The case arose out of a long-running dispute concerning infringement of Lifestyle Equities’ Beverly Hills Polo Club marks. Liability was established (in an April 2018 judgment), and in 2023 and 2024, during the course of the much-delayed inquiry for damages, Lifestyle Equities sought to recover losses suffered by sub-licensees.
However, it kept details of the sub-licences confidential and had not registered them (save for one which it applied to register in April 2025).
SportsDirect.com Retail Limited (now Frasers Group Trading Limited) (“SportsDirect“) sought summary judgment on the issue of whether Lifestyle Equities could claim for sub-licensee losses. The High Court held it could claim for those losses and dismissed the summary judgment application. SportsDirect appealed two points from the summary judgment decision.
Relevant law
Section 25(3) Trade Marks Act 1994 (“TMA“) provides:
“Until an application has been made for registration of the prescribed particulars of a registrable transaction— […]
(b) a person claiming to be a licensee by virtue of the transaction does not have the protection of section 30 or 31 (rights and remedies of licensee in relation to infringement).”
Section 30 TMA provides various rights to licensees on infringement (including the right to call on the proprietor of the mark to take proceedings). Specifically, s30(6) TMA provides:
“In infringement proceedings brought by the proprietor of a registered trade mark any loss suffered or likely to be suffered by licensees shall be taken into account; and the court may give such directions as it thinks fit as to the extent to which the plaintiff is to hold the proceeds of any pecuniary remedy on behalf of licensees.”
First instance decision
At first instance, Mr Justice Marcus Smith had referred to a “black hole” in recoverability where there is a failure to register a licence:
- the licensee only has rights against the licensor, not against third parties;
- where there is an infringement of rights by a third party the licensee suffers loss but has no rights against the third party; and
- only the licensor can stop third party infringement, but it may not have suffered any loss.
He held that s30(6) TMA was intended to avoid that “black hole” – in infringement proceedings brought by the proprietor of a registered trade mark, any loss suffered or likely to be suffered by sub-licensees (or licensees, which are treated the same) shall be taken into account. He held the first limb of s30(6) TMA benefitted proprietors and thus was not caught by s25(3)(b) TMA, and so registration of the licence was not needed; the Court of Appeal disagreed and held that all of s30(6) TMA was a protection for licensees and so fell within s25(3)(b) TMA, so that registration of the licence was needed for the protection to operate.
Smith J also held s25(3) TMA left the time frame for registration open-ended. This meant that registration could have retrospective effect in principle. The Court of Appeal agreed, subject to the limitation period.
The two grounds of appeal
1. Does section 30(6) TMA extend to sub-licensees even where there is no registration?
On appeal, Lord Justice Zacaroli, giving judgment for the Court of Appeal, held that s30(6) is a protection for licensees; by virtue of s25(3)(b) it is unavailable “until an application has been made” to register the licence.
S30 TMA envisages two options for protecting the rights of licensees: (1) proceedings brought by the proprietor for the benefit of the licensee and (2) proceedings brought by the licensee. In the first case, s30(6) ensures that the loss suffered by the licensee shall be taken into account, and proceeds may be held by the proprietor on behalf of the licensee.
Zacaroli LJ held that the judge at first instance was wrong to divide s30(6) and treat its first limb as affording protection to the proprietor, since the proprietor’s own losses were already recoverable under s14 TMA. He concluded that “the subsection as a whole, therefore, is a protection for licensees.”; accordingly, by s25(3)(b), it cannot be invoked unless and until an application to register the licence has been made.
2. Is there a time limit within which an application for registration of a licence must be made so as to obtain the protection of section 30(6) TMA?
Zacaroli LJ confirmed that an application to register the licence was a pre-condition of the protection in s30; a claim by a proprietor to recover losses on behalf of a licensee cannot be made until an application to register the licence is made.
The parties did not dispute the first instance findings that there was no time limit for registration of a licence or that registration could have retrospective effect in relation to damages.
However, the Court of Appeal confirmed that ordinary statutory limitation periods will still apply and the application for registration of the licence must occur within the limitation period, which begins running from the point of infringement, in order to claim sub-licensee damages running from that infringement. Procedural entitlement to rely on s30(6) TMA depends on registration, so if registration is applied for after the limitation period has expired, the claim to recover losses of a licensee is lost.
Ultimately Lifestyle Equities failed at this final hurdle as the limitation period had passed; no application had been made to register any of the licences (including the one registered) within the limitation period; the last pleaded infringement was in June 2016, and no application for registration of any of the licences had been applied for within six years of that date. The court made clear that a claim for licensee losses is a distinct claim from the proprietor’s own claim, and so commencing proceedings for the proprietor’s claim before the expiry of the limitation period did not preserve or extend the licensee’s separate claim.
Key takeaways
This decision highlights:
- Licence registration should be treated as a priority, as registering a licence is a precondition to the recoverability of licensees’ losses. This applies equally to intra-group licences and to licences between unconnected parties.
- Registration can have retrospective effect, but only if the application to register is made within the statutory limitation period for the infringement which leads to licensee losses. Where commercial sensitivities delay registration, limitation risk must be actively managed.
- Recovery of licensee losses is a distinct head of claim, and cannot be assumed to follow from a claim for the proprietor’s own losses. Claims for licensee losses require separate strategic consideration.
- The decision significantly reduces the scope for avoiding the “black hole” problem where licences are left unregistered; s30(6)’s solution to the “black hole” is only available where a registration application is made and the claim is brought in time.
This article was co-authored by Fiona Sellers (Associate) and Jennifer Bryant (Senior Professional Support Lawyer) at Fieldfisher.
