Court of Appeal Clarifies Fiduciary Duties and Trademark Ownership in Quantum Advisory Limited v Quantum Actuarial LLP

Citation: [2024] EWCA Civ 247
Judgment on

Introduction

In the case of Quantum Advisory Limited v Quantum Actuarial LLP [2024] EWCA Civ 247, the Court of Appeal engaged with complex issues primarily concerning the use of trademarks, the accrual of goodwill, and fiduciary duties in a commercial context. This case is significant for its elucidation of the responsibilities an agent owes to its principal, particularly regarding intellectual property rights and acts that may constitute self-dealing or a breach of duty.

Key Facts

Quantum Advisory Limited (“Quad”) and Quantum Actuarial LLP (“LLP”) were in dispute over the use of the trademark “QUANTUM ADVISORY” and several derivative registered trademarks applied for and obtained by LLP. Initially, after the reorganization of associated companies including Old Quad, LLP was permitted to use the “QUANTUM ADVISORY” name under a service agreement. Over time, LLP registered four marks which included the contested stylized “Q” mark without Quad’s consent. Quad sought rectification of the trademark register and declarations related to the goodwill associated with the “QUANTUM ADVISORY” mark.

Fiduciary Duties and Goodwill

The case deepened the understanding of fiduciary relationships in a commercial setting, especially regarding actions that an entity may take whilst bound by such duties. The court determined LLP was acting as a fiduciary to Quad, thus owing duties of loyalty and care, despite not having authority to contract on behalf of Quad. It held that, in matters related to the fiduciary relationship, LLP could not act for its benefit without informed consent from Quad. This was based on the principles stated in Bristol and West Building Society v Mothew and similarly articulated in cases like Arklow Investments Ltd v Maclean and Children’s Investment Fund (UK) v Attorney General.

Trademarks and Rectification

In terms of trademark law, the court dealt with the provisions under section 10B of the Trade Marks Act 1994, which aligns with Article 13 of the Trade Marks Directive and Article 6septies of the Paris Convention. This section addresses situations where an agent or representative registers a trademark without the consent of the principal, who is the proprietor of the mark, allowing the principal to claim the registered mark. The court agreed with the notion that ownership and proprietorship of a trademark for rectification purposes under section 10B are issues for national law, as highlighted in caselaw like Sribhan Jacob Company Limited’s Trademark Application and the CJEU’s decision in Specsavers International Healthcare Ltd v Asda Stores Ltd.

Equitable Remedies

The judgment also considered the availability of equitable remedies notwithstanding section 10B’s statutory framework, which was questioned following principles from Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd. It was determined that where an agent or representative registers a mark that is not identical or similar to any the principal’s mark, it is possible to have a separate claim in equity for breach of fiduciary duty, as evidenced by Salvador Benjumea Bravo de Laguna v Esteban Torras Ferrazzuolo and Ball v The Eden Project.

Outcomes

The case concluded with distinctive outcomes for the different marks under dispute:

  • The Word Trade Mark, Device Trade Mark, and Device Series Trade Mark were held to be either identical or similar to Quad’s “QUANTUM ADVISORY” mark. LLP’s registration of these marks was not justified, constituting a breach of fiduciary duty, thereby entitling Quad to rectification under section 10B.
  • As for the Q Device Trade Mark, whilst it was found not to be identical or similar to Quad’s mark and despite the lack of pleadings before the trial judge for ownership in this mark, the Court of Appeal still granted rectification on the basis of a breach of fiduciary duty. This decision underscores the notion that an agent can violate fiduciary duties beyond the scope defined by section 10B.

Conclusion

The decision in Quantum Advisory Limited v Quantum Actuarial LLP highlights the bounds of fiduciary duties in relation to intellectual property and the use of trademarks. It offers cogent guidance on the harmonization of EU law with national law, affirming the role equity can play in supplementing statutory trade mark rights, particularly where misuse of power and trust arises. The impact of this decision reaches beyond trademark law by characterizing the fiduciary relationship in the business context, emphasizing the importance of loyalty and the prohibition of self-dealing without express, informed consent of the principal.

Related Summaries