Motivate Publishing FZ LLC & Anor v Hello Ltd

A contract is formed objectively by considering the parties’ communications and conduct as a whole. A response which rejects material terms, insists on additional terms or proposes a materially different territorial scope is not acceptance.

Proprietary estoppel is capable in principle of protecting a licence of intellectual property rights, rather than only an interest in land. However, an indication that renewal is intended or likely does not establish a sufficiently concrete representation where material terms remain to be negotiated. Business expenditure incurred in anticipation of renewal does not, without the necessary representation, establish an estoppel.

Motivate held an exclusive licence from Hello Ltd to publish the Middle East edition of Hello! magazine. The licence expired on 31 March 2015. Motivate claimed that exchanges of emails in November 2014 had concluded an agreement for renewal, alternatively that Hello Ltd was barred by proprietary estoppel from denying the renewed licence.

The contractual issue was whether the emails objectively amounted to agreement. The estoppel issues included whether proprietary estoppel could apply to an intellectual property licence, whether a sufficiently concrete representation had been made, and whether Motivate had relied to its detriment.

1. Contract formation. The court applied the objective approach stated in RTS Flexible Systems v Molkerei Alois Müller [2010] 1 WLR 753, including the principles drawn from Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601. The correspondence had to be considered as a whole, and the parties could agree to be bound while leaving some matters for later agreement.
2. The November exchange did not create a binding renewal. Motivate’s response did not accept the proposed 96+4 page count, the required local-content arrangement or renewal limited to the UAE. It also proposed withdrawal of the UK edition from airport outlets, describing that issue as critically important. Objectively, the response was a counter-proposal, not acceptance.
3. Proprietary estoppel. The court rejected the submission that the doctrine was confined to land. Following the analysis of the authorities, including Cobbe v Yeoman’s Row [2008] UKHL 44, Strover v Strover [2005] EWHC 860 (Ch) and Baird Textile Holdings v Marks & Spencer [2001] EWCA Civ 274, a proprietary estoppel could in principle protect a licence of intellectual property rights.
4. The estoppel claim nevertheless failed. The statement that Hello would renew for the UAE could not be separated from the unresolved terms in the same email. At most, the communications encouraged Motivate to think that renewal was likely. They did not represent that further negotiations were unnecessary or that agreement on terms had been reached.
5. Because no sufficient representation was established, it was unnecessary to decide whether the expenditure relied on constituted detriment, or whether expenditure incurred by the second claimant could support an estoppel against Hello. The claim was dismissed.