Webinar
Intellectual Property: The perils of goodwill
Intellectual Property: The perils of goodwill
The common law property right of goodwill is important to any business, but its fundamental nature is often mis-understood, which results in it being mis-treated by those trying to rely upon it, sometimes with disastrous consequences. In this webinar, Michael Edenborough QC presents an update on the topic and taking questions live.
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Webinar transcript
(Please note this is auto-generated and un-edited)
0:00
Good afternoon, everybody. My name is Mauro Paiano, I'm a partner in the IP team here at Shakespeare amounts now. Welcome to today's webinar on the panels of goodwill.
0:09
This is one in a series of IP webinars, which we're providing, as we continue to adjust to the new abnormal.
0:16
We're delighted to have ... from so caught as our guest speaker today.
0:21
Michael will be well-known to many IP practitioners, he's practiced covers all areas of intellectual property law and procedure involving registered and unregistered rights, including some of the more unusual forms of intellectual property rights, such as plant varieties, moral rights, and geographical indications.
0:38
Also has significant experience in dealing with contentious trademark matters, and he's an author of the Contentious Trademark Registry Proceedings. That's a guide devoted to the practice and procedure relating to contentious matters before the UK trademark registry.
0:54
Now, before I pass it over to Michael, I just wanted to mention the Q and A icon on your screen.
0:59
Please use this to ask your questions as we go along, and we'll answer these at the end of the presentation. So with that, I want to just hand over to Michael to kick us off.
1:12
Great, well, thank you very much indeed, and welcome to everybody this afternoon. On my hope you're all well and not have managed to jump the number of slides already. Wait a minute. Here. It's going wrong.
1:27
Sorry about that. So this afternoon we're going to be talking about the perils of goodwill and now, Why do we need to do this? Surely, goodwill is an incredibly easy thing.
1:40
Sorry.
1:41
We're getting a bit of a problem with the slides.
1:50
Right. Let's stay there.
1:53
The thing about Goodwill is the intellectual property practitioners tend not to like it, because it's an unregistered right. And so, therefore, there's no nice statue through which they can go to match it to which they can go and look everything up and see how it is formulated, because it's a creature of common law. And so, therefore, in order to understand it, you have to look into cases.
2:19
But also, what's interesting is that common lawyers, the people who do all sorts of landlord and tenant things, and more handy like that, they say that they can do it, because it's just another common law tort. So, surely, there's no great if you could put you just pleaded lakatos. Can you go? Wow! I actually fall into a third camp. And that is, even though it might not have a nice, regulated formulated regime, and it is just inverted comas, a common law tort.
2:53
I actually think it's incredibly interesting. It's incredibly subtle, common law wrong.
3:02
And the point is, is that, commonly, you can make lots of mistakes.
3:07
So let's see where we can go, wide's my hmm. Try that.
3:15
So these are the topics that I'm going to be covering. What is Goodwill to? What does it attach? Who owns it?
3:22
How is it transferred? How is it damaged? and how does it die?
3:29
I would just about cover the entire lifetime of this tort.
3:35
Now, the very first thing is, what is Goodwill?
3:39
Now, many of you will have heard and be familiar with this classic quote, the attractive force that brings in custom very old case, 1901, and, in essence, it does encapsulate and still encapsulates what is goodwill, It's the thing that brings in customers, but this is a big problem. It must not be confused with reputation.
4:10
Very, very commonly, you'll see in pleadings, even though settled by quite prestigious council, was the fact that the claimant is the owner of a goodwill and reputation and it goes on like that.
4:27
That is a mistake, goodwill and reputation are fundamentally different.
4:35
Goodwill is protected by the tort of passing off. Reputation is protected by the tort of defamation.
4:45
They are not the same. They're quite different.
4:49
And you can see this quote from wardlow, most seriously misuse term. And it's misused by Judge is a very high authority, and that's a big problem, because this era has been permeated down, handed down and permeates throughout the case law.
5:09
Goodwill is not reputation.
5:12
Reputation concerns, as it says, Yau repute with the general world about something. For example, in a personal capacity, it's Your Honor.
5:24
And so therefore, you can see the difference!
5:27
Let's take a pragmatic example, the last election, and the last general election in this country.
5:34
In December 2019, the labor Party had a reputation, but it did not have a Goodwill, It did not bring in the voters to vote for that party, and that is why, even though it had a high reputation high in that sense, meaning it had a reputation that extended throughout the population, it did not have a strong goodwill sufficient for it to be voted into office.
6:04
Now, the second big misunderstanding is that the goodwill is not a right that resides in an unregistered trademark per se. Now the first thing is, is that you should use the right terminology.
6:21
What one is actually looking at there is an indicia an industry, and as an entirely general term, and it is, in essence, the physical manifestation in which the goodwill resides commonly people get this wrong. So, they think the Goodwill resides in the actual indicia itself which might be akin to a trademark. So they think and therefore, they can do things with indicia.
6:52
That's wrong.
6:53
There is no property right in the industry, per se, the property, right? The thing that can be protected by the torta passing off is the Goodwill.
7:09
Now, to what does Goodwill attach?
7:14
And actually, the answer to that question is very, very simple.
7:19
It is any trading activity that is actually the call, the kernel, all the tools of profiting off, goodwill attaches to a trading activity, and so therefore, it's something about which traders are interested in. But interestingly, can also attach to some premises. and the classic example of that is, for example, a pub.
7:51
And so a pub itself, the actual physical location where public house is sited can have an associated goodwill.
8:03
And that means that when you are selling, for example, a pub.
8:09
Then the real property value, or rather the property value of that pub, falls into two parts: the real property part, bricks and mortar, but also the intangible property part, the goodwill.
8:26
And there's a classic case on this which tries to separate out the goodwill that resides in a public house from the Goodwill that resides with the public and who used to operate public House.
8:41
And the way in which there was rather Flamboyantly quote, was that, the goodwill that attached to the trader, the public, was like, In essence, a dog.
8:54
And that meant that when the trader, the public current moved premises, he took his goodwill with him rather like a dog is faithful to his owner. So therefore, that goodwill mu's with the change of public.
9:13
However, there's a goodwill that resides with the site itself, the public house itself. And that rather buoyantly called Goodwill that was akin to a cat, because the cat was independent of the public good and just actually reside in where the public house was. Because the case then I'm actually fell apart and a number of different ways because they then started talking about goodwill that was akin to mice and rabbits and all sorts of things like that. But that was just an aside, which course, which I actually went down. Know that once they went down that rabbit hole.
9:50
Now, this is in contrast to the fact that private activities do not generate a goodwill. And the reason for that is because there's no trade there.
10:03
So this again highlights the fact that goodwill very essence of goodwill is a trading activity and mere private activities attach.
10:14
Have no goodwill or do not generate any goodwill.
10:21
Now, who owns the goodwill? This can be quite a thorny question.
10:29
So the simple point is that the trading entity itself owns the goodwill. NAFTA trade an entity as a Company, and the company owns the Goodwill. If the trade an entity, it's an individual, then the individual owns the Goodwill.
10:50
And, of course, you can already see that there might be a problem when you have a small company.
10:56
That is, in essence, a one man band that has one Director, the question then arises? is does the Director own the goodwill? What does the company own the goodwill? Well, commonly, the Director will say that they own the goodwill and, therefore, they can take the goodwill when they sell the company.
11:19
That really is often wrong, because the trader is actually the company is a trading company, and so therefore, the goodwill attaches to the company.
11:30
Now there are other forms of legal entities that might also own the goodwill.
11:37
A very common one would be a partnership and a very common example. That is his musical bands. So, you might have a formal partnership as occurs with, for example, law firms, or you might have an informal partnership, which is, commonly, the situation when you have a music band. But, it's the partnership that owns the goodwill that has been generated by the trading activities of the partnership, and it becomes an asset of the partnership. And so, formerly, when the partnership dissolves, you need to sell the goodwill. So, as to realize the asset and distribute the that the monetary value of that asset amongst former partners, that can lead to all sorts of naughty questions when you have a band that loses the drama, for example, and then brings in another drama, or another bass guitarist, or what have you.
12:30
You actually have a series upon shapes that are forming and forming, and the goodwill needs to evaporate and be re formed on each occasion, and that can be factually very complicated.
12:44
Another common way in which goodwill can be owned by more than one person is when you have a joint venture. Or you have Trade collectives, because that's an entity. Admittedly a nebulous entity that is trade. In this example, the goodwill belongs to that entity.
13:03
You might have an unincorporated society, in which case, then, in following the normal way, in which these things work. The assets that unincorporated society hold held on, trust, the offices of the unincorporated society, quite. A lot of charities are actually unincorporated, and so therefore, the assets held by the offices of the charity, and that can lead to quite a few problems down the line.
13:36
But you can see, from what I've already said, that goodwill is generated by trade in activity, and therefore, the goodwill is owned by the trading entity.
13:49
A corollary of that, is it a holding company or a mere trade society, which does not trade, does not therefore, own any relevant goodwill?
14:03
A holding company doesn't trade.
14:06
It can hold the title to things like patents, copyright, and trademarks, but it cannot hold the title to Goodwill because the goodwill is attached to the trading activity and a holding company does not trade.
14:26
That's probably about the most important thing I'm going to say in this talk to bear that in mind a holding company because it does not trade cannot own the goodwill that's associated with the trading activity that occurs with the licensees or the subsidiaries or whatever it's doing, the actual trading.
14:52
Now.
14:55
How is goodwill transferred?
14:58
This relates back to what I've already said.
15:01
So the goodwill attaches to a trading activity and so therefore you need to transfer the thing to which goodwill attaches.
15:14
And that means you actually have to transfer the underlying trade.
15:22
You cannot transfer goodwill in a vacuum.
15:28
If you don't transfer the trade that has generated the trading activity that has generated the goodwill, you cannot transfer the goodwill that is handing glob attached to the trading activity.
15:46
And that brings me to two things that commonly go wrong.
15:51
And that is where people have tried to assign the goodwill engross. Engross means here means it's been separated. The Goodwill is being separated from the trading activity and there's two ways in which there's commonly happens.
16:08
The first of all, the first way is that somebody is purported to license indicia Malone.
16:17
So somebody has purported to license the physical manifestation of the Goodwill, the sign if you want the Mark, if you want, and they've tried to do that in a way that is divorced from the trade inactivity. Now, that license in all ... alone, that is disjointed from any trading activity, is void.
16:44
So if you purport to license the indicia them, without it being attached to the underlying business, that license agreement is void because you can't do that at common law.
16:59
And then that brings me back to what I've already mentioned about holding companies.
17:05
A holding company commonly will hold trademarks, copyright patterns, in an IP context, and quite often, purports to license the use by a subsidiary of the indicia.
17:22
And the reason why that is done is because it purports to own the goodwill in the indicia.
17:32
But that analysis is fundamentally flawed. It's fundamentally flawed because a holding company does not own the goodwill because it is not a trade, an entity.
17:46
And it cannot license in a vacuum, the spice of surgery of the DCM alone.
17:53
And so those license agreements between a holding company and subsidiary avoid, they have no effect.
18:06
Then a related point is when you try to assign the goodwill per se, without a sign, in the underlying business activity.
18:19
And this, again, to put it in the context of a holding company and subsidiary company is a common problem. So you have a holding company that owns, for example, a trademark. You have a subsidiary that's actually doing the trade in.
18:36
Holding company will license the subsidiary to use the registered trademark, yes.
18:43
Quite often in such an agreement, the Trading company purports to assign any goodwill that is generated in the use of the registered trademark back to the holding company.
18:59
But that is an assignment of the Goodwill engross, an assignment of the goodwill by itself, divorced from the trade in activity.
19:09
Because the subsidiary is not a sign in is not sell, it is not part in wave inactivity, it keeps that thing to it, so it is merely purporting to assign what is being generated by the trading activity. Namely the goodwill back to the holding company without the underlying business. That assignment is void, per se.
19:39
Is void bad at common law?
19:43
Now those are two big mistakes that occur when dealing with transfers of goodwill.
19:53
Can I get the next slide?
19:55
Yes.
19:57
Now, how is goodwill damaged?
20:01
The first point you need to notice is that we've been talking about goodwill and it's in the context of the common law tort of passing off. And because there's a common law tort, you need a misrepresentation. Misrepresentation needs to be actionable, in the sense, that it needs to actually have an effect on the mind of the person who has been to see.
20:29
Now, deceit there actually is, is not one that has a men's rare element. It just means that the person has made a mistake, because is a misrepresent T of the misrepresentation.
20:42
And that is to be distinguished from confusion, which is the operative wrong in trademark infringement matters. So it's an operative misrepresentation, not confusion. That is the damage or the damage in mechanism when you're talking about goodwill.
21:05
Now the misrepresentation falls into various different source, and I've just outlined five of them here. The commonest is a direct misrepresentation.
21:18
That is where I say, my goods are your goods.
21:24
Where are you?
21:27
The owner of the goodwill. So I'm misrepresenting, I'm falsely stating that my goods are your goods. That's a direct misrepresentation.
21:41
That's the Communist way in which passed in Office Pleated, but it also might be that instead of saying that my goods are your goods, I might say that my goods are associated with your goods.
21:57
Or it might be my services are associated with the maintenance of your goods for example. And that's a false association because I'm falsely saying the my goods or services are associated with your goods or services.
22:16
And a similar form of misrepresentation arises when I say that I actually my goods or services are licensed by you because that license in kasia and is actually false.
22:33
So if I falsely represent that I have a licensing arrangement with you, you be the owner of the goodwill that again is a misrepresentation.
22:45
Then we get to the situation where we have an extended form of passing in off.
22:52
This is where we say, for example, you have a series of champagne houses who collectively produce a product and sell that product under the ... Sham pain.
23:07
The misrepresentation that I put forward is that I falsely claim that I am part of that group.
23:16
I forcedly associate myself with that extended group and in that situation the extended group can bring an action.
23:28
one member can bring an action or all members can bring an action because the goodwill is owned jointly by them all.
23:37
But what you have to bear in mind, and this goes back to an earlier slide, is that the trading association that looks after that group of traders cannot bring an action because the trading association itself does not trade, It merely looks after the traders. So the goodwill with respect to that trading is belonged by that is owned by the trade is not by the trade in association. And then we come to the last form that I've identified, which is inverse, pass it off.
24:14
And what happens here is I falsely say that your goods are my goods.
24:23
And so I've wrongly associated you with me and that's the inverse strongly associated in me with you.
24:34
This is quite rare actually, but it is a recognized form of misrepresentation that found an action for pass it off.
24:47
Now, how can the goodwill be extinguished?
24:52
Communist way Is that the thing that has given rise to the goodwill name you the trade in activity stops.
25:04
If that happens, the goodwill does not die immediately.
25:08
It dies a slow death.
25:12
So if, for example, I am a trader and I have been producing some goods under a particular ...
25:21
and then I cease to trade, I will still have a residual goodwill that will last beyond my last trade in activity.
25:32
And so there's a slow decline, a slow way, the rune on the vine of my goodwill.
25:39
And after a number of years, which would have to be determined by evidence as subjective factor inquiry, my goodwill will actually have extinguished itself completely and therefore, there'll be no goodwill left to protect.
25:56
Now, there's another way that Goodwill can die and that is if I abandon trade.
26:03
So, that's not just I stop band and trade in.
26:08
Now, this can happen, for example, if I am a corporate entity and the corporate entity is dissolved, that point to the point of disillusion.
26:21
The goodwill is abandoned and it dies at that point immediate. There is no residual goodwill that lasts be owned.
26:33
The dissolution of a corporate entity in that case if the corporate entity were responsible for the generation of the goodwill.
26:40
Now this is particularly important when a company is dissolved and its assets that have not yet been sold path boehner kantor to the crown.
26:54
Because it's assets. For example, trademarks, registered trademarks or things like that.
27:00
Title to that can pass to the Crown, Burnup, I can't hear.
27:05
But the good will evaporate.
27:10
Yeah.
27:11
And so when you inquire of the crown to purchase back the trademarks, you can purchase back the trademarks because good title passed and the crown and you can get good title back.
27:25
But you cannot purchase back any related goodwill. There was associated with the trading activity connected with the use of those trade marks because on the dissolution of the company, the goodwill was abandoned and evaporate completely at that time.
27:42
And so therefore, there's nothing let you come buy back anything.
27:49
Now there's two other ways in which the goodwill can be damaged and extinguished but these are rare.
27:56
The first of which is deceptive trade and now, the Goodwill should point to a unique source, a unique trade source for the goods or services that are associated with the trading activity under and by reference to the indicia.
28:14
But if for various reasons, the number of unassociated entities are using the same or similar similar indicia, then the indicia lose their distinctiveness. And so, therefore, in essence, they become deceptive because you can no longer say with certainty that the use of a tickler and ...
28:43
always invariably points to just one unique trading source.
28:50
Now, you can see that there's a slight conflicts here with the the trading groups, the groups. The champagne and so forth, But that's because in those cases, the indicia champagne.
29:04
Refers to a particular type of wine grown in particular area. And so therefore, that's the true thing that it is saying. It is not saying that there's only one manufacturer and sausage and what it is saying is the wine, the bears, that in DCM comes from a certain place and has been made by a certain process. That's the truth that associates itself with that in tissue.
29:35
And that's why you can have a number of owners of the Goodwill associated with Champagne barked.
29:43
When you have a number of people who are using the same or similar indicia and then not associated any in any way and the truth that you're trying to put forward with the use of the in this year is that goods or services. So, marked originate from a unique trading source that is an ally that becomes ally. And, therefore, the ... becomes deceptive. And that loss to seek distinctiveness leads to fatally its death.
30:20
Now, the last type is adverse possession.
30:23
Now, this is very rare, but what happens here is that you create an entity you who've been trading in a small manner of way, using a particular in this year. And so, therefore the DCM, truthfully, and rightfully points to unique tradings source, which is very small, but he's you.
30:47
And then what happens is that somebody comes along and, swamps your trading activity with the same trade in the same industry, such that, after a period, when actually, everything is confusing.
31:02
But after that, intermediate period, the mark now, sorry, the indicia now, points uniquely and solely to the newcomer, the junior user.
31:18
That means that the Junior user has, in essence, redefine the meaning of the indicia in DC and no longer points to the senior user. It now points uniquely and solely to the junior user. So the Junior user has adversely possessed the ... from the senior user. This is incredibly rare. There was an example where it was alleged but failed the junior use. I had a turnover of about £10000, an intern. And, I think, Stoke newington, the small part of North London. And the junior user had a turnover of £100 million, in the same, in this room.
32:13
So how that was not enough for successful adverse possession through the code and the junior use, as long ... carried on for a while. Then it would be that the junior user would have adversity possess the .... And in essence, the senior user, um, if they had failed to take steps, they would have lost the rights in their senior right in their senior ....
32:40
Wow.
32:43
Then brings me to the summary, which is the protection of goodwill is by the Common Law Tort of passing off. That needs to be distinguished from the common law tort of defamation that protects the reputation of an individual. Normally, an individual it can also be an entity, a corporate entity and the goodwill is designed to protect the trading activity of a trader and so it is intimately connected with the trade inactivity.
33:18
There are no formalities so it arises automatically. As soon as you start trading under a distinctive indicia goodwill arises automatically and you start generating that property rights.
33:32
A property right resides in the Goodwill, which is, in essence, a manifestation of the trading activity and there might be a physical manifestation of that Indian and just CMO or something like that.
33:49
It is fluid in scope and intensity. So the more you trade, the stronger it is, The less you trade, The weaker it becomes.
33:59
If you start trading in a greater area, greater geographical extent, you have a greater sphere of influence. If you only trade in a small way in a small place, the scope extend to your goodwill is thereby limited.
34:17
So it's perfectly possible for two unrelated entities to have the identical in DCM trading in identical goods, but both in a small way to have separate goodwill's.
34:34
So one might be trading down in cool will another trade up in Scotland and the two never meet.
34:41
So therefore, they have a goodwill that permeates only the local activity.
34:46
That's very common, for example, for things like Hairdressing establishment and I have a small catchment area. Very few hairdressers have a pan UK reputation.
34:59
And the way in which this goodwill is damaged by an operative misrepresentation. And there are a number of ways in which that can be done Coleman list, communist of which is a direct misrepresentation. Or there are various other ways in which a misrepresentation might arise.
35:18
Now, I have now spoken into a vacuum for 40 minutes or so.
35:26
So I'm more than happy to try and answer any of your questions.
35:30
I think I might have some questions, Yes, on the Q&A. Right, so I'm going to try and answer these. Kind of the first one is from Felicity. Hello, Felicity Kime noticed you on the attendees list Can they be goodwill generated?
35:48
By use by the public, nicknames and abbreviations answer, Well, you've given an example, EG hug, for Harley Davidson Bikes. Yes, Hogue is actually Harley owners group.
36:05
And the answer is, yes.
36:08
You've also given another example: BMR for BMW cars.
36:13
You say, you make a comment, though.
36:16
There is no trade, but the point being is, is there might be trade.
36:21
So for example, the Harley Davidson earners when they set up their Holley Davis owners' group might: Well, have T shirts made, for example, you know, Hulk **** home or something like mad. And that, therefore, gives you a trade in material goods in this case, T shirts that are sold by reference to the .... Namely, the nickname, Hog.
36:52
It might be the same for BMW cars and Beam, or what have you.
36:57
So there are possibilities. There are potential ways in which, a Goodwill can be generated in the nickname, or an abbreviation, but you need an underlining underlying trade that makes use of that nickname or abbreviation.
37:17
The next question is from Peter Smith.
37:20
Does trade include the activities of charities that might not sell?
37:26
Why does a state might not sell products but do attract donations?
37:32
The answer is: is that it's well established that charities can have a protector more goodwill.
37:41
Now, many charities do have a trade, you know, that sells things like, for example, mugs, or T shirts, or kostas, or what have you.
37:51
But it's actually being considered that the trading activity all secure in bequests from potential benefactors is a trade in activity.
38:05
Therefore, that's a trade in activity, namely the receipt of requests and the securing of those requests. That is an activity that can be protected by Goodwill.
38:17
There are some famous cases of charities, so in other charities, or the courts hate it, because, of course, the course live to the fact that charities are thereby spending the money that is being requested to the charities, not on the good causes for which the request was made, but merely litigate in. But they do understand that the courts to understand that actually it is essential for a charity to maintain its distinctiveness in order to mange maintain and to ensure that it goes to the right charity.
38:54
Now, the next question is from: Mark, Huzzah, can goodwill be licensed to a trade in franchise?
39:06
I've been told, you allow me to answer this question live. Am I doing that live?
39:11
Think I am doing a live.
39:15
The The point, Beanies, You have to be a bit careful here when you have a franchise operation.
39:27
It's the franchisee, But he's doing the trading.
39:32
Therefore, it is the franchisee that is generating the Goodwill.
39:39
And so therefore, it is not the franchise all.
39:44
That is in a position to license the goodwill to the franchisee, because the franchisee already has the Goodwill and doesn't need the license.
39:54
What do you actually do in a franchise or franchisee situation, is a franchise, all, has a registered trademark, And license is the use of the registered trademark to the franchisee, And it is that mechanism that regulates and controls the activities of the franchisee.
40:19
That's how you make sure, for example, McDonald's keeps control of the McDonald's trademarks, but you then get a nasty question of who owns the goodwill that has been generated by the franchisees.
40:37
Strictly the franchisees generate the goodwill than owning the goodwill.
40:43
And they cannot sell that goodwill, back to the franchise, or unless they sell the franchise, they can't sell it in a vacuum.
40:53
I realize that might be an unwanted answer, but that's the way in which it works.
40:59
Now we have a question from an anonymous attendee. How is the monetary value of Goodwill Determined?
41:09
Well, that is actually very difficult.
41:14
And about 20 years ago, its goodwill was not really valued as such.
41:24
When you bought a company, a certain value was ascribed to the Goodwill and Neil's then written off and the accounts and that's a little bit of an accountancy fudge.
41:33
What happened about 20 years ago was that Mac, which is, all of a sudden, decided they wanted to value the Goodwill that vested in the mac Mathias indicia in the sale of a smack, Betty's biscuits, and he described the value of one million pounds to that good will. And the reason it did that is because it wanted to put an asset in its balance sheet so you could then borrow against that asset.
42:10
Now how do they reach the value of one million pounds?
42:14
To be blunt, they work backwards. They worked out how much they wanted to borrow. What's the value of the asset they needed in order to secure that borrowing and then put a value to that on them on the tray only on the indicia?
42:30
It's very difficult to value, goodwill, because it is that nebulous thing, which is the attractive force that brings in custom.
42:41
So a hypothetical theoretical way of doing it, is you have the production of goods that are identical to the goods that are branded with the indicia.
42:55
And with respect to that unbranded trade, you work out what your turnover would be, what your profit margin would be.
43:04
And you compare that with your turnover and profit margin of the branded goods, the good, the bad indicia.
43:12
And you hope that there's a significant uplift with respect to the trade of the branded goods.
43:18
When you ascribe that up to the value of the goodwill, it's a very, very precise way of doing things.
43:29
I have another question from Peter Smith.
43:34
Does ownership of goodwill ultimately depend on public perception rather than form or transfers? Yes, is the answer to that question? And the Reason is, is because it's the public perception of who is the trading entity that is responsible for the goods or services that bear the indicia that performed under by reference to the indicia.
44:00
So the former transfers that works, if you are transfer in the business that is associated with the Goodwill, But if you're for transfer tris in essence, to deceive the public by divorce in the goodwill from the trading activity, then that formal transfer fails and the true situation prevails.
44:25
So I think I've answered that question.
44:28
I've got a couple of additional questions, if that's all right. Cool. one is kind of an assignment of goodwill in price as part of a settlement agreement and the passing of dispute ever be effective.
44:41
And I've got a comment which should assign it be construed in effect as a simple permission for the ... to use the relevant sawing along with an undertaking by the ..., to no longer use it.
44:53
Well, you see what you have? There is a series of interlocked questions as you are well aware.
45:03
If in essence the agreement purports to assign the goodwill engross without the underlying business, then the assignment engross is null and void.
45:16
That's easy, but there may be a series of collateral agreements whereby what happens is the parties promise for consideration.
45:28
And therefore, it's legally binding, because it's a contract not to sue or not to interfere with, or not to stop in some way the activity that the other party is then doing.
45:41
And so therefore, it amounts to in essence. A non-compete or unknown challenge will not interfere in Type Clause, depending on the exact details, how you'd want to phrase it.
45:54
And so you can end up with a situation whereby the business resides or remains where the original party but and that original party, men does not use going forward in DCM that was associated with its trading activity.
46:15
But it then allows because it promises not to stop. The new party from using the DCM in relation to the new party is trading activity.
46:27
What happens then is that the old goodwill is, in essence Abandon because it's decided not to use it.
46:37
Then the new party generates a new goodwill, and because it's the trade in entity, it is the owner of the new goodwill, right? And it has to start afresh in essence with the new Goodwill account.
46:51
Try it. Yes. On the back of yeah. It doesn't have a lot more if it doesn't do anything.
46:56
Even though even just banks the assignment so, to speak, that's of no use to manual based spank nothing.
47:07
I've got one more question, but I just finished is another question. The license agreement, there might be a provision that the goodwill in years to the benefit of the license, or give neurons just now, about well-being, a matter of public perception, do such provisions in licenses, have any effect.
47:25
The short answer is no. There are no void.
47:32
OK, because I mean the, because it's quite simple.
47:37
What's trying to happen is that the trader, which in this case is the licensee, generates the goodwill.
47:49
But he is then, in essence, dynamically assigning back or proportion dined to dynamically assigned back, then generated goodwill.
47:59
But without reference to the underline trading activity, that, therefore, amounts to a dynamic assignment, engross of the goodwill divorced from the trading activity, which is void of common law OK, thank you and my final question. You mentioned earlier that goodwill dies of dissolution of a corporate entity. Yes. What? What would happen if the company's restored to the register? Has it still lost the goodwill? Yes. Yes. It's quite easy. See, what you need to do is you need to think about it one step at a time of a bear, a very little brain, and so, therefore, you must just take very small steps.
48:41
Company, create an activity, generates a goodwill, that's fine, company dissolves. So, therefore, the abandons is goodwill, Goodwill dies at that point.
48:54
Company remains dissolved for a period of time.
48:59
So, therefore, the company is dead.
49:01
Because of the way in which the company law works, you're allowed to resurrect a company, you are allowed to bring it back to life, and you can do that for various purposes.
49:12
So, the company spring's back to life but that's a result of statute, not a common law.
49:20
So, therefore, the statute has no bearing upon the common law situation, which is the goodwill has died, and that Ted, you cannot resurrect the dead goodwill.
49:31
You can resurrect a company that walls dead.
49:37
Excellent. Thank you, Michael. And, thanks, thanks very much for a very helpful. and NASA's got any more questions. I think that's the list is, pretty disaster list is one that you've already. Yeah. Yeah, so that brings us to the end of the webinar. And I hope everybody found useful. If there was something that you'd like further information on, or have a specific query on, any matter that you'd like to discuss, Please let us know, and we'll be happy to help.
50:05
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50:14
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