Effects of Company strike off on trademark
Introduction
When a company decides to cease operations permanently, one common route is to apply for strike-off under the Companies Act, 2013. While this may seem like the final step in closing down a business, many company owners and stakeholders overlook a critical asset that may continue to hold value long after the business is gone — the trademark.
So, what happens to a trademark when a company is struck off from the register of companies?
This article explores the legal implications, status and treatment of the effects of Company strike off on trademark.
Understanding Strike-Off
Under Section 248 of the Companies Act, 2013, a company can be struck off:
- Voluntarily, by filing Form STK-2, or
- Suo moto by the Registrar, for reasons like non-filing of returns or not carrying on any business for two years.
Once a company is struck off, it ceases to exist as a legal entity. Its name is removed from the Register of Companies maintained by the Ministry of Corporate Affairs (MCA).
Trademark Ownership & Registration
A trademark is an intellectual property (IP) asset that provides exclusive rights over brand names, logos, slogans, etc. In India, trademarks are governed by the Trade Marks Act, 1999.
If a trademark is registered in the name of a company, then the company is considered the legal owner of that trademark.
Effects of Company strike off on trademark
Here’s what happens to the trademark post strike-off:
- Trademark Still Exists on Register
A company’s trademark does not automatically get cancelled or removed from the Register of Trademarks when the company is struck off. It remains valid until:
- The renewal period expires and it is not renewed,
- It is voluntarily surrendered by the trademark owner, or
- It is removed on application by a third party (e.g., for non-use under Section 47).
However, the entity that holds the trademark no longer exists legally, which complicates its ownership.
- Trademark Becomes Legally Inoperative
While the trademark may continue to exist on paper, it cannot be:
- Enforced in a court of law,
- Transferred or licensed, or
- Assigned to another party
…unless the company is restored or a legal successor is appointed through appropriate legal means.
Since the trademark was registered in the name of a company that no longer exists, there is no legal person left to claim or act upon it.
- No New Assignments or Renewals
Only the registered proprietor of a trademark or its legal successor can file:
- Assignment deeds
- Renewal applications
- Licensing agreements
If the company is struck off, it cannot perform any of these actions, which puts the trademark at risk of eventual expiration or cancellation.
- Risk of Removal Due to Non-Use
According to Section 47 of the Trade Marks Act, 1999, a trademark may be removed from the register if:
- It is not used for a continuous period of five years, and
- There is no bona fide intent to use it in the future
Since the company is struck off and no one is actively using the trademark, a third party can file for its cancellation for non-use.
- Restoration of Company = Revival of Trademark Rights
If someone (like a creditor, shareholder or director) applies to the National Company Law Tribunal (NCLT) and successfully restores the company, then:
- The company comes back into existence legally, and
- All assets, including the trademark, are restored back to the company
This is a possible way to reclaim or manage the trademark legally, but it involves significant time and cost.
Best Practices Before Strike-Off
Before proceeding with company strike-off, it is advisable to:
- Assign the Trademark
Transfer the trademark to:
- Another existing company
- A business partner
- An individual (e.g., promoter or director)
Use Form TM-P to file an assignment request with the Trademark Registry.
- License the Trademark
If you want the brand to be used by others, consider executing a Trademark License Agreement before closing the company.
- Transfer to Holding Company or New Entity
If you’re shifting operations to a new business or group company, ensure the trademark is assigned before the strike-off.
Case Reference: Restoration of Company for Trademark Rights
Indian courts have held in various cases that intellectual property survives the strike-off of a company but cannot be claimed unless the company is restored.
In Bhagwati Developers Pvt. Ltd. v. Registrar of Companies, the Delhi High Court ruled that even after a company is struck off, its properties, including IP rights, remain vested in the company and are not automatically transferred to shareholders or promoters.
Conclusion
While company strike-off may close your legal business entity, your trademark remains in existence unless it is removed for non-renewal or non-use. However, it becomes inaccessible and unusable in the absence of a legal owner.
To avoid disputes, loss of brand value or infringement risks, it is essential to handle trademark transfer or assignment properly before applying for strike-off.
If you’re unsure about the correct legal steps, consult an IP expert or trademark consultant.
