When does an arbitration clause apply to trade mark infringement proceedings?
The Court of Appeal recently found that a company which had acquired the BEVERLY HILLS POLO CLUB trade marks was bound by an arbitration clause in an agreement signed by its predecessor. More details on the first instance decision are here.
Arbitration clauses are common in many tech agreements and, as this case shows, these clauses can have far reaching an unintended consequences not just on the original parties but on their successors in title.
The case is Lifestyle Equities CV & Anor v Hornby Street (MCR) Ltd & Ors  EWCA Civ 51.
Lifestyle Equities acquired the UK and EU trade marks for BEVERLY HILLS POLO CLUB in 2009. It subsequently sought to bring an action for trade mark infringement and passing off over the use of the SANTA BARBARA POLO & RACQUET CLUB marks.
However, there was a prior 1997 agreement that was made in the context of a trade mark dispute in the United States and Japan, and made provision for use of the marks in all countries. This agreement provided for any dispute to be resolved by arbitration in Los Angeles, United States and was binding on the parties, their “heirs, administrators, successors, assign[ee]s, licensees” and others.
At the Court of Appeal, Lord Justice Lewison and Lady Justice Macur disagreed with the first instance judge’s finding that Lifestyle Equities had become party to the 1997 agreement and was estopped from denying this. But they agreed Lifestyle Equities was bound by an arbitration clause in the 1997 agreement, under Californian contract law. They therefore granted a stay of the case.
The third judge, Lord Justice Snowden, disagreed. He did not view the dispute as a contractual matter and held the applicable law was English law in respect of the UK trade mark and EU law in respect of the EU trade marks. He said this law “would apply to the substantive underlying dispute as to whether the co-existence provisions … were binding on the Appellants or not” and the same law should apply to the question whether they are bound by the arbitration clause.
What does this all mean?
While this case clearly vexed the Court of Appeal judges, the outcome provides a clear lesson for businesses that acquire trade marks from other parties: it is vital to understand if there are any pre-existing arrangements that will constrain your ability to use and enforce the mark. You may not just be acquiring a valuable brand, but also certain commitments and obligations.