Lifestyle Equities CV & Anor v Sportsdirect.Com Retail Ltd & Ors

A contractual settlement may confer an enforceable benefit on non-parties where, on proper construction, the parties intended those persons to be able to invoke it. Under Dutch law, commercial language is important, but the court must also consider the parties’ reasonable expectations and the circumstances of the transaction.

A trade mark proprietor’s consent to first marketing in the EEA must normally be express. Inferred consent requires facts that unequivocally demonstrate renunciation of the proprietor’s rights. Operational involvement by production agents or suppliers does not establish consent without actual or ostensible authority.

The claimants, proprietors or licensees of Beverly Hills Polo Club trade marks, sued members of the Sportsdirect group for trade mark infringement concerning goods sold during 2013 and goods imported after a 2014 licence agreement. They also alleged that Republic induced West Coast Capital, the contractual licensee, to breach restrictions on resale.

The defendants relied on the settlement clause in the licence agreement, contractual permission to sell through USC, trade mark consent and exhaustion. They counterclaimed for revocation or partial revocation of the UK and EU marks for non-use. The court determined the construction and enforceability of the agreement, the infringement and inducement claims, and the scope of any revocation.

1. 2013 goods. Applying Dutch principles of construction, the settlement and waiver in clause 2.4C took effect when the agreement was entered into, at the latest upon payment of the royalty advance. The clause was enforceable by the first and second defendants as third-party beneficiaries. They were deemed to have accepted the benefit under Article 6.253(4) of the Dutch Civil Code. The 2013 infringement claim therefore failed.
2. Inducement of breach. Clause 2.4B, read with clauses 2.1A and 2.1C, permitted sales directly to consumers through USC stores or the USC website. It did not permit WCC to sell the licensed goods wholesale to Republic. The sale of the administration goods was therefore a breach. Republic, acting through Mr Nevitt, knew of the contractual restrictions, or was indifferent to whether the transaction breached them, and the breach was a means to the successful transfer of WCC’s business. The claimants satisfied the threshold requirement of damage.
3. Trade mark infringement. The goods were purchased and imported by SCRL as principal, not by WCC or as WCC’s agent. The defendants failed to prove express or implied consent. Under Zino Davidoff SA v A & G Imports Ltd [2002] Ch 109, inferred consent required an unequivocal renunciation of trade mark rights. Neither QDS, Ms Willson nor the suppliers had actual or ostensible authority to give that consent. Exhaustion therefore failed, and the importation and subsequent dealings infringed under the relevant provisions of the Trade Marks Act 1994 and EUTMR.
4. The UK mark had a reputation in the UK. The counterclaim failed for the EU mark. The UK mark was partially revoked and its protection confined to men’s clothing excluding footwear and headgear. The claim otherwise succeeded in principle. Further submissions were directed on the consequential order and quantum.

First instance decision. The judgment itself does not state any subsequent appellate decision.