Branding And Un-Branding In Joint Venture

A joint-venture arrangement is like a marriage between two (or more) parties. They commit to common goals of togetherness, well-being and prosperity.The joint-venture entity, whether incorporated or not, is equivalent to a child. Each party to the JV exercises rights, obligations and decision making in relation to it and are responsible for the growth of the business of the joint venture.While a joint venture can certainly have a new, unique, or novel name, aka "brand", parties choose sometimes to leverage their existing brand names to create a new brand — what we refer to as "co-branding" or a "composite mark". This essentially involves using a unique element of each party's already established trademark, such as the brand name or company name, to form a new mark. Something like a combination of your family name and spouse's family name for a child's surname. The latest example of this is "JioHotstar".While this sounds cool and easy, there are few nuances to consider while joining hands, and un-joining, should a situation arise..Parties deciding to lend their names or trademark for JV purposes need to first examine if such co-branding leads to a brand that is strong and adequately protected. A diluted or not very well-established brand or common words or names may not result in creation of an immediately recognizable JV brand.Secondly, they need to evaluate what they are licencing to the JV — the name (word) or any creative logo or both. Thirdly, trademarks are protected in relation to particular goods or services. Registration of a trademark in one or more classes does not guarantee protection across all 45 classes. Unless the mark is a well-known mark. Therefore, it is also important to analyse whether the licenced trademark is or can be protected in the class(es) relevant for the JV's business.Next, licencing of trademarks needs to be in consonance with law. The Trademark Act has certain baselines provisions for licencing purposes. For instance, the party licencing the mark should actually have the rights to do so. This is especially relevant for large groups where the licensor entity may differ from the intellectual property-owning entity.Additionally, the trademark licence should be subject to certain control conditions, failing which the licence can result in issues of "naked licencing", which has its own set of challenges for the owner of the mark.It may also be important to keep in mind that a trademark clearance is typically required for company name registration. The brand licencing agreements help in securing company name clearances. Lastly, the question of goodwill accruing from use of the composite trademark is an important one as goodwill is a balance-sheet item as well.In a classic licencing situation, goodwill from use of a trademark accrues to the benefit of the licencer. This is distinguished from a JV scenario where goodwill from business and, sometimes, the new brand name accrues to the benefit of JV. This may happen in situations where the JV is permitted to register the composite trademark in its own name. This question requires some ponderance and examination, especially from a structuring, tax and accounting perspective..IndusInd Bank Clarification Leaves Too Many Questions Unanswered.No matter how heartbreaking it may sound, one needs to plan for such tough days. What makes the exit smoother is to have an exit plan in place. Couple of points for parties to consider in a termination scenario can be cancellation of trademark registrations for the composite mark, if any applied for; transition timelines to change the company name and branding; withdrawing marketing content from public domain.If the JV is disintegrating, then transition is mutual. If one party continues with the JV (with exit of existing, and entry of new party), then issues like ownership of trademarks, positioning of past association of the JV with the erstwhile party, re-branding of the JV name and business, split of goodwill are some additional aspects to consider.These are not difficult to achieve. However, proper planning for the life journey and after life of JV, along with robust documentation can make this a smoother ride..Aarushi Jain is a partner and head of media, education and gaming, while Swati Sharma is a partner and head of intellectual property at Cyril Amarchand Mangaldas.Disclaimer: The views expressed here are those of the authors and do not necessarily represent the views of NDTV Profit or its editorial team..A Nasdaq Meltdown, Like China’s Big Tech in 2021?

Branding And Un-Branding In Joint Venture

Parties deciding to lend their names or trademark for JV purposes need to first examine if such co-branding leads to a brand that is strong and adequately protected.

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