Trade Mark Registration Breached Fiduciary Duty

A financial services company has succeeded in its appeal against a High Court ruling that it was not entitled to claim ownership of a trade mark registered by an LLP carrying out business on its behalf.

The LLP was set up in 2007 as part of the reorganisation of a business consisting of three companies. It provided services to legacy clients on behalf of the existing business and was also able to develop its own business. In 2018, without the knowledge of the company to which it was contracted to provide the services, it registered four trade marks used by both it and the company. It initially claimed that the company was not entitled to use them. The company brought proceedings, arguing that the LLP had applied for the trade marks as its agent and claiming ownership of them.

The Court found that the LLP was a fiduciary of the company in respect of the company's business, and its right to use the company's name would cease when its services agreement with the company ended. Under Section 10B of the Trade Marks Act 1994, the company was entitled to rectification of the Register of Trade Marks to show that it was the owner of three of the trade marks. However, its claim in respect of the fourth mark, comprising a single stylised letter, was rejected.

The company appealed against that decision. The LLP cross-appealed, challenging the finding that there was a fiduciary relationship, that its entitlement to use the company's name was coterminous with the services agreement, and that the company was entitled to claim ownership of the other three trade marks,

The Court of Appeal found that the High Court was amply justified in concluding that a fiduciary relationship existed between the company and the LLP. There was also no basis for interfering with the finding that the LLP's right to use the company's name lasted only for the duration of the services agreement.

The Court of Appeal agreed with the High Court that the fourth mark was not sufficiently similar to the company's name for the purposes of Section 10B. It was also not open to the company to claim that it owned the goodwill associated with the fourth mark, as this had not been argued before the High Court. The company's claim could only succeed if the fourth mark had been applied for in breach of fiduciary duty.

Noting that the fourth mark had been used in connection with the LLP's duties under the service agreement, the Court of Appeal observed that its registration in the LLP's name was in the LLP's own interests and contrary to those of the company. The registration was in breach of the fiduciary duty the LLP owed to the company. The company's appeal was allowed and the LLP's cross-appeal dismissed.