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Built Your Goodwill on a Trade Mark? Do You Actually Own it?

A surprising number of companies build their brands on trade marks that they do not actually own. The risks inherent in such arrangements were laid bare by a case in which intellectual property rights in a machine manufacturer’s trading style were acquired by one of its former directors personally.

The trade marks were registered by the director in 2004 and used by the company to establish a thriving business. They were allowed to lapse following his departure, but he later applied successfully through a corporate vehicle to register fresh marks in similar terms. It was only at that stage that the company challenged the validity of the new marks on grounds that their registration amounted to passing off.

In upholding the company’s case, a hearing officer appointed by the Comptroller-General of Patents, Designs and Trade Marks found on the evidence that the director had, in return for a nominal £1 payment, assigned all rights, including goodwill, in the trade marks to the company two years before they lapsed.

The new marks, if used, would result in a misrepresentation to the public and would be likely to damage the company’s trade. They were thus invalid insofar as they covered the company’s established fields of business.