Intellectual Property Rights As Security For Loans
Mad About Money|September 2018
Intellectual Property Rights As Security For Loans

At Present, a Rule That Has Been Made by the Supreme Court That a Debtor Who Has Defaulted the Loan Cannot Be Allocated a Trademark to the Bank, Whereas in the Matter of Canara Bank Vs Ng Subbaraya Setty Assignment of Trademark Which Was Held by the Supreme Court for Agarbattis, as a Collateral for an Outstanding Loan Is Against the Trademark Act and the Banking Regulation Act.

According to Supreme Court’s opinion, it said that the trademark cannot be allotted to the property which has come into its proprietorship of the bank in return of any claims by the bank. Hence, trademarks are not part of any securities for loans or advances. Moreover, Intellectual Property Rights are made for securities for the loan.


The Supreme Court has also stated that section 6 & 8 of the Banking Regulation was in expectation of the assignment. Hence, a bank cannot utilize a trademark to sell agarbattis as it cannot go beyond the banking business. It can only sell goods to recognize the security held by it. The 3rd party is not permitted to utilize the trademark as well as not permitted to get a royalty. The court also observed that the bank manager, who acknowledged the assignment of the trademark, was dismissed and prosecuted as well.


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September 2018