Trade mark licences – look out for pitfalls
A recent case which went to the Court of Appeal, Holland & Barrett International Ltd & Anor v General Nutrition Investment Company , is a useful reminder of the care which needs to be taken when licensing trade marks.
The key facts in that case were as follows:
- The original trade mark owner granted an exclusive licence to Holland & Barrett (H&B) to use 5 of its trade marks in the UK.
- As part of a group reorganisation, the original owner transferred its rights in the trade marks to another group company (GNIC) but H&B was not given notice of the assignment.
- The agreement allowed the owner to terminate the licence if H&B failed to use the trade marks for a period of 5 years. GNIC tried to terminate H&B’s licence in relation to 4 of the 5 trade marks on the basis that H&B wasn’t using them.
The Court of Appeal came to the following conclusions:
- Because H&B hadn’t been given notice of the assignment from the original owner to GNIC, GNIC’s notice of termination was invalid. It is therefore important to remember that if a trade mark is assigned, prompt and valid notice of the assignment should be given to any licensee.
- It agreed with H&B’s argument that if GNIC was able to terminate the licence in relation to the 4 trade marks H&B wasn’t using (and use them itself), this would potentially compromise H&B’s rights in relation to the 5th trade mark which it was still using on an exclusive basis.
This case illustrates some of the problems which can arise if trade marks aren’t managed in a meticulous manner. Trade mark owners need to handle assignments efficiently and restrictions in trade mark licences should be set out clearly, perhaps in conjunction with a brand guidelines document.