority to initiate legal proceedings in the event of design infringement. This exclusive right emphasizes the privileged position of the registered owner in safeguarding the integrity of the design.

To further refine licensing agreements, incorporating quality control clauses is advisable. These clauses set standards that licensees must adhere to, preserving the quality associated with the licensed property and safeguarding its reputation.

 

This strategic approach to licensing terms allows for a carefully calibrated scaling up of operations across various sectors while ensuring that proprietors retain a share of the revenues. Additional clauses in these agreements can incorporate parameters related to quality control, brand reputation, and payment terms, creating a framework that encourages mutually beneficial business growth.

 

This licensing framework serves as a means to unlock the hidden commercial value of applied artistry without relinquishing legal control against unauthorized adoptions. For Indian MSMEs (Micro, Small, and Medium Enterprises) and independent designers who may lack the resources to deter imitators, this approach provides a vital avenue to secure proportionate returns on innovation through partnerships tailored to the market’s needs.

 

LICENSING – ENABLING WIDER DIFFUSION

To facilitate broader dissemination without completely surrendering ownership rights, registered proprietors have the option to license their designs selectively through contractual partnerships. The Design Act accommodates both exclusive and non-exclusive licensing of registered designs, either in whole or in part, for renewable durations, with royalties tied to the production scale undertaken by licensees.

 

Exclusive licensing agreements include clauses that prevent simultaneous identical licenses within the same product categories or geographical areas, mitigating risks for licensees. These agreements meticulously define the scope of usage rights, circulation territory, product categories, timeframes, and quality control provisions to preserve the reputation of the design.

By strategically structuring these agreements, incentives and synergies are created for both licensors and authorized users, minimizing the likelihood of disputes. Similar to assignments, the same recordal documentation protocols apply to license agreements for validity against third parties.

 

For instance, licensors may authorize multiple non-exclusive vendors in specific regions, granting limited access to registered designs based on localized demand and cost advantages. Alternatively, licensors might exclusively license design adaptation rights for particular niche product ranges or manufacturing processes.

 

Upon expiration, licenses can be reassigned through bidding processes, reflecting the latest commercial potentials. This framework allows for a comprehensive leveraging of proprietary registrations without relinquishing ownership. Moreover, renewal fee revenues continue to accrue to proprietors over time, alongside royalties linked to the production volumes of licensees.

These provisions play a crucial role in mitigating risks for MSMEs abundant in creative talent but lacking experience in commercialization and protection against imitation. For these smaller enterprises, licensing offers a strategic avenue to navigate the complexities of market expansion by forming partnerships with manufacturing entities. The equitable revenue structures inherent in licensing agreements help de-risk the challenges associated with entering new product categories or geographical markets.

 

For MSMEs with a wealth of creative talent, but perhaps limited resources to combat imitation, licensing becomes a valuable tool. It allows them to tap into the expertise and resources of manufacturing partners while still maintaining control over their designs and earning a share of the revenues.

 

Simultaneously, prospective manufacturing partners benefit from the arrangement. Licensing provides a legal framework for them to explore new products or geographical areas without the substantial risks associated with full-scale ownership. The partnership becomes a mutually beneficial arrangement where both parties contribute their strengths – the creativity of the MSMEs and the manufacturing capabilities of their partners – fostering innovation and growth in the market.

 

BUILDING SUPPORT INFRASTRUCTURE

Efficient utilization requires reinforcing advisory support and public awareness concerning avenues for monetizing protected ornamental designs within the existing legal framework, addressing obstacles created by unclear pathways.

 

Firstly, it is imperative for MSMEs to engage high-caliber IPR attorneys with expertise in IP management, contract negotiation, and valuation strategy. These professionals play a critical role in assisting MSMEs in making well-informed, data-driven decisions regarding assignment and licensing terms, thereby safeguarding their interests.

 

Secondly, the establishment of digital databases containing information on registered design ownership and rights transfers promotes transparency and helps deter disputes by providing updated traceability.

 

Thirdly, ongoing multilingual awareness campaigns conducted by public agencies, such as India’s IP office, law universities, and industry bodies, through workshops and user-friendly guides on pathways to monetization and associated safeguards, can overcome grassroots-level limitations. Stimulating collaboration among creators, investors, and industry stakeholders is essential and can be facilitated through initiatives such as design trade fairs, online portals, and legal aid camps.

 

By maintaining simplicity in the process and fostering a balance between legal exclusivity controls and strategic openness, the framework can enable fluidity, unlocking the potential for exponential innovation. This approach is crucial for achieving sustainable success on a global scale.

 

CONCLUSION

The rights of original designers are safeguarded by both the Design Act of 2000 and the Copyright Act of 1957, addressing the transfer of these rights to subsequent owners. Facilitating the transfer of intellectual property rights between two parties for product development and commercial purposes, the Assignment Agreement plays a pivotal role. Design assignment agreements are governed by Section 30 of the Design Act and Rules 32-35 of the Design Rules, 2001. However, when not meticulously drafted in accordance with legal requirements, these agreements can give rise to legal and equitable rights, leading to various complications.

To mitigate potential issues, it is advisable to incorporate specific terms in Assignment Agreements, addressing concerns such as governing law, jurisdiction, and Alternative Dispute Resolution. This approach ensures the expeditious resolution of disagreements and reinforces the legally binding nature of the agreement, requiring adherence to all applicable laws. The enforceability of assignment agreements serves as an incentive for individuals to pursue innovative technologies that contribute to societal advancement.

In addition to compliance with rules, it is imperative to accurately specify ownership details within the agreement. The assignment should clearly define what each party owns and stipulate the duration for which an individual will hold intellectual property ownership. This meticulous approach acts as a safeguard, particularly in the event of potential disputes regarding the ownership of the design.

 

REFERENCE

1. 1. Intellectual Property Rights in India, V K Ahuja, ISBN : 9789351433880, 2nd Edition 
   2. Law Relating to Intellectual Property, Dr B L Wadehra, ISBN : 9789350350300, 5th Edition 
   3. Licensing Intellectual Property Law & Management,  Dr Raman Mittal , ISBN : 8190288342, 9788190288347, 1st Edition

• Research Handbook on Intellectual Property Licensing,  Jacques de Werra , ISBN ; : 1849804400, 978-1849804400, 1st edition

1. India Patent and Designs Act 1911
2. The Designs Act, 2000 
3. The Designs Rule, 2001
4. The Designs Rule, amendment 2008
5. The Designs Rule, amendment 2021
6. TRIPS Agreement 1994
7. Critical Analysis of Design Laws in India with Provisions of Design Act, 2000, published on www.ijcrt.org. The link for the same is herein  https://www.ijcrt.org/papers/IJCRT1813362.pdf