Claim No: IP-2022-000066 - [2024] EWHC 1369 (IPEC)

The Defendants have made no submissions to me on this point. The Claimant submits that the Franchisee Defendants could and should have performed basic due diligence to ensure that KK had rights to sub-license the signs they came to use, and that this amounts to reasonable grounds to know. I accept that submission.

In relation to KK, I accept the Claimant’s submission that he knew that Sign 1 was different to the Settlement Sign, and he knew that the Settlement Sign was reached in order to compromise infringement proceedings against him. I have made specific findings that in developing Sign 1 he intended to make it as similar to Morley’s Red and White Mark as he thought he could get away with. In my judgment, he had reasonable grounds to know that use of Sign 1 which was materially modified from the Settlement Sign, would be infringing, particularly given his history of following a strategy of imitating the Claimant’s branding and locations as closely as possible, and the Claimant’s history of taking infringement actions against him.

I further accept the Claimant’s submission that KK knew that the Franchisee Defendants were not named in the 2018 Agreement, were not within the definition of “Related Parties”, and that the 2018 Agreement contained a clause excluding third party rights.