Unregistered trade mark licences: A costly oversight?
The recent Court of Appeal’s decision in Lifestyle Equities CV v Frasers Group Trading addresses a deceptively simple question: can you recover losses suffered by a licensee in trade mark infringement proceedings if the licence has not been registered?
Although the dispute concerned a technical point of statutory interpretation, the answer carries considerable commercial significance. The judgment highlights the risks of treating trade mark licence registration as a mere administrative formality, and confirms that failure to register your trade mark may ultimately limit the damages available following infringement.
Facts of appeal
The case arose from a long-running trade mark dispute between Lifestyle Equities, owner of the Beverly Hills Polo Club brand, and Frasers Group. Having successfully established trade mark infringement, Lifestyle later sought compensation not only for its own losses but also for losses suffered by businesses within its wider licensing network.
Many of those businesses used the brand under licence, but they had not formally registered the licensing agreement. Therefore, the Court of Appeal was asked to decide whether those losses could still be recovered. It concluded that they could not because Lifestyle had not registered the licences, so they could not recover the losses those licensees and sub-licensees suffered as part of its damages claim.
Practical considerations for businesses
While the decision turned on a technical point, its implications are highly practical for businesses that rely on brands, licensing arrangements, and intellectual property as part of their commercial strategy. Key takeaways include:
Register trade mark licences wherever possible
The case demonstrates that registration is far more than an administrative formality. If you fail to register a licence, you may limit the losses you can recover if a third party infringes the trade mark.
Review existing licensing structures
Businesses that operate through franchisees, distributors, subsidiaries, or other licensees should check whether they have properly recorded their trade mark licences and identify any gaps they need to address.
Do not assume losses across a wider network can be recovered
Where value is generated by licensees rather than the trade mark owner itself, an infringement claim may not capture the full commercial impact of the infringement if licensing arrangements have not been registered.
Balance confidentiality against enforcement risk
In Lifestyle Equities, the licensing arrangements were largely kept confidential and were not registered. The decision highlights the potential downside of prioritising confidentiality over preserving enforcement rights.
Licensees should not rely on licensors to recover losses on their behalf
Businesses that operate under a trade mark licence should protect their interests adequately; they should structure licensing arrangements to support effective enforcement if infringement occurs.
IP housekeeping matters
The judgment serves as a reminder that relatively straightforward administrative steps can have significant financial consequences when disputes arise. Businesses should treat licence registration as an integral part of their wider risk management and brand protection strategy.
What this means for businesses
The key message from the Court of Appeal is clear: if your business relies on licensed trade marks, failing to register those arrangements could significantly reduce the compensation available if another party infringes your rights.
Our Commercial Team advises businesses on trade mark licensing, brand protection and IP strategy. Whether you grant licences or operate under a licence, we can help you structure your arrangements properly, make them commercially effective, and secure the strongest possible protection if a dispute arises.