The Saga of the 'YEZDI' Trade Mark

The High Court of Karnataka recently settled a complex, years-long legal battle over the iconic Indian motorcycle brand, ‘YEZDI’. The decision clarifies the fate of brands belonging to companies in liquidation. The company, Ideal Jawa (India) Limited, ceased the production of its bike in 1996 and was subsequently ordered to be wound up in 2001. The core dispute was whether the brand's legal rights and goodwill survived after over 15 years of non-use and non-renewal of its trade mark registrations by the company and the Official Liquidator. The Official Liquidator and the Employees' Association argued that the brand remained an asset of the defunct company, while the former Director, Mr. Boman R. Irani, contended that the lapsed mark had entered the public domain, allowing him to legally re-register it and license it to Classic Legends Private Limited.

The Division Bench decisively ruled in favor of Mr. Boman R. Irani and Classic Legends, setting aside the single-judge order that had declared Irani’s registrations void. The court's pivotal finding centered on the concept of abandonment, noting that a trademark cannot remain in "limbo for indefinite time". Critically, the judges highlighted the fact that the company had stopped using the mark since 1996 and that the Official Liquidator had failed to take action to renew or protect the registration for over 15 years, despite having custody of all company records and assets since 2001. This inaction by the Liquidator effectively amounted to the abandonment of the mark.

The court further concluded that a brand's goodwill is not perpetual. Goodwill is directly tied to an active business and cannot exist in a vacuum for years, especially after a company's assets are sold off with no intention to resume the business. By not using the mark or renewing its registration, the company lost its proprietary rights. Consequently, the bench held that Mr. Boman R. Irani's subsequent registration of the brand, by following the due process required by the Trade Marks Act, was valid, as he was merely utilizing a mark that had already entered the public domain. This landmark judgment is critical for the brand owners as it stresses that a brand's goodwill does not survive indefinitely in a vacuum without active business operations or maintenance.

Article By- Zoha Khanam