Goodwill hunting: how to see off patent trolls and profiteers

I CONFESS to a little sadness concerning the merger of Fyfe Ireland (FI) and Tods Murray (TM) and the declaration on FI’s website regarding cessation of trade under the ‘prestigious’ Fyfe Ireland brand.

Fyfe Ireland was established in the 1830s. There must be at least a public interest ground for ensuring such a legal legacy ought not to be scrapped, without first taking intellectual property advice.

Proprietors of unregistered trade marks (eg ‘Fyfe Ireland’) rely on the common law action of passing-off to protect goodwill (the attractive force which brings in custom) in the underlying trading business. Goodwill arises local to the geography of the business. Importantly, goodwill cannot be protected by the original business if the proprietors assign their rights (eg by sale/merger). This fairly limited protection is logical, since the law provides a separate regime for the registration of trade marks and the enforcement of registered trade marks.

Hide Ad
Hide Ad

Registration provides the proprietor of a registered mark exclusive and potentially perpetual protection of the mark. Enforcement of a registered trade mark may be quicker, more cost effective, and in scope more powerful than enforcement of rights in an unregistered trade mark. Why not register, then?

I believe it was in the interests of the partners of FI to file an application for their trade name mark pre-merger. This would have arguably enhanced the value of the brand by swapping local common law rights for exclusive UK statutory rights. Alas, they did not. So with all the profession’s lawyers and all finance men, they could not put this 180-year-old law firm together again.

FI had been put together again in the past. In the mid-1980s Fyfe Ireland merged with Glasgow-based Bird Semple, then demerged seven years later. The business had traded as ‘Bird Semple Fyfe Ireland’. The FI name, even if assigned, had not ceased in trade. With little decay of the goodwill, on demerging there was sufficient brand continuity to merit the continuation of the FI dynasty. In the case of the TM merger, trade under the FI brand has completely ceased. There are little rights in the FI name to therefore enforce. Yet there is value. Accounting practice will dictate that TM will have to write off the cost of the FI goodwill (eg over a ten-year period); a costly endeavour. But it did not have to be so.

Immediately post-acquisition, TM could have filed an application for the ‘Fyfe Ireland’ mark. The goodwill, the nonpareil asset in this deal, was the name. Registering the trade mark would have captured the brand value as at completion date, with no recurring annual expense. It would also have benefited TM’s asset via a depreciation-free window of at least five years – enough time to see if the merger works or not.

Good brand management is concerned not only with adding value, but also protection.

The cessation of trade exposed the FI name to the mercies of patent trolls, goodwill hunters and other profiteers. For this reason, and without want of personal gain, I made a pre-emptive strike in February, filing the trade mark application for FYFE IRELAND.

The value of my registration is at least threefold. It captures the fugacious goodwill let loose by Fyfe Ireland and Tods Murray. It prohibits a future FI demerger from Tods Murray. And it ensures the brand’s value and strategic weaponry are not seized by any unregulated legal market entrants who may ultimately cause a fraud on the heritage-appreciating public. The rights to the name are safe and available to TM on request at any time, subject to reimbursement of legal fees.

In a year when legacy-plotting exercises abound, the value of heritage is being disregarded. Valuable intellectual assets are considered worthless despite monetary or strategic value being able to be extracted from them.

Hide Ad
Hide Ad

Scotland cannot afford to lose its intellectual heritage or the brands that are meant to represent the same. The goodwill associated with our national heritage is the only currency available to perspicacious Scottish lawyers who compete in a globalised marketplace. To quote Proverbs: remove not the old landmark.

l Philip Hannay is an intellectual property expert with Cloch Solicitors

Related topics: