My Fotostop Ltd v Fotostop Group Ltd* (Miss S Prevezer QC sitting as a Deputy Judge;  EWHC 2729 (Ch); 06.11.06)
The parties were in dispute about the terms of an asset sale agreement made between them under which the claimant sold its business and the majority of its assets to the defendant. Under a clause in the agreement, the claimant was bound to transfer to the defendant legal title in a figurative CTM “1 Hour Photos”, following which the claimant was entitled to receive £100,000 plus interest (the sum being held in escrow). If the claimant did not transfer the mark, the defendant was entitled to the money.
The defendant argued that a purported assignment of the mark was not ‘duly executed’ and therefore not effective, as it had not been signed by the defendant. The claimant submitted that, in the context of the agreement, ‘duly executed’ meant duly executed by it alone. The defendant further argued that there had been no valid assignment of the mark in the first place from a third party transferor to the claimant, as there was no transfer of the whole of the undertaking within the meaning of Article 17(2) of Regulation 40/94.
The Deputy Judge adopted a common sense approach to the meaning of “whole of the undertaking” within Article 17(2). If there was a transfer of the whole of an undertaking, then the IPRs would be transferred with it. This meant that even absent written formalities, the trade marks ‘follow the business’. Therefore, even if the third party transferor failed expressly to transfer the legal title of the trade mark to the claimant, on the facts the ‘whole undertaking’ had been transferred, which included the legal title in the trade mark. This was supported by the evidence, which showed a clear intention by the parties to included IPRs in the transfer. On the facts, the IPRs were the main assets of the business and were clearly sold as part of the sale. Accordingly, it was held that the claimant had validly acquired the trade mark.
The Deputy Judge further decided that the subsequent assignment from the claimant to the defendant had also been validly executed, with the result that the claimant was entitled to the sum in escrow.