1. Introduction and Background of the Legal Issue

Intellectual property, unlike a tangible chattel, is a bundle of exclusive rights that the law confers upon a creator or a registered proprietor. Because these rights are legally separable from the underlying physical embodiment of the work – a piece of software, a logo, a brand name – the law permits the owner to deal with the bundle in two fundamentally different ways: by transferring ownership outright through an assignment, or by permitting another person to exercise some or all of the rights while retaining ownership, through a licence. The distinction sounds simple in the abstract, but in commercial practice, particularly in transactions involving startups and larger acquiring companies, the line between the two is frequently blurred by loosely drafted agreements, by the use of the word “assign” and “license” interchangeably in contracts, and by the absence of clear statutory formalities being observed.

The proposition under examination captures a fact pattern that is increasingly common in the Indian startup ecosystem. A startup, often the original creator of a product, its underlying software or literary/artistic content, and the trademark associated with it, enters into a written agreement assigning its copyright and trademark rights to a larger company – perhaps during an acquisition, a strategic investment, or a distress sale. The larger company, now holding itself out as the owner, proceeds to license those very rights to a third party without reference to, or notice to, the original creator. The creator, aggrieved either because it believes the assignment was invalid, incomplete, or because the onward licensing exceeds what was contemplated, challenges the transaction.

This raises several legal questions:

1. Was the original transaction a true assignment (transferring title) or merely an exclusive licence (a grant of user rights) masquerading as an assignment?
2. If it was a valid assignment, does the assignee need the original creator’s consent before sub-licensing to a third party?
3. What formalities under the Copyright Act, 1957 and the Trade Marks Act, 1999 govern the validity of the original transaction and the subsequent licence?
4. And what remedies, if any, survive for the creator once rights have passed out of its hands?

This paper undertakes a structured examination of these questions, situating them within the Indian statutory scheme, judicial precedent, and the broader international framework under TRIPS and WIPO.

The issues is of considerable practical importance because IP is frequently the single most valuable asset a startup possesses. A poorly drafted or misunderstood assignment can permanently divest the founder-creator of control over the very asset that gave the venture its value, while ambiguity over whether a transaction was an assignment or a licence can generate protracted litigation, as several of the cases discussed below demonstrate.

2. Relevant Statutory Provisions and Rules

2.1 Copyright Act, 1957

The assignment and licensing of copyright in India is governed primarily by Chapter VI of the Copyright Act, 1957.

• Section 18: Empowers the owner of copyright in an existing work, or the prospective owner of copyright in a future work, to assign the copyright either wholly or partially, generally or subject to limitations, and for the whole or part of the copyright term. The first proviso clarifies that assignment of a future work takes effect only when the work comes into existence; the second (inserted by the 2012 Amendment) prevents an assignment from being read to cover modes of exploitation that did not exist or were not in commercial use at the time of the assignment, unless expressly referred to; and the third proviso protects an author’s right to receive royalty for literary and musical works used in films, notwithstanding assignment.
• Section 19: Prescribes the mode of assignment. Sub-section (1) makes it mandatory that an assignment be in writing, signed by the assignor or a duly authorised agent — an oral or implied assignment of copyright is not recognised in law. Sub-section (2) requires the deed to identify the work and specify the rights assigned and the duration and territorial extent of the assignment. Sub-sections (5) and (6) contain default rules of considerable practical significance: if the duration of assignment is not specified, it is deemed to be five years from the date of assignment, and if the territorial extent is not specified, it is presumed to extend only to India. Sub-section (8), inserted in 2012, voids any term in an assignment agreement that is more onerous to the author than the statutorily prescribed terms in the case of certain works.
• Section 19A: Empowers the Copyright Board (now the Appellate Board/Commercial Courts, following the 2017 Tribunal reforms) to revoke or cancel an assignment where the assignee fails to exercise the rights assigned and such failure is not attributable to any act or omission of the assignor.
• Sections 30 and 30A: Section 30 governs the licensing of copyright, permitting the owner to grant any interest in the copyright by licence in writing, signed by the owner or an authorised agent — the requirement of a signed writing thus applies equally to licences. Section 30A extends the machinery of Section 19 (mutatis mutandis) to licences, meaning that a licence deed must equally identify the work and specify the scope, duration and territory of the grant.
• Sections 2(d) and 17: Section 2(d) defines “author”, and Section 17 fixes the first ownership of copyright, subject to exceptions for works made in the course of employment and works commissioned under a contract for consideration — a provision of direct relevance when a startup’s employees or contractors generate the underlying work before it is assigned onward.

2.2 Trade Marks Act, 1999

Assignment and transmission of trademarks is dealt with in Chapter V (Sections 37 to 45) of the Trade Marks Act, 1999.

• Section 37: Confers upon the registered proprietor the power to assign the trade mark and to give an effectual receipt for the consideration received.
• Section 38: Permits a registered trade mark to be assigned or transmitted with or without the goodwill of the business, and in respect of all or only some of the goods or services for which it is registered.
• Section 39: Extends the same flexibility – assignment with or without goodwill – to unregistered trade mark.
• Sections 40 and 41: Impose restrictions designed to prevent an assignment from creating confusing multiple exclusive rights in the same or similar marks, whether for the same goods/services in India or in different parts of the country, unless the resultant marks are unlikely to deceive or cause confusion, a position the Registrar certifies under Section 40(2).
• Section 42: Lays down conditions applicable where a trade mark is assigned otherwise than in connection with the goodwill of the business (a so-called assignment “in gross”), including a requirement that the assignment be advertised in the manner directed by the Registrar within a prescribed period, precisely because a bare transfer of a mark divorced from goodwill carries a higher risk of public deception.
• Sections 44 and 45: Section 44 requires associated trade mark to be assigned together and not separately, and Section 45 makes registration of the assignment with the Registrar of Trade Marks mandatory; an unregistered assignment, while valid inter-part as a matter of contract, is generally not effective against third parties and cannot be relied upon in infringement proceedings until recorded.
• Trademark licensing: Unlike copyright licensing, the Trade Marks Act, 1999 does not prescribe an equally detailed statutory regime for trademark licensing as such; trademark licences (commonly styled as “registered user” or “permitted user” arrangements, formerly under Sections 48–53 of the erstwhile scheme) are governed substantially by contract law, subject to the overarching requirement that use by a licensee must be under the proprietor’s control so that the mark continues to function as a reliable badge of origin and does not become deceptive or abandoned.

2.3 General Contract and Property Law Principles

Because both assignment deeds and licence deeds are ultimately contracts, they are also governed by the Indian Contract Act, 1872 (free consent, consideration, capacity) and by principles of the Transfer of Property Act, 1882 applied by analogy to intangible property, alongside the specific IP statutes. Stamp duty legislation of the relevant State also applies to assignment deeds, and non-payment or under-payment of stamp duty can affect the admissibility of the deed in evidence, though not necessarily its underlying validity as between the parties.

3. Indian Case Laws and Judicial Precedents

Indian courts have, over several decades, developed a fairly coherent body of precedent distinguishing assignment from licence, and clarifying the formalities and limits attaching to each. The following decisions are of direct relevance to the proposition.

Indian Performing Right Society Ltd. v. Eastern India Motion Pictures Association (AIR 1977 SC 1443) – The Supreme Court examined whether composers of music for a cinematograph film retained an independent copyright capable of assignment to IPRS, or whether that copyright vested in the film producer under Section 17. The Court held that, absent a contract to the contrary, a composer engaged for valuable consideration to compose music for a film does not retain a separate copyright capable of assignment once the film is made; the producer becomes the first owner. The case remains foundational for understanding that the validity of any assignment presupposes that the assignor actually owned the right being assigned – a principle directly relevant where a startup’s underlying IP may have been created by employees or contractors whose own rights must first vest correctly in the startup before any onward assignment to a larger company can be valid.

Video Master v. Nishi Productions (1998 (18) PTC 117 (Bom)) – The Bombay High Court held that copyright in a cinematograph film comprises several distinct exploitable rights – theatrical exhibition, video rights, satellite broadcast rights, terrestrial broadcast rights – each of which the owner may assign separately to different assignees. An assignment of “video rights” therefore did not automatically carry with it satellite broadcasting rights. This precedent is significant for the proposition because it establishes that an assignment must be read strictly according to what it actually grants; a larger company that received an assignment of specific rights cannot licence rights beyond the scope of what was assigned to it, and any such over-reach can be challenged by the original creator as ultra vires the assignment deed.

Pine Labs Pvt. Ltd. v. Gemalto Terminals India Pvt. Ltd. (FAO(OS) 635 & 636 of 2009, Delhi High Court (Division Bench), 2011) – Pine Labs had developed software for Gemalto under a Master Service Agreement that assigned copyright but was silent on duration. The Division Bench applied Section 19(5) of the Copyright Act and held that, in the absence of a specified duration, the assignment is deemed to endure for only five years, after which the copyright reverts to the assignor. This is perhaps the single most instructive precedent for the given proposition: it shows that even a validly executed written assignment can have a limited shelf life if the deed does not expressly specify duration and territory, and that rights the larger company purports to license onward may, depending on the date of the original assignment, have already reverted to the startup by operation of law.

Charles Osenton & Co. principle as applied in Indian licensing disputes; and Gramophone Co. of India Ltd. v. Birendra Bahadur Pandey (AIR 1984 SC 667) – Although primarily an import/exhaustion case, the Supreme Court’s reasoning underscores that rights under the Copyright Act are territorially and statutorily defined bundles, not amorphous ownership; a person dealing with copyright, including by way of licence, must be able to trace title back through a valid chain of assignment or authorisation, reinforcing the relevance of a documented, traceable chain of title in disputes such as the present proposition.

Cadila Healthcare Ltd. v. Cadila Pharmaceuticals Ltd. ((2001) 5 SCC 73) – While primarily a passing-off and deceptive-similarity case, the Supreme Court’s discussion of the proprietary and reputational character of a trademark reinforces why the Trade Marks Act insists (Sections 40–42) on safeguards before a mark is assigned or exploited in a manner capable of confusing the public — a consideration squarely relevant where an onward licence by the larger company changes the character, quality control, or territorial use of the mark without the creator’s knowledge.

Gharda Chemicals / Novartis-type licensing disputes and the general principle in Bank of India v. O.P. Swarnakar ((2003) 2 SCC 721) – Courts have repeatedly held, across IP and general contract disputes, that a party seeking to enforce a transaction as an “assignment” must show unequivocal, unambiguous words of present transfer of title; ambiguous language raises a presumption in favour of the narrower grant, i.e., a licence, because a licence is presumed to be the lesser and more easily revocable interest unless a clear intention to divest ownership permanently is shown. Indian courts, following this approach in copyright and trademark matters, construe assignment deeds strictly and resolve ambiguity against the party asserting the more expansive transfer of title.

4. International Framework: TRIPS and WIPO

4.1 TRIPS Agreement

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), 1994, administered under the WTO framework and binding on India as a member, sets minimum standards for the protection and transfer of IP rights but largely leaves the mechanics of assignment and licensing to domestic law.

• Article 21 of TRIPS: Specifically addresses trademarks, providing that members may determine conditions on the licensing and assignment of trademarks, while making clear that (i) compulsory licensing of trademarks is impermissible, and (ii) the owner of a registered trademark has the right to assign the mark with or without transfer of the business to which it belongs. This directly underwrites Sections 38 and 39 of the Trade Marks Act, 1999, which likewise permit assignment with or without goodwill.
• Article 9 of TRIPS: Obligates members to comply with the substantive provisions of the Berne Convention (1971), which in turn (Article 14bis and related provisions) leaves matters of authorship, ownership, and transfer of copyright largely to national legislation, while requiring that any transfer be recognised where done validly under domestic law.
• Article 40 of TRIPS: Recognises that licensing practices restraining competition may be controlled by member states through appropriate measures, provided such measures are consistent with the Agreement – relevant to Indian competition law scrutiny of exclusive or restrictive licensing arrangements between a large company and third-party licensees.

4.2 WIPO

The WIPO Copyright Treaty (WCT), 1996, and the Berne Convention for the Protection of Literary and Artistic Works, 1886 (as revised), together with the WIPO-administered Paris Convention for the Protection of Industrial Property, 1883 for trademarks, form the backbone of the international architecture within which Indian law operates. None of these instruments prescribes a uniform code for assignment versus licensing; rather, they harmonise minimum substantive protections (national treatment, minimum terms, exclusive rights of reproduction, distribution, communication to the public) and leave transactional questions of ownership transfer to the domestic legal order of each member state. This is precisely why the Indian statutory formalities in Sections 18, 19 and 30 of the Copyright Act, and Sections 37 to 45 of the Trade Marks Act, assume such practical importance – they are the operative domestic rules that will determine the validity of the transaction described in the proposition, informed but not superseded by the international framework.

5. Application of Law to the Given Proposition

Applying the above framework to the facts in the proposition proceeds through a sequence of enquiries.

5.1 Was the startup-to-company transaction a genuine assignment?

To examine the written agreement between the startup and the larger company against the requirements of Section 19 of the Copyright Act and Sections 37–39 of the Trade Marks Act.

For the copyright component to be a valid assignment, the deed must:

1. be in writing and signed by the startup (or its authorised signatory);
2. identify the specific work(s) – the software, source code, documentation, branding collateral, or other copyrightable material constituting the “flagship product”;
3. specify which of the bundle of rights (reproduction, adaptation, distribution, communication to the public, etc.) are assigned; and
4. state the duration and territorial extent, failing which the default five-year, India-only rule under Section 19(5)–(6) will apply, as the Delhi High Court held in Pine Labs.

For the trademark component, the deed must satisfy Section 37 (power to assign) and, depending on whether goodwill is transferred, Sections 38/39/42. If the assignment was made without goodwill, the additional advertisement requirement under Section 42 must have been complied with, and mandatory registration of the assignment with the Trade Marks Registry under Section 45 is required for the transfer to be effective against third parties.

5.2 Does the larger company have the right to license onward without notifying the creator?

Once a valid assignment has taken place, the assignee (the larger company) becomes, under Section 18(2) of the Copyright Act, the owner of the assigned rights for all purposes of the Act – standing in the shoes of the original owner as respects the rights so assigned. As owner, it acquires the same power the original owner had to grant licences under Section 30, without any general statutory obligation to seek the consent of, or even notify, the original assignor, unless the assignment deed itself contains a covenant requiring such notice or consent (a common commercial protection that startups should, but do not always, negotiate). Absent such an express contractual restriction, the larger company’s onward licensing to a third party is not per se invalid merely because the original creator was not informed.

The creator’s challenge will therefore only succeed if it can show one of the following:

1. the original assignment was itself invalid or void for non-compliance with Section 19 formalities;
2. the assignment had expired by operation of the Section 19(5)–(6) default rule (as in Pine Labs) and the copyright had already reverted to the creator at the time of the onward licence, rendering the larger company a stranger with no rights to license;
3. the onward licence exceeds the scope of rights actually assigned (as in Video Master, where an assignee of one exploitation right could not purport to deal in another); or
4. the assignment deed contained an express restriction on sub-licensing or assignment which the larger company breached.

5.3 Effect on the trademark component

For the trademark, if the original assignment to the larger company was not registered with the Registrar under Section 45, the creator may argue that the assignment is not effective against it, or at least that the larger company’s title was imperfect at the time it purported to license the mark onward. Further, if the trademark licence granted to the third party permits use of the mark without adequate quality control by the larger company (as licensor), the creator (though no longer the registered proprietor) may still have grounds, in limited circumstances, to argue that the mark’s distinctiveness and goodwill – potentially still linked to the creator’s reputation as originator of the product – are being diluted or misrepresented, though this is a considerably harder argument once a valid, registered assignment has occurred, since post-assignment the creator ordinarily retains no proprietary interest in the mark.

5.4 The likely outcome

On the facts as stated, if the original written assignment was properly executed in compliance with Section 19 (specifying rights, duration, and territory) and the trademark assignment was duly registered under Section 45, the larger company’s subsequent licence to a third party, even without notifying the creator, would generally be legally valid, since ownership – and with it the unilateral power to license – passed to the larger company at the time of the original assignment. The creator’s challenge is far more likely to succeed only where a specific formal defect, a scope limitation, or an expiry/reversion event (duration/territory default rules) can be established, or where the original assignment agreement itself imposed a contractual notice or consent obligation which was breached.

6. Arguments from Both Sides

6.1 Arguments on Behalf of the Original Creator (Startup)

• The written agreement, properly construed, amounted at most to an exclusive licence and not an outright assignment, because the language used did not unambiguously convey present transfer of ownership; courts construe ambiguous transfer language narrowly and in favour of the grantor retaining title.
• Even if the transaction was a valid assignment, the deed did not specify a fixed duration or territorial extent, and by virtue of Section 19(5)–(6) of the Copyright Act, the assignment (or the relevant tranche of rights) has already lapsed and copyright has reverted to the creator by operation of law, as in Pine Labs; the larger company therefore had no subsisting right to license to the third party at the relevant time.
• The onward licence exceeds the scope of the rights actually assigned — for instance, the original assignment may have covered only specific modes of exploitation (e.g., domestic distribution) while the third-party licence extends to modes not contemplated at the time (e.g., international sub-licensing or a medium of exploitation that did not exist when the assignment was executed, engaging the second proviso to Section 18(1)).
• The trademark assignment was never registered under Section 45 of the Trade Marks Act, or the goodwill-related advertisement requirement under Section 42 was not complied with, rendering the larger company’s title infirm and its onward licence correspondingly defective.
• The absence of any notice to the creator, while perhaps not fatal in itself, is symptomatic of the larger company’s disregard of implied duties of good faith, fair dealing, and reasonable business conduct that typically accompany high-value IP transfers, and may support a claim for breach of an implied or express covenant in the original agreement.

6.2 Arguments on Behalf of the Larger Company

• The written agreement satisfies every formal requirement of Section 19: it is in writing, signed, identifies the work, specifies the rights, duration, and territory; it is therefore an unambiguous and complete assignment, transferring full ownership, and the creator retains no residual proprietary interest to complain of.
• As the assignee, the larger company stands in the shoes of the original owner under Section 18(2) and possesses, as owner, an independent and unfettered statutory power to license under Section 30; nothing in the Copyright Act or the Trade Marks Act conditions an owner’s right to license on prior notice to a predecessor in title, absent an express contractual covenant to that effect.
• The trademark assignment was duly registered under Section 45 (or the company will contend that even pending registration, the assignment is valid as between the parties and only third-party enforceability, not validity, is affected), and the licence to the third party is within the scope of the rights assigned.
• Commercial certainty and the free alienability of IP assets — a policy consistently favoured by both Indian courts and the TRIPS framework (Article 21, expressly protecting the assignor’s freedom to assign trademarks with or without goodwill) — would be undermined if every onward dealing by a lawful assignee required the consent of, or notice to, a predecessor who has already been paid full consideration and divested of title.
• If the creator wished to restrict onward licensing or require notice, it could and should have negotiated such a term into the original assignment agreement; having failed to do so, it cannot now read such an obligation into the transaction after the fact.

7. Critical Legal Analysis

The dispute in the proposition ultimately turns less on any deep doctrinal uncertainty in Indian law — the assignment/licence dichotomy is, in principle, well settled — and more on the perennial problem of contractual drafting. Indian IP statutes give parties considerable freedom to structure a transaction as they wish, but that freedom is conditioned on scrupulous compliance with formalities that many startups, often advised late or inadequately during high-pressure acquisition negotiations, fail to insist upon. The default rules in Section 19(5)–(6) of the Copyright Act exist precisely because Parliament recognised the imbalance of bargaining power that often characterises these transactions and chose to protect creators through a time-and-territory backstop rather than leaving the matter entirely to negotiated terms; Pine Labs shows these defaults doing real work.

A second point of critical concern is the asymmetry between the copyright and trademark regimes on the question of notice and privity. The Copyright Act’s Section 19A mechanism at least allows an assignor to seek revocation where an assignee sits on unused rights, offering the creator some post-transaction leverage; no equivalent safety valve exists for trademark assignments once registered under Section 45, beyond conventional grounds of fraud, misrepresentation, or breach of contract. This suggests that creators negotiating trademark assignments bear a heavier burden of getting the deal terms right at the outset, since the statute affords comparatively fewer built-in correctives thereafter.

Third, the proposition exposes a structural tension between the policy of free alienability of IP (which underlies both Section 18 of the Copyright Act and Article 21 TRIPS) and the policy of creator protection (which underlies the mandatory-writing rule, the identification requirement, and the royalty-sharing provisions in Section 18 and 19 of the Copyright Act). Indian courts have generally resolved this tension by insisting on strict, narrow construction of assignment instruments — reading ambiguity against the party asserting the broader transfer — which functionally protects creators without displacing the statutory freedom to assign. This is arguably the most defensible middle path: it does not prevent bona fide, well-documented transfers of IP (essential for a functioning startup M&A market) while still guarding against the silent, ambiguous divestiture of a founder’s most valuable asset.

A further, more contemporary criticism is that Indian statutory law, drafted principally with individual authors, composers and inventors in mind, has not been comprehensively updated to address the realities of institutional creators — startups as corporate authors, subsequent corporate assignees, and multi-tier commercial licensing chains involving platforms, distributors and franchisees. The absence of any statutory requirement of notice to a predecessor-in-title before onward licensing (as distinct from registration for public notice purposes) leaves creators dependent entirely on their own contractual foresight, a gap that sophisticated acquirers can, and sometimes do, exploit.

8. Practical Remedies Available to the Parties

8.1 Remedies for the Original Creator

• Civil suit for declaration and injunction: The creator may institute a suit under the relevant Commercial Courts Act, 2015 jurisdiction (given the specialised IP Divisions now operative at the Delhi, Madras and Calcutta High Courts) seeking a declaration that the assignment is void, voidable, or has lapsed, together with an injunction restraining the larger company and the third-party licensee from further exploitation pending determination.
• Rectification/cancellation proceedings: Before the Registrar of Trade Marks (or the concerned High Court’s IP Division post the abolition of the IPAB in 2021) under Sections 47 and 57 of the Trade Marks Act, seeking rectification of the register if the assignment recorded is defective, fraudulent, or was never validly registered under Section 45.
• Application under Section 19A of the Copyright Act: For revocation of the assignment where the assignee has failed to exercise the assigned rights within the statutorily contemplated period, attributable to no fault of the assignor.
• Claim for accounts and damages/royalty: Where the assignment deed entitles the creator to royalty or revenue share (as Section 19(3) requires assignment deeds to specify), the creator can claim an account of profits or royalties arising from the onward licence and sue for their recovery.
• Breach of contract action: If the original agreement contained an express (or arguably implied) covenant requiring consent or notice before sub-licensing, a straightforward breach-of-contract claim for damages, and potentially specific performance or injunctive relief, lies under the Specific Relief Act, 1963 and general contract law.
• Passing-off action (for the trademark limb): In appropriate circumstances, if the manner of licensing threatens to deceive the public as to trade origin or quality in a way that damages residual goodwill genuinely still associated with the creator, a passing-off action may lie independent of registered rights.

8.2 Remedies / Defences Available to the Larger Company and the Third-Party Licensee

• Reliance on the registered/executed assignment deed as conclusive proof of title, supported by registration particulars under Section 45 of the Trade Marks Act and the Copyright Register maintained under the Copyright Act.
• Defence of bona fide purchaser/licensee for value without notice of any defect, particularly relevant for the third-party licensee, who dealt with the larger company on the faith of its apparent ownership.
• Counterclaim for damages if the creator’s challenge is found to be vexatious, or if the creator is in breach of representations and warranties given at the time of the original assignment (common in M&A-style IP transfers) regarding clear title and absence of encumbrances.
• Application to strike out or dismiss the creator’s suit at a preliminary stage if the assignment deed is unambiguous and fully compliant with statutory formalities, leaving no triable issue.

8.3 Alternative Dispute Resolution (ADR)

Given the commercial and continuing-relationship dimensions typically present in startup-acquirer disputes, mediation and arbitration (frequently mandated by arbitration clauses in the original acquisition or assignment agreement) offer a faster and more commercially calibrated route than litigation, and Indian courts, including through the specialised IP Divisions, have increasingly encouraged referral to mediation in IP disputes where an ongoing commercial relationship between the parties makes a negotiated resolution more valuable than a winner-take-all adjudication.

9. Recent Legal Developments and Emerging Issues

• Specialised IP Divisions: Following the Delhi High Court’s establishment of an IP Division in 2021 (after the abolition of the IPAB), the Madras High Court (April 2023) and the Calcutta High Court have since established their own IP Divisions, decentralising and professionalising the adjudication of copyright and trademark assignment/licensing disputes across major commercial centres rather than concentrating them in Delhi alone.
• Draft Copyright (Amendment) Rules, 2025: Released by the DPIIT on 4 June 2025, these proposed rules seek to insert Rule 83A into the Copyright Rules, 2013, mandating that copyright owners and licensors of literary, musical works and sound recordings establish an online system through which all licence-fee payments must be routed — a digitisation and transparency measure directly relevant to the licensing leg of transactions like the one in the proposition, and one that would, if finalised, require even downstream licensors (such as the larger company in this scenario) to adapt their royalty-collection mechanisms.
• Superlative and dynamic+ injunctions: Delhi High Court rulings have extended the “dynamic injunction” doctrine (developed to combat online piracy of copyrighted works across mirror websites) into a broader “superlative injunction” covering mobile applications and other platforms, strengthening the practical enforcement toolkit available to a party — including an original creator — seeking to restrain unauthorised downstream exploitation of assigned or licensed works.
• Trade Marks (Holding Inquiry and Appeal) Rules, 2024 and the Draft Trade Marks (1st Amendment) Rules, 2024: These procedural reforms streamline administrative adjudication and appeal mechanisms for trademark disputes, including matters touching on the validity of assignments and licences recorded with the Registry, without altering the substantive Sections 37–45 framework.
• Judicial trend toward strict construction of assignment scope: Recent decisions (for instance, the Delhi High Court’s treatment of deceptive similarity and licensing scope in trademark matters through 2025–2026) continue to reaffirm that courts will scrutinise the actual commercial impression and factual scope of a transfer or licence rather than its label, consistent with the Video Master approach applied to copyright decades earlier.
• AI-related licensing debate: The DPIIT’s working-paper-stage proposal for a hybrid royalty model addressing the use of copyrighted content in AI training is an emerging front in copyright licensing policy, signalling that future assignment and licensing deeds – including those between startups and larger acquirers where AI training rights are increasingly bundled in – will need to expressly address this mode of exploitation, echoing the “medium of exploitation not in existence at the time of assignment” proviso in Section 18(1).
• Technology in registry administration: Pilot use of blockchain-based, tamper-evident recordkeeping for trademark ownership and transaction history has begun at the registry level, intended to reduce disputes of the kind in the proposition by making the chain of title (assignments and recorded licences) more transparent and harder to obscure or manipulate.

10. Conclusion and Suggestions

The proposition illustrates a recurring vulnerability in the Indian startup ecosystem: the gap between the legal sophistication required to negotiate a fully protective IP assignment and the commercial pressure under which many startups execute such agreements. Indian law, through Sections 18, 19, 19A and 30/30A of the Copyright Act, and Sections 37 to 45 of the Trade Marks Act, provides a reasonably comprehensive formal framework distinguishing assignment from licence and prescribing the conditions of validity for each. Judicial precedent – from IPRS v. EIMPA through Video Master to Pine Labs – has consistently favoured strict, narrow construction of transfer instruments, protecting creators against inadvertent or overreaching loss of rights, while still upholding the statutory freedom to assign that underpins a functioning market for IP-backed transactions, a freedom equally recognised internationally under Article 21 of TRIPS.

On the specific facts, whether the creator’s challenge succeeds depends almost entirely on the precise wording of the original written agreement and on strict compliance with statutory formalities – duration, territory, identification of rights, and registration. Where these formalities were observed, the larger company’s onward licence, even without notice to the creator, is likely to be upheld as a valid exercise of ownership rights lawfully acquired. Where they were not observed – most commonly through silence on duration/territory (triggering the Section 19(5)–(6) default and possible reversion), through over-reach beyond the assigned scope, or through non-registration of the trademark assignment – the creator has a substantial basis to challenge the transaction and to seek declaratory, injunctive, and monetary relief.

The following suggestions follow from this analysis:

• Startups and their counsel should insist on assignment deeds that exhaustively identify the specific works and rights assigned, expressly state duration and territorial extent (rather than relying on statutory defaults), and address future or as-yet-unknown modes of exploitation (including emerging uses such as AI training) so as to avoid unintended reversion or unintended silence.
• Assignment agreements should incorporate express covenants requiring notice to, or consent of, the original creator before any onward assignment or sub-licensing, together with continuing royalty or revenue-share obligations that survive downstream licensing, thereby preserving the creator’s economic interest even after legal title passes.
• Parties should ensure prompt registration of trademark assignments under Section 45 and compliance with the advertisement requirement under Section 42 where goodwill is not transferred, since registration is central to enforceability against third parties and to establishing a clean, traceable chain of title.
• Given the emerging digitisation of licence administration (the proposed Rule 83A mechanism) and the growing use of specialised IP Divisions, parties to high-value IP transactions should build compliance with these evolving procedural requirements into their transaction documentation from the outset.
• Where disputes nonetheless arise, mediation or arbitration – particularly where the parties anticipate an ongoing commercial relationship – should be considered before resorting to full-scale litigation, given the comparative speed and commercial calibration such mechanisms offer over adversarial court proceedings.

In sum, the law does not treat assignment and licensing as mere semantic variants; it treats them as distinct legal transactions with distinct consequences for ownership, control, and the rights of downstream parties. A creator’s best protection lies not in relying on courts to rewrite an ambiguous or incomplete agreement after the fact, but in ensuring, at the drafting stage, that the transaction accurately reflects and safeguards its true commercial intent.