This case surrounded two licences to make and sell Umbro's football clothes in the US. One licence (to Dick's) was for the exclusive sale of on-field sports clothing and the other (to Hudson Bay) was for the exclusive sale of off-field clothing. The off-field clothing was effectively the range of replica kits to be worn by supporters. Despite Umbro initially trying to keep the markets separate, in practice it did not work out that way, and there were allegations that both Dick's and Hudson Bay had strayed into the other's fields of use. There was also a dispute as to whether Umbro had authorised this. Of crucial importance were the questions of what sort of clothing constituted on-field or off-field use and whether Umbro had authorised Hudson Bay to sell on-field clothing.
The High Court ruled that Umbro had breached the licence by allowing Dick's to dip into the off-field market. However, it also agreed that Hudson Bay had breached the licence by doing likewise the other way. The Court of Appeal has now agreed with the High Court's ruling. The reasoning turned on pockets. FIFA (the regulatory body) had regulations which said that on-field clothing could not have pockets; in contrast, off-field clothes generally did have pockets. There were other differences such as the size of logos, but that was the main distinguishing design difference. Hudson Bay argued that it had asked for authorisation to stock a design without pockets, which had been agreed to by the head of Umbro's US subsidiary. However, that person did not have actual or ostensible authority to bind Umbro UK, which was the party to the licensing agreement. That lack of authority was borne out by other surrounding facts in the case, such as the delay in executing the original agreement which had been negotiated by Umbro US so that Umbro UK people could sign it.
Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: 'This case is interesting because of the sporting subject matter. But it raises another more serious point. When someone wants to get something approved or agreed by the other party in a contract, they should ensure that the individual they are dealing with has authority to bind that other party. Where in doubt, this should be checked with a board director.'
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