A Trademark License Agreement that allows exclusive rights cannot be terminated unilaterally unless specific breach conditions are met; otherwise, it remains enforceable.

JUDGMENT

Vibhu Bakhru, J. M/s Golden Tobacco Limited (hereafter `GTL') has filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereafter the `A&C Act'), inter alia, praying that the respondent - M/s Golden Trobe Private Limited (hereafter `GTPL') be restrained from manufacturing, selling and supplying to the market, cigarettes under the exclusive brands owned by GTL, that is, Panama, Golden Gold Flake, Golden Classic, Taj Chhap and Chancellor (hereafter referred to as `the Exclusive Brands').

2. GTL claims that it is the owner of the Exclusive Brands, which have acquired significant reputation and goodwill in domestic and international market. The trademarks `Panama' and `Taj Chhap' were registered in the name of GTL on 20.06.1954 and 22.06.1954 respectively; the trademark `Golden Gold Flake' was registered in favour of GTL on 05.04.1979; the trademark `Chancellor' was registered in favour of GTL on 25.02.1993; and the trademark `Golden Classic' was registered in favour of GTL on 15.09.2015.

3. GTL claims that GTPL was not engaged in the business of manufacturing or selling of cigarettes prior to August, 2019. On 16.08.2019, the parties entered into an agreement captioned `Master Long Term Supply Agreement'. In terms of this agreement, GTL agreed to supply cigarettes under its Exclusive Brands to GTPL and, GTPL agreed to purchase and distribute the same in domestic as well as international markets.

4. On 12.02.2020, the parties entered into a comprehensive Trademark License Agreement (hereafter `the Trademark License Agreement'). In terms of the Trademark License Agreement, GTL granted exclusive non-transferable and non-assignable license in respect of the Exclusive Brands to GTPL. This was subject to the exception in respect of duty free sales in India and in few other countries in respect of the trademark `Golden Gold Flake' and `Panama'.

5. GTL contends that the said Trademark License Agreement was a comprehensive agreement not only for sale, supply and distribution of cigarettes, but also for manufacture of the same under the Exclusive Brands. According to the GTL, the Master Long Term Supply Agreement dated 16.08.2019 stood superseded by the Trademark License Agreement and the same did not survive after 12.02.2020.

6. GTL terminated the Trademark License Agreement by a termination notice dated 14.08.2020 alleging that GTPL had neither commenced manufacturing of cigarettes nor paid any royalty to GTL for a period exceeding six months. Subsequently, on 29.08.2020, GTL withdrew the said termination notice in view of an amicable settlement arrived at between the parties. On that date (that is, 29.08.2020), the parties entered into an Amendment Agreement (hereafter `the Amendment Agreement.) whereby it was agreed that GTPL would pay a minimum monthly royalty as specified under the Amendment Agreement for an initial period commencing from August, 2020 through November 2020. The parties agreed that they would once again meet in December, 2020 to discuss and agree upon a minimum turnover and payment of royalty.

7. GTL claims that GTPL has viola