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Journal of Intellectual Property Law & Practice, 2024, Vol. 00, No. 00 DOI: https://doi.org/10.1093/jiplp/jpae101 Editorial Trade mark assignments—a continuing academic nightmare

Trade mark assignments—a continuing academic nightmare

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Look at any standard IP textbook, and you might think that the definitive treatment of trade mark assignments begins and ends with section 24 of the Trade Marks Act 1994. However, nothing could be further from the truth, especially when considering the principles underlying cause of action assignments.

The starting point for assessing the validity of a cause of action assignment is to determine what type of cause of action is involved. Historically, passing off is recognized as a cause of action in deceit, first acknowledged in England in Southern v How (1617) 79 ER 400. It was the case then that a claimant must establish deceit to succeed in a passing off claim. Since Millington v Fox (1838) 40 ER 956, it has evolved into a cause of action for breach of trust. Ultimately, it represents an amalgamation of the two, depending on whether actual deception is included in the pleading.

If passing off was genuinely a cause of action for breach of trust, a claimant would be entitled not only to the standard exten-sive inquiry into damages or an account of profits but also to a proprietary injunction in nearly every case, alongside a right to an equitable tracing claim (with a breach of fiduciary relation-ship being a prerequisite). To date, it appears that no claimant in passing off has sought such remedies.

Identifying the nature of a cause of action has two additional important consequences, as it defines the extent of damages a claimant may claim and the freedom to assign that cause of action. It is the latter that is the focus of this editorial. The assignability of a claim in deceit versus one in breach of trust leads to contrasting outcomes.

Any transfer of one of the many causes of action recognized in law must first comply with the requirements of section 136 of the Law of Property Act 1925. Assignments of causes of action in passing off are no exception. This section governs all assignments of various types of causes of action despite the fact that, upon its plain wording, the section merely refers to the assignment of ‘debts' or ‘other legal things in action'. Over time, the courts have considered extending section 136 to almost all other causes of action, but passing off (and registered trade mark infringement) appears not to have yet been considered.

Returning to the duality of the cause of action in passing off, actions in deceit are deemed personal actions and thus are not assignable. This prohibition on assignability is established by cases such as Prosser v Edmonds and subsequent authorities.

The counterpart to deceit in passing off is breach of trust, which, like most causes of action, is unassignable unless the assignee has a genuine and legitimate interest in the assign-ment. This requirement addresses objections based on cham-perty, a public policy consideration preventing assignments of bare causes of action. However, a genuine and legitimate inter-est is generally recognized when the assignment of the cause of action occurs incidentally to the transfer of a relevant property right.

For instance, registered IP rights are defined as ‘property rights' by section 24 of the Trade Marks Act 1994. Similar provisions exist for copyright (section 90 of the Copyright, Designs and Patents Act 1988) and registered designs (defined as ‘personal property' by section 15A of the Registered Designs Act 1949). Patents are also considered ‘personal property' (but not a thing in action) by section 30(1) of the Patents Act 1977.

Registered trade mark infringements could be viewed as a cause of action resembling a statutory tort. Prima facie, such rights are unassignable, as demonstrated by May v Lane (1894) 64 LJ QB and its subsequent line of authorities regarding common law and statutory tort claims. However, a transfer of that prop-erty right together with the right to sue for registered trade mark infringement appears to fulfil the genuine and legitimate interest test.

Similarly, an assignment of copyright that transfers the copy-right in a work, a property right, along with the right to sue for infringement, appears to address the assignability objections typically associated with statutory torts for the very same reason.

Passing off, however, is quite different. It is not a form of prop-erty; rather, it is the cause of action itself. The closest one can come to a property right within the context of passing off resides in the goodwill linked to a name that is the subject of the cause of action. At first glance, this might resolve the public policy objec-tion to any assignment of the cause of action: one could assign the goodwill, the property right, along with the right to sue for passing off.

However, complications arise when transferring the goodwill of a business associated with a name or other trade identi-fier. Common law dictates that any transfer of goodwill must take place along with the ‘manufactory' of the business asso-ciated with it. That was established by the famous case of Pinto v Badman RPC (1891) 8(19) 181. Failing to do so could lead to a situation where goodwill exists in two different hands— the assignor and the assignee—resulting in potential public deception.

To effectively address these restrictions on transferring a cause of action in passing off, it is essential to ensure that any assign-ment meets both the Pinto v Badman requirements and the pub-lic policy objections regarding bare causes of action. Thus, one should transfer the business of the assignor along with its good-will, ensuring that any assignment of the cause of action in

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passing off is incidental to the transfer of a property right when it concerns services rather than goods. There is no manufactory of services.

Even then, there is no clear law associated with the cause of action assignments governing this issue. The closest the courts have come to examining the interrelationship between the cause of action assignments related to IP rights and section 136 of the Law of Property Act 1925 was the judgment of the Court of Appeal in Crosstown Music Company 1, LLC v Rive Droite Music Limited[2010] Civ 1222, a case concerning the assignment of copyright. Although section 136 was discussed, the relationship between it and section 90 of the Copyright, Designs and Patents Act 1988 was left unresolved.

Mark Engelman*

*Email: info@markengelman.co.uk

Senior Member, St. Edmund's College, Cambridge, UK and Intellectual Property Barrister, Thomas Cromwell Group, 4-5 Gray's Inn Square, London, UK

Journal of Intellectual Property Law & Practice, 2024, Vol. 00, No. 00 , DOI: https://doi.org/10.1093/jiplp/jpae101, , Editorial

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Trade mark assignments—a continuing academic nightmare

Trade mark assignments—a continuing academic nightmare

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