A dispute between two fashion companies over the interpretation of a licence agreement has led to a detailed June 2024 High Court judgment including an interim injunction from Mr Justice Bryan.
The case concerns a 2011 agreement between MOU and Artcrafts. This agreement granted Artcrafts an exclusive licence to manufacture, distribute, sell, advertise and promote MOU footwear in the “territory” listed in the agreement as well as a non-exclusive licence to undertake the same activities elsewhere in the world.
Artcrafts claimed it had paid royalties of €19 million to MOU up to the end of 2023.
However, after the relationship between the parties became strained, they ended up in court, with an order in Artcrafts’ favour in January 2023.
In the current (separate) proceedings, Artcrafts alleges that MOU has breached the agreement by:
marketing, promoting and selling the products in the USA through a company called SSENSE;
using its own website to advertise and promote the products in the territory generally; and
placing Google Ads into the territory.
Artcrafts made efforts in November and December 2023 to persuade MOU to end this alleged unlawful activity without success.
Deciding whether to grant the interim injunction - and other issues
The judge resolved a number of issues in favour of Artcrafts, in particular:
He granted the continuation of an interim injunction restraining MOU from undertaking certain breaches of the licence agreement until trial or further order on the basis that damages would be an inadequate remedy and the balance of convenience lay in Artcrafts favour. As the judge put it:
“If an injunction were refused and MOU turned out to be wrong, the damage to Artcrafts is likely to be very considerable with the consequent damages being inadequate as difficult to quantify or measure, and with no certainty that any damages award would be met resulting in irremediable prejudice to Artcrafts, whereas in contrast I do not consider that MOU would suffer prejudice, still less irremediable prejudice, in being held to the contractual obligations under the Licence Agreement, and in circumstances where any loss (should MOU succeed at trial) could be recompensed in damages and recovered from Artcrafts.”
The judge also granted summary judgment in favour of Artcrafts on MOU’s allegation that the licence was terminable on reasonable notice, saying:
“MOU cannot even arguably bring itself within any of the circumstances in which a term may be implied into a contract, and no such amendment should be allowed. MOU's case that the Licence Agreement is determinable unilaterally without cause on reasonable written notice has no real prospect of success, and I am satisfied that there is no other compelling reason why the issue should be disposed of at trial.”
The judge granted a declaration sought by Artcrafts that the USA forms part of the exclusive territory in the licence agreement and has done so since 1 January 2015, as had been admitted in a witness statement, saying:
“I am satisfied that the making of the declaration sought is the most effective way of resolving the issue that has been raised, and I do not consider that any other way of resolving the issue would be equally satisfactory.”
What does this mean?
Disputes over terms in a licensing agreement can be serious and multi-faceted, as this dispute shows. The judge has resolved a number of issues in favour of Artcrafts in this judgment, and it will be interesting to see the outcome of the trial, assuming the case is not settled before then.
The case is a reminder of the importance of seeking appropriate legal advice when drafting licence agreements and also when undertaking any activity that may breach the agreement.
For more information on drafting and understanding IP related agreements, please get in touch.
To find out more about the issues raised in this blog contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - rosie.burbidge@gunnercooke.com