Termination of trademark license must be communicated

Termination of trademark license must be communicated

Termination of trademark license must be communicated

T.C. is the founder of milfit sweden ab (Milfit) which arranges training sessions and competitions within the training form Military Fitness.

For a period, he is the company’s only full-time employee and holds the majority of all shares.

T.C. as a private individual is also a registered proprietor of a figurative trademark which is used as a logo by Milfit.

In June 2018, T.C. sells all its shares to N.O. – thereby becoming the new majority owner – and in connection with the sale terminates all other engagement with the company.

Milfit continues its use of the brand even after T.C. leaves the company.

In April 2019, T.C. sends Milfit a recovery order for its continued use, the claim is calculated in light of the company’s total turnover at the competitions where the brand has been used.

T.C. has not informed Milfit at the time of the share sale that he owns the brand or that the company may not continue to use it.

In addition, he has not provided that information to the company until almost a year after the sale.

Milfit is therefore of the opinion that the transfer of the trade mark was unspoken at the time of the share transfer, or that T.C’s inaction should be interpreted as consent to continued use.

As the parties fail to reach a consensus on the matter, T.C. brings an action against Milfit in the Patent and Market Court seeking damages for the company’s continued use of the brand.

Patent and Market Court

The Patent and Market Court (PMD) begins by explaining the legally relevant grounds in this context.

The holder of a trade mark may grant someone else the right to use the mark by licence under Chapter 6, section 4 of the Trademark Act.

Since the parties agree that Milfit was entitled to use the mark before the share sale, PMD notes that it has at least held a license until then.

The next question the court has to consider is whether, and if so when, that licence has expired.

According to the Court, a general rule in the interpretation of contracts is that contracts without an end date are concluded indefinitely and therefore remain in force until they are terminated.

Unless otherwise agreed between the parties – expressly or implicitly – the same applies to the licence, which means that it could only be terminated by termination.

The Court therefore examines initially whether the parties have concluded agreements concerning licences and, if so, what that agreement was.

Milfit claims that the license was entered into at the time of the transfer of the shares to N.O. because the parties’ agreement stated that “no other claims will be made against the other party”.

It is also considered that the transfer of the trade mark should be implicitly interpreted into the agreement since T.C. did not inform Milfit that he is the proprietor of the mark at the time of the share sale.

According to the court, it is up to Milfit to substantiate its claim as to the meaning of the agreement.

The PMD does not believe that the said wording of the agreement is sufficient to demonstrate that the N.O. intended to grant Milfit continued license.

Nor does the fact that he has failed to disclose that he is registered on the licence give rise to a different interpretation, since pmd states that the person buying something should generally examine what is purchased.

Therefore, it is deemed that there is nothing in the parties’ agreements governing the license or for how long it will last.

The court’s overall assessment is therefore that the licence has been in force until it is possibly terminated.

According to T.C., the license has expired by selling the shares to the N.O.

However, he does not claim that it is something he announced at the time of the sale.

It should be noted that termination is a legal act which must be communicated and that the licence therefore did not expire at the time of the share transfer.

On the other hand, the Court considers that the recovery order sent to Milfit on 26 April 2019 should have made it clear to the company that the continued use of the trade mark was not permitted.

The requirement should therefore be regarded as an implied termination of the licence, which is why its use after its reception was not permitted.

The case is therefore to some extent in T.C’s favour when the Court ruled that certain use of the trade mark was unfair.

On the other hand, only a small part of the amount calculated by T.C. can be attributed to the period of unauthorised use and he is therefore only awarded a marginal part of the sum claimed.

Therefore, in addition to receiving only a small part of what he wants, T.C., becomes liable for both his own and Milfit’s legal costs under Chapter 18.

Section 4 of the Code of Procedure.