TC09562 - [2025] UKFTT 00762 (TC)

Fecha: 23-May-2025

Issue Two – the scope of the rule prohibiting assignment “in gross”

Issue Two – the scope of the rule prohibiting assignment “in gross”

The parties’ submissions

65.

Before I consider whether, on a realistic view of the facts, the effect of the Agreements in this case was that CPW disposed of the Goodwill to BBUK, it is necessary to consider the scope of the common law rule prohibiting the assignment of goodwill “in gross”.

66.

Mr Gammie accepted the basic proposition that the goodwill attaching to a business could not be assigned “in gross” – which is to say without the assignee’s taking over some relevant interest in the business to which the goodwill related. However, he said that a “relevant interest” for this purpose did not require the assignee to have acquired the business to which the goodwill related or any of the assets of the business. It merely required that, following the assignment of the goodwill, the assignee was the person for whose benefit the business was carried on.

67.

In making this submission, Mr Gammie relied on the decision of Geoffrey Hobbs QC as the appointed person in a trade mark dispute in Kurobuta Limited v Hallsworth [2021] R.P.C 13 (“Kurobuta”). In Kurobuta, the appointed person had concluded, at paragraphs [37] to [79] of his decision, that an assignment of goodwill in the form of unregistered trade marks could be valid even if it was not accompanied by a transfer of the business to which the trade marks related or the assets and resources of that business. In the view of the appointed person, all that was needed was that, following the assignment:

(1)

the assignee should be capable of turning the goodwill to account; and

(2)

there should be no likelihood of deception.

68.

In reaching that conclusion, the appointed person had referred to the development of the authorities in this area, as demonstrated in two earlier judicial decisions, namely:

(1)

the Privy Council decision in Star Industrial Company Limited v Yap Kwee Kor trading as New Star Industrial Company [1976] F.S.R.256 (“Star Industrial”); and

(2)

the House of Lords decision in Scandecor Developments AB v Scandecor Marketing AB [2001] UKHL 21 (“Scandecor”).

69.

In Mr Gammie’s view, these decisions showed that that an assignment of goodwill could still be valid without a transfer of the business to which the goodwill related or the assets of that business as long as the assignee was capable of turning the goodwill to account in the future and there was no deception involved.

70.

A critical part of the decision in Kurobuta was paragraph [75], in which the appointed person noted that a business was not a thing but a course of conduct and went on as follows:

“Whether by choice or through force of circumstance, the resources and facilities deployed for the purposes of a business are liable to come and go. Meanwhile, the goodwill built up and acquired for the benefit of the business subsists as an intangible asset with a lifespan of its own. It is owned via the right to control exploitation of the “attractive force which brings in custom” to the business which has generated it. That right can normally be transferred with the transferee then becoming entitled to manage for itself the task of organising the resources and facilities it needs or wishes to deploy for the purpose of exploiting the goodwill of the business. The law does not appear to me to stand in the way of that being done by the transferee using pre-existing or yet to be procured or any combination of pre-existing and yet to be procured resources and facilities. It would otherwise not be possible to effect a transfer of the subsisting (which I take to include residually subsisting) goodwill of a business which has for any reason lost or run down or been prevented from utilising most or all of its tangible assets. So even if (which was a matter not addressed in the evidence) no physical assets were delivered to the applicant under the Assignments, that would not, in my view, render them incapable of being Assignments of the goodwill of the “Kurobuta business” (viewed as an activity) in relation to which the “KUROBUTA trade name” had previously been used.”

“It is conceded on behalf of the Hong Kong Company that the right of user of the unregistered mark or get-up intended to be conferred upon the Singapore Company was exclusive; the Hong Kong Company could no longer use it itself in relation to goods to be sold, or otherwise traded in, in Singapore.

At common law this right of user of the mark or get-up in Singapore was incapable of being assigned except with the goodwill of that part of the business of the Hong Kong Company in connection with which it had previously been used. So, if despite the temporary cesser of the Hong Kong Company’s business in Singapore after the import duty on toothbrushes had been imposed in 1965, it still retained – as well it might (cf Mouson & Co. v Boehm (1884) 26 Ch.D. 398) – a residue of goodwill capable of being revived in 1968, any right of property in that goodwill would have passed to the Singapore Company under the Agreement. The Singapore Company is not a party to these proceedings; and their Lordships express no view as to what rights, if any, it would have been entitled to enforce against the respondent if it had been the plaintiff in a passing-off action brought against him”.