Contemporary trademark law is based on the idea that the trademark owner enjoys the exclusive right to use the mark and to stop others from using it without permission. The process of registering a trademark under the Trade Marks Act, 1999 brings about certainty, promotes investment in brands and allows companies to protect their commercial identity. Nevertheless, in the context of an economy that is becoming more collaborative, this principle is being put to the test in ways that traditional trademark jurisprudence had never foreseen.

The dispute involving the well-known DAKSHIN restaurant provides an interesting example. Although at first sight it seems to be yet another legal dispute over trademark infringement and passing off between two business organisations, a more detailed look shows that a much more important legal issue is raised namely, whether statutory ownership of a trademark should automatically determine entitlement to the commercial goodwill that has been built through years of collaborative enterprise.

The problem involves much more than just the hospitality sector. At present, companies tend to operate via franchise agreements, management contracts, licensing arrangements, strategic alliances and co-branding partnerships. In many such relationships the registered owner of the trademark is not the only one who contributes to the reputation of the brand. The operational expertise, the customer experience, the quality assurance, the marketing strategies and the ongoing investment made by various commercial partners together influence how consumers perceive the brand. However, when dispute arise, courts generally apply the traditional approach based on statutory ownership.

The case of ITC Limited & ANR. v. Adyar Gate Hotels Limited, 2025 LiveLaw (Del) 1671 thus opens the possibility to consider a significant but underexplored question in Indian trademark law, whether ownership of a trademark and commercial goodwill can always be treated as identical legal interests?

Registration Protects the Mark; Goodwill Protects the Business

Trademark law not just protect a name or a logo, a successful trademark represents years of consumer confidence, consistent quality and commercial reputation. It is this accumulated reputation that transforms an ordinary sign into a valuable commercial asset.

For a long time, common law has acknowledged the distinction between a trademark and goodwill. When you register a trademark you get control over it. Registration creates exclusive proprietary rights in the mark. Goodwill, however, is generated through continuous commercial activity. It is earned through consumer trust rather than granted by statutory registration. The distinction has frequently gone unnoticed since, in traditional business models, the person who owned the trademark was generally the same entity that carried on the business.

Modern commerce presents an entirely different picture

One company may own a luxury hotel, another may manage it and restaurants may be run under separate branding arrangements. International franchises depend on local entrepreneurs who are willing to invest large amounts of capital and follow quality standards set by the franchisor. Tech firms license their brands to independent operators in a variety of jurisdictions. Consumers dealing with such businesses seldom make a distinction between contractual arrangements. Their confidence is directed at the brand experience itself.

Thus, commercial goodwill often is the product of a joint effort rather than the exclusive contribution of the registered proprietor.

The Dakshin Dispute illustrates this commercial reality. The controversy surrounding DAKSHIN exemplifies this transformation. Over the decades, the restaurant grew to become one of the best-known destinations for South Indian cuisine in India. It did not gain its reputation overnight, nor did it do so simply by registering a trademark. A restaurant is defined by consistency in service standards, culinary excellence and operational management and customer satisfaction for many years.

The legal dispute which is involved here is trademark infringement, passing off and other intellectual property claims. But commercially it pointed to a much wider dilemma. If the restaurant's reputation was built with the collaborative efforts of multiple parties, should the determination of trademark ownership end with identifying the registered proprietor?

At present Indian trademark law provides only a partial answer. The Trade Marks Act, 1999 clearly identifies the registered proprietor as the holder of exclusive statutory rights. However, certainty of ownership does not necessarily resolve all disputes over acquired goodwill.

The Court decision in ITC Limited v. Adyar Gate Hotels Limited is indicative of the way modern trademark disputes are increasingly concerned with issues that go beyond statutory ownership and involve the commercial goodwill generated by collaborative business relationships.

Why Existing Trademark Doctrine Appears Inadequate

Courts have consistently recognised that commercial use occupies a central position within trademark law. The decisions in Power Control Appliances v. Sumeet Machines (P) Ltd., (1994) 2 SCC 448 Ramdev Food Products (P) Ltd. v. Arvindbhai Rambhai Patel (2006) 8 SCC 726 and Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd. (2018) 2 SCC 1 demonstrate the importance attributed to prior use, consumer association and market recognition in determining the protection accorded to a mark. These decisions collectively held that the value of a trademark is ultimately determined by market recognition and not registration alone.

Most of these precedents, however, arose from disputes between competing traders claiming independent ownership of a mark. They were never designed to resolve conflicts emerging from long-term commercial collaborations where both parties contributed to the development of the same brand.

This distinction is crucial.

Traditional trademark litigation asks relatively straightforward questions: Who adopted the mark first? Who owns the registration? Is there deceptive similarity? Is consumer confusion likely?

Collaborative business disputes demand additional enquiries. Who invested in developing the brand? Who maintained quality standards? Who shaped consumer experience? Who created the commercial reputation associated with the trademark?

Questions like this are rarely posed within the current analytical paradigm, but they are much more relevant across industries from hospitality to retail, education, healthcare and digital commerce. The absence of judicial precedents creates uncertainty, not because ownership is uncertain, but because the law provides no satisfactory approach for valuing commercially generated goodwill in collaborative relationships.

Learning from Other Common Law Systems

Interestingly, common law jurisdictions have taken a cautious approach without undermining the certainty of trademark registration. United Kingdom courts consider goodwill as something inseparable from commercial activity rather than a mere statutory entitlement. In the United States, the courts attach considerable importance to quality control in licensing and franchising arrangements, knowing that a commercial reputation depends upon maintaining consumer confidence. In the same manner, the Australian courts take a commercially pragmatic approach and consider the contractual relationships and trademark rights. None of these jurisdictions lessen the importance of registration. Rather, commercial evidence is used to adjudge how the trademark obtained its economic value.

Lessons from ITC Dakshin Dispute

The dispute between ITC and Dakshin raises the question of whether a distinction should be drawn more carefully between legal ownership of trademarks and the goodwill accruing from cooperative enterprises. The implementation of such a principle does not imply reducing the rights granted through trademark registration. Trademark registration guarantees the ownership of trademarks in issues of licensing, assignment, investment and commercial use of a trademark. We need to ascertain the way in which courts should deal with goodwill and applicable remedies in cases when the reputation attached to a trademark is built because of long-term cooperation with different parties.

Modern commercial buildings are moving further away from the conventional approach where one person is in charge of designing, managing and using a brand. As far as franchising, hotel management contracts, licensing contracts, technology partnerships and collaboration of institutions are concerned, each of the processes can be carried out by different people. In this process, the economic value of a trademark may be influenced by various competent entities even though they do not formally own a mark.

Understanding this fact does not mean giving ownership rights to all contractors in trade. Instead, it suggests that commercial contribution should be taken into consideration by the court when deciding on proper remedy because sometimes business agreement is not detailed enough about the future of reputation.

Towards a Contextual Judicial Framework

Courts dealing with cases with related to long-term collaborative relationships could adopt a contextual framework based on four considerations. First, the duration and nature of the commercial relationship should be considered. The contribution arising from a short-term licence may differ substantially from that arising from a decades-long management or other forms of relationships during which a consumer association was formed

Second, courts should consider the substantive contribution of the parties involved. The input should not be limited to financial investment. Other factors such as control, quality assurance, training, marketing or other aspects of service and customer relations are often essential to the generation of goodwill. Third, the importance of consumer perceptions cannot be underrated. The basic aim of trademark law is to avoid consumer confusion and safeguard the commercial reputation behind a trademark. Therefore, if certain consumers attributed the quality of a given business to the collective efforts of various companies, then such a commercial implication is bound to be considered when addressing the infringement issue.

Fourth, by virtue of the contractual allocation of intellectual property rights, the ownership of property rights should be primarily governed by the intentions of the contracting parties. However, in the case of the failure of the contract, the court should go beyond the mechanical analysis to understand the true nature of the transaction.

The solution lies in a multidimensional judicial approach that recognises commercial contribution without impinging on statutory trademark ownership. It would enable businesses to determine goodwill, brand usage, quality control and post-termination rights at the stage of contract formation. At the same time, it would provide the courts a set of principles for adjudicating disputes where business contracts fail to anticipate the complexities of long-term collaboration.

The ITC–Dakshin dispute therefore presents an opportunity for trademark jurisprudence to develop an advanced understanding of goodwill. The appropriate response is not to diminish the exclusive ownership provided by trademark registration, but to recognise that ownership of a mark and creation of its commercial value are two separate issues. Courts can protect the proprietary rights of registered trademark owners while determining appropriate remedies to the contracting parties by considering such factors as the duration of the relationship, commercial contributions, quality control and consumer perception. Comparative analysis from the United Kingdom, United States and Australia demonstrates that such an approach is compatible with effective trademark protection. As collaborative business models increasingly shape hospitality, franchising, technology, education and digital commerce, trademark law must adapt to the evolving commercial ecosystems through which brands acquire value. The future development of trademark jurisprudence may therefore lie not in choosing between registration and goodwill, but in reconciling proprietary rights with the commercial realities that give trademarks their enduring economic significance.

Author Dr. Parul Sinha is an Assistant Professor at School of Law, Bennett University, Greater Noida & Niraj Shrivastava is an Assistant Professor, School of Law, UPES, Dehradun. Views are personal.