Trade mark rights and the importance of having written agreements

Trade mark rights and the importance of having written agreements

JLCS Pty Ltd v Squires Loft City Steakhouse [2008] FCA 867

Synopsis

This case illustrates what can happen when a dispute arises between family members in relation to trade mark rights and the parties do not have a written agreement governing the rights to use the trade mark. Trade Marks owners should take steps to secure their rights by registration under the Trade Marks Act and should also take steps to ensure that any agreements in relation to the use of trade marks are reflected in writing.

Facts of the case

The facts of this case centre around a family restaurant business. Lionel Miller and Joel Distiller were the joint owners of a restaurant in South Yarra which operated under the name SQUIRES LOFT. Lionel and Joel with family members Harold and Saul Miller (Lionel's father and brother) established another restaurant under the name SQUIRES LOFT at Goldie Place in the central business district of Melbourne. It was agreed that Harold and Saul would operate the Goldie Place restaurant under that name. The terms of that agreement were not put in writing and a divergence of views arose in relation to what had been agreed by the parties.

Harold and Saul operated the Goldie Place restaurant for a period of time under the impression that they were joint owners of the trade mark SQUIRES LOFT. A dispute arose when Lionel and Joel sought to grant a licence to a third party to use the name SQUIRES LOFT for another restaurant which was located near Harold and Saul's Goldie Place restaurant in central Melbourne.

The dispute initially came before the Australian Federal Court with Harold and Saul claiming that they jointly owned the trade mark SQUIRES LOFT with Lionel and Joel. In the absence of written agreements between the parties regarding any rights to the trade mark the Court decided that Harold and Saul were not joint owners but that Lionel and Joel had granted a licence to them to use the trade mark SQUIRES LOFT for their Goldie Place restaurant. Lionel and Joel subsequently brought an action claiming that the licence had come to an end when Harold and Saul transferred their interests in a trust company which owned the Goldie Place restaurant to various third parties and that Harold and Saul no longer owned the restaurant.

The decision

The Court upheld the earlier decision and made the following rulings:

  • The owners of the trade mark SQUIRES LOFT are Lionel and Joel.
  • A licence to operate the Goldie Place restaurant under the trade mark SQUIRES LOFT had been granted by Lionel and Joel to Harold and Saul (the licence being inferred from the conduct of Lionel and Joel).
  • The licence was not dependant on Harold and Saul's ownership of the Goldie Place restaurant through their trust company. The licence had been granted to Harold and Saul personally. It did not matter that the Goldie Place restaurant was no longer owned by them. Harold and Saul were still running the restaurant and the licence would run for as long as they continued to do so.
  • Implied in the licence was a condition that the goodwill in the Goldie Place restaurant operated by Harold and Saul should not be adversely affected. Lionel and Joel's intention to grant a licence to a third party to use the trade mark SQUIRES LOFT for another restaurant within close proximity to the Goldie Place restaurant would adversely affect the goodwill in the restaurant and deny Harold and Saul the benefit of the licence.

Commentary

The dispute over the ownership of the trade mark SQUIRES LOFT could have been avoided if Lionel and Joel had registered the trade mark SQUIRES LOFT at the time that they first began using those words as a trade mark for their restaurant. Moreover if there had been a written agreement the parties would have already clarified the terms of the arrangements between them.