“Old Quad carried on business as a provider of administrative, actuarial and related services, primarily for defined-benefit pension schemes. It carried on its business in the name Quantum Advisory, or ‘QA’ for short. In March 2000 it procured the registration of the domain name quantumadvisory.co.uk, and shortly afterwards it established a website at the domain, which it used thereafter for the purposes of its business. It also adopted the style for email addresses of name@quantumadvisory.co.uk. Its letterhead showed the company name, with a QA logo, as well as the website and email addresses.”
“In summary, the business of the legacy companies would be continued by a new entity, which would seek to develop and expand it. However, the goodwill of the existing legacy business would be ringfenced: the clients of the legacy companies (‘the legacy clients’) would remain the clients of the legacy companies (or their assigns), but they would be serviced on behalf of the legacy companies by the new entity, which would then receive a fee representing the cost to it of providing the services to the legacy clients. Accordingly, the new entity would not receive any profit element for servicing the legacy clients. Instead, the benefit to the new entity was that it would receive a turnkey business: it would take over all of the staff of the legacy companies and have the full use of their premises and equipment and the Quantum brand, as well as having an established client base on which to build new business. In this way it would be enabled to develop its own business without the usual costs and risks associated with starting a business from scratch.”
“The style of email addresses and the website have continued to be used by both [Quad and LLP]. LLP adopted a common letterhead, which displayed the Mark and the corporate names of both Quad and LLP. Similarly, all invoices and emails sent by LLP were in common form for both legacy business and LLP business. In 2009 the branding was refreshed, but the letterhead continued to show the Mark, with a modified logo, and the website and email addresses, and the bottom of the page showed both corporate names. There was a further rebranding in 2016, with a new logo, but the information on the letters and invoices remained materially unchanged. (On each occasion the format of the emails was also modified, to similar effect.) All communications sent out by LLP continued to show both corporate names until about May 2018, when the name of Quad began to be omitted from communications with non-legacy clients. Both entities have at all times continued to use the single website, which contains testimonials from both LLP clients and legacy clients and contains a statement that LLP ‘trading as Quantum Advisory’ ‘processes business on behalf of Quantum Advisory Ltd’.”
“We note that, without our consent, you use the letterhead of the LLP which contains our logo as well as other registered Trade Marks. The LLP is the owner of four registered marks (UK00003320702, UK00003320706, UK00003320709 and UK00003350849). Please refrain from using the LLP’s Trade Marks on your correspondence.”
“We refer to our letter dated9 July 2020 , which concerned your use of the LLP’s letterhead. As made clear in our previous letter, the LLP’s logo and other parts of the letterhead are protected by registered trade marks. The LLP has not provided its consent for you to use its trade marks (contained in the letterhead or otherwise), nor will consent be provided. To the contrary, our letter of9 July 2020 specifically asked you to refrain from using the LLP’s trade marks on your correspondence. Given that your letters of24 July 2020 and6 August 2020 were issued on the LLP’s letterhead, you have evidently refused to comply with that request. Please confirm within 7 days of the date of this letter that you will stop using the LLP’s trade marks, be that on your correspondence or otherwise. If you fail to provide that confirmation and/ or continue to unlawfully make use of the LLP’s trade mark(s), the LLP will have no option other than to take further action against you. Should further action be necessary, the LLP will refer to this correspondence (and our letter dated9 July 2020 ) to show that the LLP has provided you with an opportunity to resolve this matter amicably.”
“1. What is the nature of the relationship between the parties; in particular does LLP owe Quad fiduciary duties whether as its agent or representative or otherwise? 2. On what basis was LLP permitted to use the Mark? 3. Does LLP no longer require any permission from Quad to use the Mark? 4. Who is entitled to the goodwill in the name QUANTUM ADVISORY? 5. Who is entitled in equity to the benefit of the registered trade marks? 6. Is Quad entitled to be substituted as proprietor of the registered trade marks undersection 10B of the Trade Marks Act 1994 , and in particular (a) is LLP Quad’s agent or representative for the purposes of section 10B and (b), if it is, can LLP justify registering the registered trade marks in its own name? 7. What, if any, relief is Quad entitled to?”
“124. LLP is a fiduciary to Quad in respect of the conduct of the Quad’s business. 125. LLP is entitled by licence to the use of the Mark only during the subsistence of the Services Agreement. Upon termination of the Services Agreement LLP will no longer be licensed to use the Mark and will be liable to a claim for passing off if it materially misrepresents its business as being associated with Quad and if the other requirements of the tort are met. 126. Pursuant to section 10B of the 1994 Act, Quad is entitled to rectification of the register so as to substitute its name for that of LLP as proprietor of the Device Trade Mark, the Device Series Trade Mark and the Word Trade Mark. 127. Quad is not entitled to relief under section 10B in respect of the Q Device Trade Mark. 128. Quad is not entitled to an order for rectification, assignment or transfer in respect of any of the registered trade marks in equity.”
“Quad has resolved to appoint the LLP to carry out certain responsibilities for and on behalf of Quad in relation to its business, and the LLP agrees to carry out such responsibilities (the Services, as defined below) in consideration for the payment by Quad of the Administration Fees and any other payments due to Quad pursuant to this Agreement.”
“7.3 The LLP shall provide the Services in a professional, competent, diligent and efficient fashion in accordance with Best Industry Practice and shall devote such time and efforts as it deems reasonably necessary for the efficient operation of Quad’s business. 7.4 The LLP shall in providing the Services comply with any statutory, regulatory or professional requirements as well as any other reasonable requirements made known to it from time to time by Quad which shall include (but not be limited to) the implementation of any actions arising from any reviews of service standards by Quad with any Clients or Introducers. The LLP shall consider in good faith any recommendations made by Quad in the LLP’s performance of the Services and the LLP shall be deemed to accept any such recommendation unless the LLP promptly notifies Quad in writing of the LLP’s rejection of any such recommendation and provides reasonably detailed reasons for such rejection. 7.5 Without prejudice to the generality of the LLP’s obligations contained in this Agreement, the Services shall be performed to a standard no less favourable than that provided by the LLP from time to time for other clients in respect of services the same as or similar to the Services.”
“1) It is to be noted at the outset that the fiduciary relationship alleged by Quad relates only to Quad’s business. It is not suggested that LLP is a fiduciary in respect of its own business. 2) The critical point, in my view, is that the effect of the Services Agreement is, during its subsistence, to entrust the entire operation of Quad’s business — and the entire ability to carry it on — to LLP and to grant to LLP all the authority and powers necessary to enable it to carry on that business. By reason of the arrangement embodied in the Services Agreement, Quad, like Old Quad before it, has had no staff, and all of the assets with which it could carry on its business have been made available to LLP; and every aspect of its operations has been carried on by LLP on its behalf and will be so carried on until the termination or expiration of the Services Agreement. In my judgment, [counsel for Quad] are correct to submit that this relationship necessarily entails that, in respect of the legacy business, LLP owes fiduciary duties to Quad. 3) (In respect of the legacy business, it probably does not much matter whether the definition of ‘Assets’ is wide enough to include Quad’s goodwill. The parties seemed agreed at trial that it did not extend to goodwill. My view, as a matter of construction and therefore of law, is to the contrary: Quad’s goodwill was an asset of Quad and must have been used ‘for any reason relating to the business of Quad’ prior to the date of the Services Agreement; it therefore falls within the definition. It is a different question whether or to what extent the goodwill would be useful to LLP in carrying on the legacy business. However, LLP was certainly capable of damaging Quad’s goodwill, as was recognised in clause 8.4.) 4) I attach no importance to the fact that under the Services Agreement the ‘Services’ are said to be provided to Quad rather than to third parties. It is, again, the substance that matters; the point taken by LLP in this regard seems to me to be semantic. The nature of the Services provided to Quad was the carrying on of Quad’s business with third parties. The Services Agreement meant that, in its relations with third parties, Quad had no hands or eyes or brains other than those of LLP. This is well indicated by the fact that clause 2.1, which states that the Services are to be provided ‘to Quad’, provides that ‘Quad confers upon and grants to the LLP such power and authority as is necessary or desirable for providing the Services.’ The definition of ‘Services’, and the definition of ‘Assets’, which incorporates it, shows that the work comprised in the Services is work provided to the legacy clients. 5) Similarly, the fact that the Services Agreement does not state that the relationship between the parties was one of agency, or fiduciary in any other respect, is in my view immaterial. What matters is the substance of the relationship, not the labels attached to it. 6) Again, I do not consider that the proviso in clause 8.1.1 of the Services Agreement militates strongly against the existence of an agency relationship in particular or a fiduciary relationship in general. Its effect is that LLP does not, by reason of the Services Agreement alone, have authority to make contracts on behalf of Quad. However, … such authority is not a prerequisite of agency. LLP certainly does have the power to affect Quad’s legal relations with third parties, because it performs all of Quad’s outward-facing functions. The Recital to the Services Agreement captures this by recording LLP’s acceptance of its appointment ‘to carry out certain responsibilities for and on behalf of Quad in relation to its business … (the Services …)’. The very real nature of LLP’s power to affect Quad’s legal relations with third parties is also reflected in clause 8.3, which enables Quad to limit LLP’s ‘duties, powers, authorities and discretions’ exercisable under the Services Agreement; though subject to that provision and to its obligations under clause 7 it was entirely within LLP’s discretion how it exercised its powers and authority under the Services Agreement. 7) On behalf of LLP it is submitted that this power is simply an incidence of sub-contracting by Quad to LLP. Such an analysis fails to do justice to the nature of the arrangement embodied in the Services Agreement, whereby during the subsistence of the Services Agreement the entire operations of an existing business, together with the means by which that business was carried on, were handed over to LLP. 8) The ‘entire agreement’ provision in clause 17 serves only to define the contractual arrangements. It does not preclude the existence of a fiduciary relationship arising out of the parties’ contract.”
“a person will be in a fiduciary relationship with another when and in so far as that person has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that other’s interest to the exclusion of his or her own or a third party’s interest”
“Breach of fiduciary obligation … connotes disloyalty or infidelity. Mere incompetence is not enough. A servant who loyally does his incompetent best for his master is not unfaithful and is not guilty of a breach of fiduciary duty.”
“That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.”
“Accordingly, I conclude that LLP is licensed to use the Mark during the continuance of the association with Quad. It is the owner of the business that, with the use of the Mark among other things, it builds up during the continuance of that association. However, upon termination of the Services Agreement LLP will no longer be licensed to use the Mark and will be liable to a claim for passing off if it materially misrepresents its business as being associated with Quad and if the other requirements of the tort are met.”
“make available the Assets to the LLP in order to enable it to perform the Services PROVIDED HOWEVER THAT such consent to use the Assets shall be terminated immediately upon the termination or expiration of this Agreement”
“If the commercial purpose of an agreement is to license the use of a distinctive name or mark in respect of which the licensor has (or is agreed to have) goodwill, to a licensee who has (or is agreed to have) no such goodwill, and in circumstances where the licensee’s use would otherwise be actionable as passing-off, then in the absence of agreement to the contrary or other supervening factors, the goodwill in the business so carried on by the licensee under the licensed name or mark will accrue to the licensor rather than the licensee. The licence may be express or implied, provided always that it does not offend against the prohibition on transactions in gross. The licensee acquires no interest in the licensed name or mark and must cease using it on termination of the licence. Examples are to be found in Coles v Need [[1934] AC 82 ], Roberts v Davis [(1935) 53 RPC 79 ], Manus v Fullwood & Bland [(1949) 66 RPC 71 ], Bostitch [[1963] RPC 183 and[1964] RPC 173 ], and Dawnay Day v Cantor Fitzgerald [[2000] RPC 669 ]. It is irrelevant whether the goodwill in the licensed business would otherwise have accrued to the licensee, the licensor, or both. It is the parties’ contractual agreement, and not some extrinsic legal fiction or equitable doctrine, which operates to vest the goodwill in the licensor, unless otherwise agreed, because no other outcome is consistent with the ordinary licensor-licensee relationship.”
“The permission to use the name and mark QUANTUM ADVISORY, the Domain Name and email addresses using the Email Style in relation to the services provided by LLP pursuant to the Services Agreement would be terminated immediately upon the termination or expiration of the Services Agreement pursuant to clause 9.2 of the Services Agreement.”
“In my judgment, the correct conclusion is that the licence granted to LLP to use the Mark was coterminous with the Services Agreement. I reach this conclusion primarily on the basis of a finding of fact that this was the express basis on which the use of the Mark was agreed in 2007, however vague and imperfect may be the recollections of what was discussed. However, even if nothing had been said about the matter, I should reach the same conclusion as a matter of the reasonable interpretation of the licence.”
“With my LLP hat on, I think we have a bit of a problem here now. Quantum Advisory Limited is not happy to give the LLP the name ‘Quantum Advisory’ for a mixture of emotional and financial reasons. I suggest that we may want to consider naming the LLP something completely different from ‘Quantum’, as should Quantum move from the LLP in the future there may well be legal implications for the name and its usage, whilst the LLP will have run up a number of years’ worth of marketing that name for it to fall as a windfall benefit to the Pascal [i.e. Quad] shareholders and then have to change their name. This would be clearly unfair, so we may want to let Quantum Advisory Limited keep the name and so be able to use that brand n years from now should they separate from the LLP. This would have some administrative complexities, but does allow us to start anew and prevent freeloading at the expense of the LLP.”
“Mr Reid-Jones’ concerns about the future loss of LLP’s right to trade as Quantum Advisory (and, indeed, the loss of its entire trading infrastructure) were, as I find, addressed by reference to the term, or duration, of the Services Agreement.”
“I recall an informal meeting between myself, Andrew [Reid-Jones] (and I believe Dave [Deidun]), at which we discussed the problems (as well as diversion) of renegotiating terms in 10 years’ time … and the disruption and damage that would ensue to the LLP if it lost the business and brand. There were also concerns that the potential loss of business in year 10 would make it very difficult to plan in advance for future facilities and staff planning. I do not believe that we came to any conclusions at that meeting other than that it needed to be addressed. Following that meeting, Andrew asked to meet with Martin [Coombes] to review progress on the services agreement. … The extension of the term to 99 years was proposed by Martin as a way of dealing with the LLP’s issues and this was agreed by Andrew on behalf of the LLP at the meeting referred to above on15 August 2007 . I see from Martin’s email to the lawyers following that meeting that the extension of the Initial Term would reduce the profile of the exit/transition provisions. It killed off the LLP’s concern about losing the contract other than by its fault.”
“rejected this challenge on three grounds: first, there was the so-called ‘Pipeline’ business, relating to contracts with those who were not legacy clients when the Services Agreement was made but with whom Quad had had existing contacts; second, there were new clients within the legacy business, relating to new pension schemes of existing employers or new companies within the same groups as existing clients; third, any constraints on seeking entirely new business would fall away when the Services Agreement was terminated”
“(1) Subsection (2) applies where a trade mark is registered in the name of an agent or representative of a person (‘P’) who is the proprietor of the trade mark, without P’s consent. (2) Unless the agent or representative justifies the action mentioned in subsection (1), P may do either or both of the following— (a) prevent the use of the trade mark by the agent or representative (notwithstanding the rights conferred by this Act in relation to a registered trade mark); (b) apply for the rectification of the register so as to substitute P's name as the proprietor of the registered trade mark.”
“1. Where a trade mark is registered in the name of the agent or representative of a person who is the proprietor of that trade mark, without the proprietor’s consent, the latter shall be entitled to do either or both of the following: (a) oppose the use of the trade mark by his agent or representative; (b) demand the assignment of the trade mark in his favour. 2. Paragraph 1 shall not apply where the agent or representative justifies his action.”
“(1) If the agent or representative of the person who is the proprietor of a mark in one of the countries of the Union applies, without such proprietor’s authorization, for the registration of the mark in his own name, in one or more countries of the Union, the proprietor shall be entitled to oppose the registration applied for or demand its cancellation or, if the law of the country so allows, the assignment in his favour of the said registration, unless such agent or representative justifies his action. (2) The proprietor of the mark shall, subject to the provisions of paragraph (1), above, be entitled to oppose the use of his mark by his agent or representative if he has not authorized such use. (3) Domestic legislation may provide an equitable time limit within which the proprietor of a mark must exercise the rights provided for in this Article.”
“the objective pursued by [Article 8(3) of the CTMR] is to prevent the misuse of the earlier mark by the agent or representative of the proprietor of that mark, as those persons may exploit the knowledge and experience acquired during their business relationship with that proprietor and may therefore improperly benefit from the effort and investment which the proprietor has made.”
“All that they have in common is the letter ‘Q’.”
“Accordingly, Quad’s case under section 10B in respect of the Q Device Trade Mark fails. Such a case would have had to assert not that the Hero Q was similar to or associated with the Mark but that it was itself identical to a mark of which Quad was the proprietor. No such assertion was made … in the particulars of claim (cf. paragraphs 3, 6 and 16) and that is not the basis on which the case was put before me.”
“In my judgment, that is not an adequate justification under section 10B. It still amounts to reliance on the self-interest of the agent in preference to that of the principal. Mr Hill’s submission mischaracterises the position as between the parties, which I have explained at sufficient length. Quad, not LLP, was the proprietor of the Mark and had a goodwill associated with it. It remained the proprietor of the Mark and continued to use it. LLP had only a permissive right by licence to use the Mark during the subsistence of the relationship between the parties. It had its own goodwill in its own business, but it never acquired more than a licence to use the Mark. When the relationship ends, it will have to use a different trading name or risk laying itself open to an action for passing off. While the relationship subsists, although it may use the Mark for its own business, it is a fiduciary of Quad and is not permitted to prefer its own interests to those of Quad or to act in a manner that compromises Quad’s interests. In seeking to register trade marks that incorporate the Mark, it has clearly done just that.”
“The basic argument for equitable relief may, as I understand it, be summarised as follows. The effect of sections 2, 22, 24 and 26 of the 1994 Act is that nothing in the statutory scheme precludes such relief on general equitable grounds. This is confirmed by the view expressed obiter by Geoffrey Hobbs QC as the Appointed Person in Ennis v Lovell(The Swinging Blue Jeans Trade Mark)[2014] RPC 32 , at paragraph 22(4). It is also supported by Ball v The Eden Project Ltd [2001] ETMR 87, where Laddie J ordered the registered proprietor to assign the mark to the company of which he was a director, on the grounds that in registering the mark in his own name he had acted in breach of fiduciary duty to the company. The entitlement to such relief on the facts of this case follows from my findings as to the existence of a fiduciary relationship, as to the nature and extent of the permission to LLP to use the Mark, and as to the lack of justification for LLP’s registration of the trade marks. By registering, in its own name and for its own benefit, the Mark and the designs that were a refreshing of the brand and parasitic on the use of the Mark, LLP was in breach of its fiduciary duty to Quad.”
“It does this by enabling them to claim the registered trade marks if they are identical or sufficiently similar to their own previous marks. Quad’s contention in this case would add further grounds for achieving the same result in circumstances where the criterion of identity or similarity was not satisfied. That would conflict with the Directive’s purpose to harmonise the laws and to ensure that “the conditions for obtaining and continuing to hold a registered trade mark be, in general, identical in all Member States.”
“the term ‘proprietor’ is not defined, but should pose no particular problems, referring to the person or entity who ‘owns’ the mark. This ultimately is a question for each national law to determine, but there is no reason to suppose that it is confined to persons or entities that are registered owners or proprietors of the mark. However, where the proprietor is not registered as the owner of the mark in another country, it will be a question for the national law of the country of the agent or representative to determine whether this person is entitled to claim the status of ‘proprietor’.”
“Subject to the provisions of this Act, equities (in Scotland rights) in respect of a registered trade mark may be enforced in like manner to as in respect of other personal or moveable property.”
“[N]othing in the legislation prevents the bringing of a claim on general equitable principles for a declaration to the effect that a particular trade mark registration is, by reason of the manner and the circumstances in which it was acquired, held by the proprietor of the registration on trust for the claimant.”
“34. It follows that actions for recovery of ownership of an EU trade mark registered in the name of an agent or representative of the proprietor of that trade mark without that proprietor’s authorisation are governed exclusively by [the CTMR]. 35. On the other hand, Article 18 of that regulation does not govern actions for recovery of ownership of an EU trade mark in cases other than that of a trade mark registered in the name of an agent or representative of the proprietor of that trade mark without that proprietor’s authorisation. 36. Consequently, as provided for in Article 16 of [the CTMR], an EU trade mark as an object of property must, in cases falling outside that envisaged in Article 18 of that regulation, be dealt with as a national trade mark … 38. In the light of all the foregoing considerations, the answer to the question raised is that Article 16 and 18 of [the CTMR] must be interpreted as not precluding the application to an EU trade mark of a national provision, such as that in issue in the main proceedings, under which a person harmed[,] by the trade mark registration which was applied for in fraud of his rights or in breach of a legal or contractual obligation, is entitled to claim ownership of that trade mark, provided that the situation concerned does not fall within those covered by Article 18 of that regulation.”
“Quad’s legitimate interests, so far as marks are concerned, extend to the registration of marks to which it is entitled (that is, the other three registered marks) and matters falling within the law of passing off. The registration of the Q Device Trade Mark is not such a matter”
“4) If I thought that equitable relief were available in principle, I would not grant it in respect of the Q Device Trade Mark, though I would grant it in respect of the other registered trade marks. In essence, this is because I should consider the conduct giving rise to relief under section 10B to be in breach of fiduciary duty, whereas the conduct not falling within section 10B is not such a breach of duty. There is no reason of principle why LLP should not act to its own advantage and in its own interests. It is simply prevented from doing so where its advantage and interests conflict with those of Quad. Actions to take the benefit of registration of marks identical with or similar to the mark of which Quad is the proprietor are, as it seems to me, an obvious case of preferring LLP’s interests to those of Quad. But the Hero Q is not such a mark: it is not identical or even similar to Quad’s mark and has been procured solely by LLP. The fact that it has subsequently been used in the branding of the businesses of both entities does not seem to me to indicate that registration of the mark by LLP is contrary to any legitimate interest of Quad’s. Quad’s legitimate interests, so far as marks are concerned, extend to the registration of marks to which it is entitled (that is, the other three registered marks) and matters falling within the law of passing off. The registration of the Q Device Trade Mark is not such a matter. 5) If equitable relief were available in principle, I should anyway think that it would be an exceptional case where a case not falling within section 10B could merit the grant of equitable relief.”
“actions to take the benefit of registration of marks identical with or similar to the mark of which Quad is the proprietor are, as it seems to me, an obvious case of preferring LLP’s interests to those of Quad. But the [Q Device Trade Mark] is not such a mark: it is not identical to or even similar to Quad’s mark and has been procured solely by LLP.”