Promise following asset purchase grants HERR-VOSS licence

United Kingdom

In Blue IP Inc v KCS Herr Voss UK Ltd, the UK High Court has dismissed the plaintiff's claim for an injunction restraining the defendant from (i) using the mark HERR-VOSS, and (ii) registering or carrying on business under the name Herr-Voss. The court held that the defendant was entitled to use the mark and name as a result of a licence provided in correspondence as part of an asset purchase by the defendant.

The claim arose out of a complicated set of circumstances starting with the insolvency of a US company called Genesis I and its subsidiaries, including the UK company Herr-Voss Ltd (HVL). This resulted in the sale of HVL's assets to a new company called KCS (UK) Ltd, which changed its name to KCS Herr-Voss Ltd on completion of the sale.

The asset sale agreement made between the administrators of HVL and KCS Herr-Voss Ltd included HVL's intellectual property and goodwill. However, during the negotiations, no clear thought was given to the extent to which the new company would be able to trade in the future using the term 'Herr-Voss'.

A letter from the president and chief executive officer of Genesis I (also the president and chief executive officer of HVL) to KCS Herr-Voss Ltd provided the only written evidence of an agreement relating to names. In the letter, Genesis I referred to accepting a proposal made by KCS Herr-Voss Ltd for the latter to use the derivative name KCS Herr-Voss UK Ltd in its trading. Additionally, Genesis I agreed that it would not prevent the registration of the derivative name in the United Kingdom.

The actual name of the new company (KCS Herr-Voss Ltd) differed from the name (KCS Herr-Voss UK Ltd) proposed in the letter. Following a complaint from Genesis I to KCS Herr-Voss Ltd, it changed its name to KCS Herr-Voss UK Ltd (KCS UK).

The remaining assets of Genesis I, including the Community trademark HERR-VOSS for goods in Classes 7 and 11 of the Nice Classification and the UK registered mark HERR-VOSS in Class 7, were sold to a company called Genesis Worldwide II Inc (Genesis II). Genesis II subsequently passed the rights in the marks on to its IP holding subsidiary - Blue IP Inc (Blue). The asset purchase agreement between Genesis I and Genesis II mentioned the HVL asset sale agreement and stated that Genesis I had granted a limited licence to KCS UK to use the term 'Herr-Voss' only when used as part of its full trading name. Details of KCS UK's name change were also included.

Genesis II later became aware that KCS UK was using the mark HERR-VOSS for its products. In September 2002, Genesis II complained to KCS UK that its unlimited use of the mark HERR-VOSS breached the limited licence previously granted because the mark only corresponded to part of the licensed trading name. Genesis II gave notice of revocation of the licence to KCS.

As the owner of Genesis II's rights in the HERR-VOSS marks, Blue sought an injunction in the UK High Court restraining KCS UK from (i) trading in goods under the HERR-VOSS mark, and (ii) keeping or registering any company name containing the term 'Herr-Voss' or confusingly similar words, without a licence from Blue.

The High Court dismissed the claim. It held, among other things, that the promise given by Genesis I in its letter following the sale of HVL's assets was plainly a contractual one and equally intended to be of indefinite duration. The letter was sufficient evidence of acceptance that the new company could use a derivative name containing the terms 'Herr Voss' or 'Herr-Voss'. It entitled KCS UK to use its full corporate name as a brand. In addition, the letter should not be read as a contractual commitment by KCS not to use the terms 'Herr Voss' or 'Herr-Voss'. These terms were not excluded from that agreement.

Accordingly, KCS UK was allowed to continue using its company name in trade and as a mark without the restriction that such use be in conjunction with the words 'Ltd' or 'Limited'.

Tanya Theobald, Hammonds, London

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