JLCS Pty Ltd v Squires Loft City Steakhouse Pty Ltd
In JLCS Pty Ltd v Squires Loft City Steakhouse Pty Ltd
( FCA 867, June 12 2008), the Federal Court of Australia
considered two main issues. The first was the effect, if any, of a
change in ownership of a restaurant to a licence to operate the
restaurant under the name Squire's Loft. The second
was what were the obligations, if any, of the licensors with
respect to the licensees' use of the name Squire's
In an earlier matter before the Federal Court, a declaration was
made that the operators of a restaurant, who at the time were also
the owners of the restaurant, were entitled to operate the
restaurant under the name Squire's Loft. The basis for
this entitlement was found to be an unconditional licence formed
from informal discussions between the parties.
Subsequently, there was a change in the ownership of the
restaurant but there was no change in its operation and day to day
management. The Court was asked to determine whether the change in
ownership affected the licence to use the trade mark.
The declared trade mark licence
The Court determined that the change in the restaurant's
ownership had no effect on the trade mark licence, for three main
reasons. Firstly, the declaration made no mention of the ownership
of the restaurant. Secondly, the declaration recorded a right to
"operate" the restaurant and was not concerned with the
ownership of the restaurant. Thirdly, the licence had been found to
Although it is within the Court's power to amend a
declaration to give effect to the intention of a judge or to record
accurately what a judge had decided, there was no evidence that the
judge in the earlier matter had determined the licence was subject
to a condition relating to ownership. It was not within the
Court's power to alter from unconditional to conditional a
licence that had been settled in another matter.
The operation of a restaurant was held to be something different
from the ownership of a restaurant and the declared right of the
operators to use the trade mark Squire's Loft was not
in any way dependent on them being owners of the restaurant.
The obligations of the licensors
After confirming the continuation of the trade mark licence, the
Court turned to a cross claim made by the licensees against the
licensors' grant of a licence to a third party to operate a
restaurant under the name Squire's Loft City Grill
Room within 500 metres of the Squire's Loft
restaurant operated by the licensees.
The Court found that the licensees had a reputation in the name
Squire's Loft and that there was a real likelihood of
confusion, and evidence of actual confusion, with the two
restaurants operating in such close proximity to each other and
using substantially the same name.
The Court found that the licensors had an obligation not to
interfere with the licensees' enjoyment of their trade mark
licence on the following two bases.
Non derogation from grant
The judge's preferred basis for relief was based on the
principle that a grantor must not derogate from his grant, a
principle which is an independent rule of law. It is most usually
applied in relation to interests in land, but is not confined to
dealings in land. It essentially provides that one must not seek to
take away with one hand what one has given with the other.
The Court found the licensees should be permitted to use the
trade mark Squire's Loft without undue interference.
This imposed an obligation on the licensors not to use, or permit
the use of, the Squire's Loft name in a location so
proximate to the licensees' restaurant that it would result in
a significant adverse effect of the goodwill of the restaurant. A
proximity less than 500 metres was too close.
Implied term in trade mark licence
In the alternative, on the basis that the licence was informal
and obviously incomplete, the Court found it necessary for the
reasonable or effective operation of the licence that there be an
implied term that the licensors were prohibited from using,
authorising, or permitting any other entity to use the name
Squire's Loft in relation to a restaurant in such
close proximity to the licensees' restaurant that it would
prevent, hinder or impede their enjoyment of the full benefit and
advantage conferred by the trade mark licence.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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