Fortis Healthcare Trademark Auction: A Landmark Judgment Paving the Way for IP Asset Monetization in India

7th July, 2025 - 6:06 am Categories: Trademark 0 Comments

Changing role of IP assets in Indian Law was reflected in a landmark ruling wherein the Delhi High Court directed the sale of trademark belonging to Fortis Healthcare, with the purpose of enforcing an arbitral award. The aim was to recover leftover debt owed to Japanese pharma major Daiichi Sankyo by former Ranbaxy promoters Malvinder and Shivinder Mohan Singh. This ruling marks a paradigm shift in enforcing arbitral awards using trademarks as a worthy financial asset for the recovery of debt. The judgement in Daiichi Sankyo Company Limited v Malvinder Mohan Singh and Ors[1], dated 29 October 2024 not only ends a long-drawn litigation but also set an important precedent for the monetisation of intellectual property in India. The verdict is consistent with the National Intellectual Property Policy that highlights monetization of IP assets for promoting innovation and economic development.

Genesis of the Dispute

The feud has its origin in 2008, when Daiichi Sankyo acquired a majority share in Ranbaxy Laboratories from the Singh Brothers for 9,576.1 crore rupees. However, after taking over, Ranbaxy also encountered regulatory obstacles when the US Food and Drug Administration barred some of its drugs for manufacturing failure. Then came the incident in which Ranbaxy pleaded guilty to charges of fraud before an American court and had to shell out hefty penalties.

Daiichi accused the Singh brothers of having hidden vital information about regulatory failures and had initiated arbitration proceedings before the Singapore International Arbitration Centre (SIAC). In April 2016, the SIAC tribunal ruled in Favor of Daiichi, awarding 3,500 crore rupees (then around USD 413 million), which with interest has risen to 4,900 crore rupees. Notwithstanding the efforts of Daiichi Sankyo, the recovery of the awarded amount has been a long and painful process, with only a part of the amount achieved so far. In order to recover the remaining amount, Daiichi approached the auction of the Fortis Healthcare trademark belonging to RHC Healthcare Management Services, one of the judgement debtors.[2]

Legal Consequences of the Auction of Trademarks

The ruling of Delhi High Court calling for auction of Fortis Trademark gives rise to multiple legal questions under the Trademark Act, 1999. This landmark judgement recognizes the intrinsic monetary value of trademarks as well establishes their position as enforceable financial assets in terms of recovery of debt.

1. Trademark as Financial Assets

The infamous Trademark Act of 1999, defines Trademark as a mark which is capable of being represented graphically along with the ability of differentiating the goods of one person from that of the other. Though traditionally considered a source identifier and brand protection tool, this decision emphasizes that trademarks are also valuable financial assets. Section 18 of the Act recognizes that owners have the sole right over the use and assignment of trademarks, thereby making them transferable assets that could be used for money.

Justice Sachin Datta’s decision is in line with the view that trademarks, similar to physical property, are saleable and can be sold to settle debt. Objections asking for further valuations were turned down by the court, deciding that the auction process itself will determine the optimal value of the Fortis trademark, eliminating the need for independent valuation reports. By permitting the auction without requiring a detailed valuation, the court emphasized the self-regulating nature of public auctions in establishing the true market value of intangible assets.

Assignment and Transfer of Trademarks

The sale of the Fortis trademark involves passing it on to the highest buyer, thereby making it subject to the provisions under Section 37 and 38 of the Trademark Act. While Section 37 allows a registered trademark with or without business goodwill to pass on, section 38 allows an unregistered trademark to be passed on to the conditions in the Act. Here, since the Fortis trademark is a registered mark, its sale and subsequent transfer will be through the satisfaction of the procedural formalities under Section 37.

Enforcement of Intellectual Property as Debt Recovery Tools

Section 46 of the Civil Procedure Code provides for the attachment and sale of the judgement debtor’s property to enforce a decree. But the auctioning of trademarks is a fairly new concept in India. The Delhi High Court judgement marks the point that trademarks can now be used as collateral for the enforcement of arbitral awards.

In Canara Bank v NG Subbaraya Setty[3] the Supreme Court had held against assigning trademarks to banks for realization of debt in view of regulatory constraints. The current case deviates from this conservative policy by holding that trademarks can be used as enforceable assets in the fulfilment of financial liabilities.

Judicial Interpretation of Public Auctions and Valuation of a Trademark

The court declined to order extensive valuation of the Fortis trademark, holding that the Civil Procedure Code is not required to carry out complete valuation exercises before an asset can be auctioned. The court noted valuation methods tend to yield conflicting findings, and thereby render the process of auction an even better mode to determine the market value as a fact. The method aligns with international practices where intellectual property auctions are employed to realise intangible assets to recover maximum for creditors.[4]

Importance of the Judgement

• This ruling sanctions the use of intellectual property as collateral in debt recovery cases, a practice that has picked up worldwide momentum. In countries like the United States and the United Kingdom, IP assets are regularly used as security for loans and are put up for auction in the event of default. By auctioning the Fortis trademark, the Delhi High Court has established a forward-looking precedent that brings India at par with international best practices.
• The ruling supports the goals of the National Intellectual Property Rights Policy (2016) to commercialize IP assets to drive economic growth.[5]By acknowledging trademarks as valuable commercial assets, the court encourages a business-focused approach towards managing intellectual property.
• The ruling underscores the need to have solid IP portfolios and prioritize considering their trademarks as financial assets to be used to drive future growth. The decision will likely induce more investment in IP protection and enforcement across India.

Key Takeaways and Implications for Stakeholders

1. For Creditor and Investors

Creditors may consider IP assets as a potential option for securing and recovering debt. This is one of the main areas where stakeholders will be impacted. The ruling establishes a precedent that public auctions can be an effective means to establish market value for IP assets.

2. For IP Owners and Businesses

Companies should take active steps in managing and protecting their IP assets to unlock their financial potential. Appreciation of the value of trademarks as collateral can open new doors to accessing funding.[6] The ruling requests review of current IP policies for enabling more monetization of IP. Lawyers will need to factor in this verdict while counselling clients on enforcement and management strategies of IP assets.

The Delhi High Court’s move to auction the Fortis Healthcare trademark is a pathbreaking measure towards monetization of intellectual property for recovering debt. By treating trademarks as enforceable financial assets, the court has brought India’s legal system in tandem with international practices, opening the doors for greater commercialization of IP assets. This judgement not only brings justice to Daiichi Sankyo but also constitutes a turning point in the Indian legal system whereby intellectual property can be an effective monetary tool in settling commercial disputes. With India moving towards becoming an international IP hub, this judgement sets a forward-looking precedent that will guide future legal interpretations and IP asset management strategies.

Author: Vishakha Kaushik, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

[1] Daiichi Sankyo Company Limited v. Malvinder Mohan Singh, 2018 SCC OnLine Del 6869

[2] https://blog.mikelegal.com/trademark/auction-of-fortis-trademark/

[3] Canara Bank v NG Subbaraya Setty 2018 SCC OnLine SC 1975.

[4] https://ksandk.com/newsletter/auction-for-fortis-says-delhi-high-court/

[5] https://lawchakra.in/high-court/delhi-hc-auction-fortis-trademark-rs-3500-crore/?amp=1

[6] https://indianlawwatch.com/practice/delhi-high-court-directs-to-auction-fortis-trademark-in-the-daiichi-ranbaxy-dispute/