Court of Appeal rules on trade mark licence termination rights

In the case of Zaha Hadid Ltd v The Zaha Hadid Foundation [2026], the Court of Appeal overturned a High Court decision to find that a trade mark licence expressed to continue “indefinitely unless terminated earlier in accordance with this termination clause” was terminable on reasonable notice by either party. The court came to this conclusion despite the clause only giving an express termination right to the licensor (which included a right to terminate for convenience) but not the licensee.

The court followed the rationale in the case of Winter Garden Theatre (London) Ltd v Millennium Productions Ltd [1948] to establish a two-phase method.

1. Firstly, as a matter of interpretation, did the parties mean for the licence to be perpetual (in all or defined circumstances, for instance unless terminated by one party using an express one-sided termination right) or indefinitely?
2. Secondly, if indefinite, the parties need to have the power to bring it to an end (namely to terminate on reasonable notice), either as a matter of interpretation or as a “kind of implied term”.

In this case, both parties had a right to terminate on reasonable notice because:

• The term “indefinitely” in the termination clause did not equate to “perpetually.” A perpetual arrangement would imply that the licence was intended to continue forever unless ended by the owner. While the licence was intended to govern a long-term relationship, such an interpretation would not be commercially sensible for either party.
• A provision allowing either party to terminate on reasonable notice did not contradict the owner’s specific termination rights, including its express entitlement to terminate on three months’ notice. In certain cases, the latter could permit the owner to give less notice than would be considered reasonable, whereas in other situations, what constitutes reasonable notice might be shorter than three months.

Traditionally, the threshold for establishing a right to terminate on reasonable notice (whether by interpretation or implied term) is hardly ever satisfied where a contract has a fixed term or includes express termination provisions. The court’s indication that “the only way” to give effect to an intention to create an indefinite contract is to imply a right for either party to terminate on reasonable notice is therefore particularly noteworthy, especially in light of its view that commercial agreements are rarely intended to be irrevocable. This ruling may suggest a greater judicial readiness to assist a party bound by one-sided termination rights, notwithstanding the courts’ usual reluctance to intervene in an unfavourable bargain.

That said, leaving the issue of termination rights in any way ambiguous is never a good idea. If it turns out that the contract is not as good a deal as expected, termination should work as an effective option.

Even when the rights are drafted in very clear terms, questions can arise in practice when a party seeks to terminate. Therefore, it is always best to check and double-check the termination provisions before signing a contract

If you have any questions about negotiating termination provisions in your contracts or if would like an opinion on exiting (or renegotiating) a contract you have already entered into, please get in touch with Roanna Landor at roanna.landor@fsp-law.com or please contact our Commercial, IP & Technology Team.