Government sources, however, said that there was no move to review the present policy, which does not permit payment of fee only for use of trademarks. The industry, on the other hand, believes that with the entry of multinationals into the country, especially in sectors like automobiles, telecom and power, many Indian companies are entering into tie-ups and joint ventures with international vendors and suppliers of components and equipment to set up manufacturing facilities in the country.

The latest case of an Indianjoint-venture company being denied permission for fee payment for using the trademark is Rane TRW Steering Systems Ltd, a joint venture between the Chennai-based Rane group and international auto component major TRW.

The company wanted to manufacture and market products under the brand name of TRW, for which, it proposed to enter into a trademark agreement with TRW Inc. The seven-year agreement involved a fee payment of 1 per cent of the sales value excluding sale in the replacement market. A similar amount of fee was also proposed to be paid to Rane (Madras) Ltd, which holds 50 per cent equity in the joint venture. The company's proposal was first rejected last year. TRW Inc made a representation to the Foreign Investment Promotion Board early this year seeking reconsideration of Rane TRW Steering Systems' proposal. The board, however, rejected the proposal for the second time last month.

The company had stated in its fresh representation that the Trade and Merchandise Marks Act contains specificprovisions for use of a trademark by a party other than its original proprietor under certain terms and conditions. It is inherent in the rights of a licensor/proprietor of a trademark to claim a royalty or consideration from the user for the use of the trademark. In other words, a licensee has to pay some consideration. In return, it is permitted to derive benefits from the goodwill and reputation which the proprietor's trademark attracts.

The firm had submitted that the fee payment could not be considered as exclusively for use of the trademarks as a main ingredient of a valid licence in exercise of quality control by the trademark owner over the goods of the trademark user and quality control itself is a function of technology.