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In January 2025, we considered the High Court decision in Zaha Hadid Ltd v. Zaha Hadid Foundation, which held that the company was bound by a trademark licensing agreement until terminated by the foundation, and that this arrangement did not offend the doctrine of restraint of trade. The Court of Appeal has now overturned that decision.
"Indefinitely" does not mean "in perpetuity"
The termination clause at the heart of the dispute provided that the licence would "continue indefinitely, unless terminated earlier". Whilst the clause granted the foundation (as licensor) express termination rights, it made no explicit provision for termination by the company (as licensee). Did this silence mean the company could never walk away?
The High Court said yes. The Court of Appeal disagreed.
The Court of Appeal noted that the contractual language was "indefinitely", not "perpetually". An agreement of indefinite duration contemplates that it can be brought to an end at some unspecified point in the future. A perpetual agreement, by contrast, binds the parties together forever.
Two-step approach from Winter Garden Theatre v. Millennium
The court endorsed a two-step framework from the leading 1940s House of Lords decision in Winter Garden Theatre v. Millennium.
- Did the parties intend the agreement to run in perpetuity or for an indefinite period?
- If the answer is "indefinite", then a power to terminate on reasonable notice follows as part of the construction exercise.
Applying this framework, the court found nothing to support the idea that only the licensor would hold termination rights. It also did not make commercial sense for either party to be shackled together in perpetuity. The agreement required the company to promote the use of the trademarks, yet circumstances beyond the parties' control could easily arise that would frustrate this very purpose.
The Court of Appeal held, as a matter of interpretation, that all parties could terminate on reasonable notice. Though it added, rather cryptically, "it might be said that this ... is a kind of implied term, but to the extent that is so, it is one which follows directly from the true construction of the agreement".
Restraint of trade left open
As the appeal succeeded on interpretation, the court did not address restraint of trade. It did, however, offer that trademark licences may belong to a class of agreements where restrictive terms are simply accepted as part of the fabric of a trading society. That analysis was left for another day.
Judgment: Zaha Hadid Ltd v. The Zaha Hadid Foundation
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