Hudson Bay Apparel Brands LLC v Umbro International Ltd

A licensing agreement must be construed objectively, in its contractual and commercial context. Whether clothing is specifically intended for use on the field of play is determined by objective factors, including fabric, design, fit, colour, artwork, finish and distribution channel. Written approval requirements remain effective unless validly waived for the particular products, and approval cannot authorise goods outside the licence’s substantive scope. A licensor may control approval in accordance with its commercial interests, but an implied term prevents it from refusing or failing altogether to consider submitted products. The term does not generally require approval to be reasonable or impose a broad duty to provide commercial guidance.

Hudson Bay held an exclusive United States licence from Umbro to manufacture and sell men’s off-field apparel. Umbro also licensed Dick’s Sporting Goods to sell on-field wear and retained its own teamwear business. The dispute concerned the boundary between on-field and off-field clothing, including pocketless shirts, shorts and tracksuits.

Hudson Bay claimed that Umbro had permitted Dick’s to market products within its exclusive licence and had failed to co-operate in the operation of the licence. Umbro counterclaimed that Hudson Bay had marketed pocketless soccer basics which were on-field wear and had not been validly approved. The trial concerned liability only.

1. Construction and classification. The agreement was construed objectively, applying the approach endorsed in Chartbrook Limited v Persimmon Homes Limited [2009] 3 WLR 267. “Specifically intended for use on the field of play” referred to the actual field of play, including informal and practice games, and had a meaning approaching “exclusively”. The relevant intention was objective, not the subjective intention of an end-user, licensee or licensor.
2. The relevant factors included fabric, design, pockets, fit, colours, artwork, finish and distribution channel. Dick’s tracksuits marketed through specialist sports retailers were on-field wear. Fashion-oriented shirts, tank-tops and country-themed shirts marketed through the relevant channels were off-field wear. The pocketless soccer basics marketed through S&S were on-field wear because their fabric, cut, colours, logos, lack of pockets and marketing context identified them with teamwear.
3. Approval and authority. The contractual approval procedure required written approval at each relevant stage. Any waiver by Miss Jackson could extend only to compliance with that procedure for particular products. It could not authorise products outside the licence or modify the agreement. Miss Jackson lacked actual or ostensible authority to modify the licence or grant a new licence on behalf of Umbro UK. The January 2008 variation was only a proposal and was not binding.
4. Implied co-operation term. The agreement contained an implied term that Umbro could not refuse or fail altogether to consider products or materials submitted for approval. This was consistent with Mackay v Dick (1881) 6 App Cas 251. There was no implied term requiring Umbro to approve products reasonably, to respond within ten days, or to provide broad and consistent commercial guidance. Umbro was entitled to protect its brand and control approval in accordance with its commercial interests.
5. Hudson Bay succeeded in part on its first claim: Umbro knowingly permitted Dick’s to market specified off-field wear in breach of the exclusive licence. Hudson Bay’s second claim succeeded only in respect of Umbro’s temporary refusal to consider the fall 2008 collection. Umbro succeeded on its counterclaim concerning the unauthorised pocketless soccer basics. Declaratory relief and damages were ordered or to be assessed, and delivery-up and injunctive relief was available on the counterclaim.

Not stated in the judgment.