Quantum Advisory Ltd v Quantum Actuarial LLP

Factual and Procedural Background

The appeals arise from a decision of His Honour Judge Keyser KC concerning the use and registration of the mark "QUANTUM ADVISORY" ("the Mark") by the defendant, Quantum Actuarial LLP ("LLP"), and related trademark registrations. LLP was formed in 2007 as part of a reorganisation involving three legacy companies providing pension-related services, including a company formerly known as Quantum Advisory Limited ("Old Quad"). Old Quad had built substantial goodwill and reputation under the Mark prior to the reorganisation.

Following divergent ambitions among the legacy companies' stakeholders, a new entity, LLP, was created to continue the business, servicing legacy clients on behalf of Old Quad under a Services Agreement dated 1 November 2007. The goodwill was ringfenced with legacy clients remaining clients of the legacy companies, while LLP provided services for a fee representing costs only.

Old Quad's assets and goodwill were transferred to the claimant ("Quad"), which later swapped names with Old Quad to become Quantum Advisory Limited. Both Quad and LLP have since used the Mark, with LLP adopting letterheads and branding showing both corporate names until 2018.

Disputes arose regarding the Services Agreement and trademark use. Quad sought declarations affirming the Services Agreement's validity, which were upheld at trial and on appeal. Separately, LLP applied for and obtained registration of four trademarks related to the Mark without Quad's knowledge between June and November 2018.

LLP initially alleged Quad was not entitled to use these marks but later clarified that both parties own separate, concurrent goodwill associated with the Mark and both are entitled to register the trademarks. The trial judge was tasked with determining the nature of the parties' relationship, the basis for LLP's use of the Mark, entitlement to goodwill, and rights to the registered trademarks.

Legal Issues Presented

1. What is the nature of the relationship between the parties; in particular, does LLP owe Quad fiduciary duties whether as its agent or representative or otherwise?
2. On what basis was LLP permitted to use the Mark?
3. Does LLP no longer require any permission from Quad to use the Mark?
4. Who is entitled to the goodwill in the name QUANTUM ADVISORY?
5. Who is entitled in equity to the benefit of the registered trade marks?
6. Is Quad entitled to be substituted as proprietor of the registered trade marks under section 10B of the Trade Marks Act 1994, and in particular (a) is LLP Quad's agent or representative for the purposes of section 10B and (b), if it is, can LLP justify registering the registered trade marks in its own name?
7. What, if any, relief is Quad entitled to?

Arguments of the Parties

Appellant's (LLP) Arguments

• LLP contends that it and Quad own separate, concurrent goodwill associated with the Mark, allowing LLP to register and use the trade marks independently.
• LLP argues the Services Agreement permits it to acquire goodwill in the Mark for its own business and thus no licence from Quad is required after the Agreement's termination.
• LLP relies on clause 7.2 of the Services Agreement to support its right to use assets, including goodwill, for its own purposes.
• LLP challenges the existence of a fiduciary relationship and the judge’s conclusion that LLP’s use of the Mark was limited to the Services Agreement’s duration.
• LLP argues that certain contractual provisions (clauses 7.3-7.5) are inconsistent with a duty of loyalty and thus with fiduciary obligations.
• LLP contends that the registration of the trade marks was justified and not in breach of fiduciary duty.

Appellee's (Quad) Arguments

• Quad asserts that LLP is a fiduciary and that LLP’s licence to use the Mark is coterminous with the Services Agreement.
• Quad claims ownership of all goodwill associated with the Mark, including goodwill arising from LLP’s use.
• Quad argues LLP’s registration of the trade marks, particularly those identical or similar to the Mark, was without consent and in breach of fiduciary duty.
• Quad seeks rectification of the Register under section 10B of the Trade Marks Act 1994, substituting itself as proprietor of the relevant registered marks.
• Quad contends that equitable relief is available for breach of fiduciary duty and that LLP’s registration of the Q Device Trade Mark was also a breach despite the judge’s contrary conclusion.
• Quad maintains that the goodwill in the device element of the Q Device Trade Mark is owned by it, based on the agency and fiduciary relationship.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by affirming the existence of a fiduciary relationship between LLP and Quad, grounded in the Services Agreement which entrusted LLP with the entire operation of Quad’s business, including use of assets and goodwill. The court rejected LLP’s arguments that limitations on contracting authority or contractual duties inconsistent with loyalty negated fiduciary obligations, emphasizing the substance over form of the relationship.

The court analysed the Services Agreement and concluded that LLP’s licence to use the Mark was coterminous with the Agreement's duration. It found no contractual basis for LLP to acquire separate goodwill in the Mark for its own business beyond the licence, which would end on termination.

The court applied established principles that goodwill under a licence accrues to the licensor unless otherwise agreed, and that fiduciaries must not profit from their position without informed consent. It held that LLP’s registration of the trade marks, including those identical or similar to the Mark, was in breach of fiduciary duty.

Regarding the Q Device Trade Mark, the court held it was not similar to the Mark for section 10B purposes. However, it found that LLP’s registration of this mark also breached fiduciary duty because the device was part of the branding used in the legacy business and registration was for LLP’s own benefit without consent.

The court rejected the judge’s conclusion that equitable relief was excluded by EU law harmonisation principles, holding that national law and equity retain a role, particularly where marks are not identical or similar and claims arise from fiduciary breach rather than statutory rights.

The court found that Quad had adequately pleaded ownership of goodwill in the device element of the Q Device Trade Mark, and that it was entitled to relief. It concluded that the Register should be rectified to substitute Quad as proprietor of all four trade marks, including the Q Device Trade Mark.

Holding and Implications

The court allowed Quad's appeal in relation to the Q Device Trade Mark and ordered rectification of the Register of Trade Marks to substitute Quad for LLP as proprietor of the Q Device Trade Mark. It dismissed LLP's appeal.

The decision confirms that a fiduciary agent’s licence to use a trade mark is limited by the terms of their contractual relationship and that goodwill arising under such a licence presumptively belongs to the principal. Registration of trade marks by an agent without consent, even for device elements not identical or similar to the principal’s mark, can constitute a breach of fiduciary duty and justify rectification of the Register. The ruling underscores that equitable principles supplement statutory trade mark law where appropriate, particularly regarding fiduciary relationships.

No new precedent was set beyond the application of established principles to the facts.