A healthy disagreement
Ben Evans reviews a decision regarding overlapping scope. [2018] EWCA Civ 1586, Holland and Barrett International Ltd & Anor v General Nutrition Investment Company, Court of Appeal, 4th July 2018.
[2018] EWCA Civ 1586, Holland and Barrett International Ltd & Anor v General Nutrition Investment Company, Court of Appeal, 4th July 2018
Key points
- Where a licence is validly terminated for non-use in relation to some marks within a licensed set, the licensor does not acquire a right to carry out any act that would amount to a breach of exclusivity of the licences that remain in force
- Where there is a licence for the exclusive use of particular trade marks, the licensee’s rights against the licensor are contractual rather than statutory because, to be an infringing act, use of a mark must be without the consent of the owner of the mark, ie the licensor
This case concerned a 6th March 2003 exclusive UK trade mark licence agreement pursuant to which the licensor (the predecessor of GNIC) gave the licensee, Holland and Barrett, an exclusive right to use seven registered trade marks.
Of those marks, only two were used by the licensee. The other five were not used for a period of five years before the trial. Sections 46(1)(a) and (2) of the Trade Marks Act 1994 (TMA), Article 58(1)(a) of Council Regulation 2017/1001 and clause 5.6 of the licence all provided for revocation of a licence for non-use.
Warren J had agreed with GNIC that on termination of the licence of the five marks for non-use, GNIC was entitled to use those marks freely, and he held that it was not necessarily implicit in the exclusive licence of one mark that GNIC would not make use of any of the other marks (all of which were similar, incorporating the letters GNC), as the other marks were already subject to their own exclusive licences. The Court of Appeal held that this was wrong because it treated marks with overlapping scope as if they were distinct and ignored a key express term of the contract, the conventional exclusivity clause, through which the licensor had agreed not to use confusingly similar marks.
Rights clarified
It is not controversial that, while a licence is in force, the licensor is not free to use any confusingly similar mark in the territory on relevant products that would be in breach of the exclusivity clause in the licence. The Court of Appeal clarified that the licensee’s rights against the licensor were only contractual in nature – an act committed by the licensor was not an infringing act under the Trade Marks Act 1994 because it had the consent of the owner of the trade mark, the licensor itself.
The effect of this decision is that where there is a conventional exclusive licence (ie where the licensor agrees not to use marks that are confusingly similar) in place for a number of trade marks of overlapping scope, if the licence is validly terminated for non-use in relation to some of those marks, the licensor does not acquire a right to carry out any act in relation to the marks with terminated licences that would amount to a breach of exclusivity of the licences that remain in force.
Corollary
The corollary is that the licensor is free to use the marks in respect of which the licence has been revoked, notwithstanding the remaining licence over other marks, if it can do so in a manner that does not breach the terms of the remaining licence. In practice, this would mean, for example, use in a different territory and/or for different products.
Ben Evans is a Chartered Trade Mark Attorney and Senior Associate at Blake Morgan LLP
Xiao Hui Eng, a Solicitor at Blake Morgan LLP, assisted with this article.