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Archive for July, 2014

Top Ten Trademark Tips – Overseas Expansion

23/07/2014 | Chris Pulham
If you are expanding overseas, considering rebranding your whole group or if you are carrying out a periodic review of your business’ brand, the following Ten Trademark Tips may be helpful: 1 St

If you are expanding overseas, considering rebranding your whole group or if you are carrying out a periodic review of your business’ brand, the following Ten Trademark Tips may be helpful:

ChrisPulham_U6K6866.1500521 Structure – Central Ownership

If there is more than one company in the group, consider moving ownership of trademarks centrally to one company, and then licensing the relevant marks to each company in the group. This helps simplify the administrative task of renewing and policing the trademarks once they have been registered. This can be even more important if your business is comprised of different divisions, particularly if the divisions are spread around a group of companies.

2 Translation

It is usually preferable to have the same brand in every territory, but consider whether brand is suitable for the local territory without any adjustment. For example, does it have an unintended meaning or an undesirable connotation in the local territory? Would it be preferable if the word were to be translated into the local language (ie: preserving the meaning, but not the sound), if possible?

3 Transliteration

It may also be helpful to consider whether the brand should be transliterated instead of translated (ie: preserving the sound, but not the meaning). This may assist in pronunciation, but the resulting word must be checked again for any unintended meaning.

4 Further TM Applications in Key Territories

If you have not already done so, it may be a prudent moment to apply to register the brand as a trade mark in one or more of the key target countries in which it will be used. It is not practically possible to make one truly international application.  Adding countries to the international application will significantly increase the application fee, so consider what the company’s main target territories are likely to be for the next five years.

5 UK, Community TM, or International Applications

It is possible to file an application to register a mark either as: (i) a national application to the registry in the relevant country (eg: UK, USA), or (ii) a Community TM application which covers all 27 member states in a single application, or (iii) an International Application (under the Madrid Protocol), which lists the countries worldwide in which the application will be made.

6 Trademark Clearance Searches

It is usually prudent to carry out some searches of the target territories to check for existing registrations which are the same or very similar to the proposed new brand (whether or not you intend to make your own trademark application). Unfortunately it is not commercially practicable to carry out searches of every possible territory, so the search is usually restricted only to the core territories of concern.

7 Unregistered Rights

In many countries around the world it is possible to build up rights in a particular name or logo by using it in the course of trade, even where the name or logo is not registered as a trademark. These are often referred to as rights in “passing off” or “unfair competition”. Because these rights are not registered they will not be considered in any search of registered trademarks.  It is usually difficult to be certain that a proposed new brand will not conflict with any existing unregistered marks. It is of course important to research the target territory, but this should not only focus on known larger competitors. It may be prudent to research in terms of both sector and geography for similar goods or services, and including those offered by smaller businesses who may not have registered their mark, but who could still present a problem in the future.

8 Third Party Logo Designer

If you are engaging a third party designer to create one or more new marks, it is important to know that they will be providing you with an original piece of work, rather than something directly copied from someone or somewhere else, or one which is simply too derivative of another mark. Some comfort can be obtained from the designer by asking them to warrent the originality of the work and confirm what clearance searches or other research has been carried out by them. The designer should be asked to sign a written assignment to your company of the copyright in any new marks which they design.

9 Company Names and Domain Names

Registration of company or domain names in the UK does not carry any additional right to prevent someone else using that name themselves, unless this has been built up through trade over time (see paragraph 7, Unregistered Rights). You should not rely on the fact that a particular name has been registered at Companies House or as a domain name as any indication that the name does not infringe any existing registered or unregistered rights. Research and, where practicable, trademark clearance searches should be carried out before registering either, and if you require further protection against another person using that name in the future, consider making a separate trademark application.

10 Challenges and Prompt Action

Although the application process itself takes several months in the UK (and many more in some other territories), most problems which can occur in relation to brands benefit from prompt action and legal advice. If you believe another person is infringing your business’ rights in its brand, or if you receive a threat or claim from another person that your business may be similarly at fault, please contact us as soon as possible for advice.

This note is for general information purposes only, is not a substitute for and should not be relied upon without taking legal advice specific to the territory(ies) relevant to you or your business. If you have any questions or would like any assistance with any matters relating to the contents of this note please contact Chris Pulham on 020 7955 1425 or chrisp@rosenblatt-law.co.uk

Break Clauses, M&S and Cashback

09/07/2014 | Caroline DeLaney
The careful control of costs is an issue high on the list of business priorities.  Premises are often the largest overhead and so the opportunity for a tenant to reduce those costs, particularly whe

CarolineDelaney_I0A2614.121051The careful control of costs is an issue high on the list of business priorities.  Premises are often the largest overhead and so the opportunity for a tenant to reduce those costs, particularly when premises become surplus to requirements is always welcome.

In a buoyant market where landlords clamour to take properties back to redevelop and to re-let, the exercise of a break clause terminating a tenancy early will often be welcomed and any shortcomings in the notice are likely to be forgiven.  However in a market where property is hard to re-let or if the landlord does not wish to lose a valuable covenant, the landlord will closely scrutinise the tenant’s break.

Breaks are strictly construed.  They have to be in the correct form, served by the correct party in the manner prescribed by the lease.  If the break clause requires conditions to be fulfilled, these conditions have to be adhered to or the break will be ineffective.

There has been many a tale of woe coming before the courts over the years, exposing the many traps into which the tenant can fall.  The latest headline case is unusual in that it does not involve an unsophisticated tenant, but rather the titan in the retail world that is Marks & Spencer.  It does not involve a challenge on the validity of the break notice as the tenant was well-advised.  Rather it looks at the issue of whether a tenant is entitled to a refund of rent paid in advance when a tenancy comes to an end in the middle of a rent period. It was only after it had paid all the monies claimed by the landlord and successfully exercised its break, that Marks & Spencer sought a refund of monies it claimed had been overpaid.

Marks & Spencer PLC v BNP Paribas Securities Services Trust Company (Jersey) Limited & Another [2014] ECWA Civ 603 came before the Court of Appeal in March 2014,  The judgment was handed down in May 2014, a year after the controversial High Court decision that had caused landlords to revisit the drafting of their break clauses.

This case involved Marks & Spencer’s headquarters’ building in Paddington.  It had a lease of four floors for a term expiring in February 2018.  The lease contained a break clause permitting Marks & Spencer to terminate the lease early on 24 January 2012.  The break clause required the tenant to give six months’ notice and was conditional on there being no arrears of rent (including VAT) on the break date and on the tenant paying a penalty equivalent to a year’s rent on or prior to the break date.

Prior to the High Court decision, it was accepted that if the break date fell in the middle of a rental period, rent for the entire period had to be paid unless the lease contained express provision for apportionment.  The Apportionment Act 1870, which imposes apportionment by statute only applies to situations where rent is paid in arrears.  As the vast majority of tenancies require rent to be paid in advance, the parties have to rely on express provision in their agreement.

In the High Court, Mr Justice Morgan concluded that although the lease did not expressly provide that sums relating to the period after the break date should be repaid, such a term should be implied since a reasonable person would expect that a tenant should only pay for what the tenant has actually received.

Landlords were shocked, tenants rejoiced.  The Court of Appeal has however allowed the landlord’s appeal and restored order.

The Marks and Spencer lease contained an apportionment clause providing that the rent should be paid “proportionately for any part of a year” but it did not go further than this.  The Court of Appeal concluded that although at first sight this might be construed as provision for repayment of rent for any part of the quarter beyond the break date, these words were only applicable where it was clear at the time the rent was paid that the lease would end before the end of the rent period.

There were two conditions in the Marks and Spencer lease that had to be satisfied for the break to be effective.  The tenant had not to be in arrears of rent AND the break premium had to be paid on or before the break date.

When the break was exercised and the final quarterly payment fell due on 25 December 2011, there was no certainty that the lease would end at the break date.  On that basis the Court of Appeal concluded that the express apportionment provision did not apply to the exercise of the break provision.  Further the court concluded that no such provision could or need be implied.

The conclusion of the Court of Appeal means that Marks & Spencer is not entitled to cashback of over a million pounds which it would have received from its former landlord as a result of the High Court decision.  Nevertheless, it restores order to the world of break clauses.  Many people, including myself, had taken the view that the High Court judgment was wrongly decided.  The Court of Appeal has simply restored the status quo.

Top Tips:

1. Clarity in the drafting of the break notice is the key.  If a tenant wishes to only pay rent for the period for which it occupies the property, it must make sure that the break date is on the last day of the rent period or that the lease provides for the express apportionment of rent following the break.

2.  There are so many traps in the exercise of break clauses.  You have to think about the form and method of service of the break notice, the timing of the notice and the fulfilment of any conditions precedent.  Planning is key.  Everything must be checked, all information verified and nothing should be left to chance or to the last minute.

3. You should always take legal advice on the drafting of the break notice at the outset as many disagreements can be avoided by clear and careful drafting.  This applies both to the wording and timing of the break clause, and the provisions for service.  You need to think about the practicalities of serving the notice when the time comes.  I have had to serve break notices that required service by fax on numbers that no longer exist, or by hand at buildings that have been demolished.

4. You should always take legal advice on the exercise of the break notice as there are endless traps for the unwary.  What is fair or what appears to be common sense is irrelevant.  If the break notice is conditional you need to build in enough time to comply with those conditions. For instance, if the break is conditional on you complying with your repairing covenants, you need to build in time to identify and undertake the work required.  If the break is conditional on you giving vacant possession, you need to have planned your move and have somewhere to relocate.

5. If you are a landlord wanting to resist a break or a tenant wanting to exercise a break, different considerations apply.  Unfortunately the exercise of a break clause can often be a tactical affair between landlord and tenant, so careful legal advice at every stage is essential.

This bulletin should not be taken as definitive legal advice. Please contact Caroline DeLaney on 020 7955 1423 or carolined@rosenblatt-law.co.uk for further advice or  for any questions you may have concerning break clauses

Caroline DeLaney is a partner specialising in real estate disputes at Rosenblatt.

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