Of a Dame and the King (of Beer): when an indefinite trade mark licence can end

Where the use of someone else’s trade mark or other intellectual property right is vital to a company’s business, the owner may sometimes grant to that company a licence that is stated to be perpetual or indefinite. The UK Court of Appeal recently had to consider whether those terms were synonymous or whether an “indefinite” licence of a famous architect’s trade marks could be terminated by the licensee on reasonable notice.¹

In a subsequent case concerning the distribution of Budweiser beer,² the Privy Council provided useful guidance as to how a period of “reasonable” notice of termination should be determined.

The trade mark licence dispute

In 2013 the famous architect, Dame Zaha Hadid granted to the architectural practice that she had founded, Zaha Hadid Limited, the right to use registered trade marks comprising her name. When Dame Zaha died, the Foundation that she had established to protect her name and legacy became the architectural company’s licensor.

Although the company wanted to continue using the ZAHA HADID trade marks, it was unhappy with the royalty provisions of the licence so, in March 2024, gave 12 months’ notice of termination. The Foundation argued that the “indefinite” licence was not terminable by the company – it was given no express rights of termination by the licence - and this argument was accepted by the trial judge. The company appealed.  

The Court of Appeal finds for the company

Although the express terms of the licence gave only the Foundation the right to terminate the agreement, the Court of Appeal found that the trial judge was in error in deciding that this meant that the company had no right to terminate. “Indefinite” was not the same as “perpetual” and implied that there was no intention to lock the parties together forever. Such an intention would, moreover, have made no commercial sense given the many good reasons why the company might not wish to operate forever under the Zaha Hadid name.  

Since there was nothing in the agreement, or imported from the intention of the parties, that was inconsistent with a right for either party to terminate on reasonable notice (a right that the courts had construed in, or implied into, many previous contracts), the company was entitled to terminate the contract in this way.

What is “reasonable” notice of termination?

Because the Zaha Hadid Foundation had accepted that, if the company had the right to terminate the licence agreement on reasonable notice, the 12 months’ notice it had given was reasonable, the Court of Appeal did not have consider this point in any detail. This was very much the issue, though, before the Privy Council in a case litigated initially in the Bahamas between the Anheuser-Busch group (“AB”), makers of Budweiser beer and other beverages, and Commonwealth Brewery Ltd. (“CBL”).

The dispute related to an informal distribution agreement that had been in place for about 40 years and under which AB gave BHL (which had subsequently merged with CBL) the exclusive right to distribute AB’s products in the Bahamas. In 2015, AB purported to terminate the agreement on 3 months’ notice (subsequently increased to 3 ½ months’ notice). BHL did not dispute AB’s right to terminate. It did, however, argue that this was not a sufficiently long period of notice and, when AB began proceedings in the Bahamas in respect of invoices not paid by BHL, counter-claimed for substantial losses that it said arose from AB’s wrongful termination.

The Bahamian proceedings

The trial judge in the Bahamas agreed with BHL, finding that a reasonable period of notice would have been 15 months, considering factors such as the length of the commercial relationship, BHL’s investment in the AB brands and the period during which BHL suffered loss from the termination. This decision was overturned by the Court of Appeal which found that the 3 ½ months’ notice given by AB fell within the 3-6 months’ period of notice which it considered would be reasonable. BHL appealed to the Privy Council.

The Privy Council’s decision

The Privy Council pointed out that, in this type of situation, the aim of the court is normally to determine such period of notice as will reasonably cushion the recipient of the termination notice from a sudden loss of business and allow it to adjust its business arrangements. In making this assessment, the length of the parties’ relationship is a factor but not critical since the ending of a relationship (together with a consequent loss of profits while the business adjusts to the new situation) is an ordinary business risk. The trial judge had erred in tying the period of reasonable notice to the period during which BHL’s profits had been reduced by the termination.

The Privy Council agreed with the Bahamian Court of Appeal that 3 ½ months was a reasonable period of notice in this case bearing in mind that: the agreement itself was informal; AB’s products represented only 10% of BHL’s business; under the distribution arrangement, BHL was permitted to sell competitors’ products; BHL’s investments in its business during the relevant period did not relate specifically to the distribution of AB’s products and its staff could be allocated to the marketing and sale of other products; the interests of AB in being able to set up a new distributorship within a reasonable period of time; since the parties were obliged to deal with each other during the notice period, a lengthy period of notice was not in the commercial interests of either party.

Takeaways

Ideally, a trade mark licence or other agreement will have clear and comprehensive provisions setting out the circumstances in which the agreement may be terminated and, where appropriate, the period of notice required to bring the agreement to an end. Unless contradicted by the express terms of the agreement, UK courts will readily construe that an “indefinite” agreement allows either party to terminate on reasonable notice.

The Anheuser-Busch judgment shows that determining what is “reasonable” notice in this context requires an assessment of many different factors and is not simply linked to the period during which the agreement has continued to that point.

Apart from this, would-be licensees of trade marks or other IP rights should note that an “indefinite” licence may well be terminable by the licensor (as well as by the licensee) on quite short notice. This wasn’t a problem for the licensee in the Zaha Hadid case. However, in many situations, a business that trades under a name licensed to it by someone else will want a licence that states expressly that the licence can be terminated on notice only by the licensee (and not the licensor), at least in the absence of the licensee’s insolvency or serious breach of contract.

[1] Zaha Hadid Limited v The Zaha Hadid Foundation [2026] EWCA Civ 192

[2] Anheuser-Busch International Inc. & Anor. v Commonwealth Brewery Ltd [2026] UKPC 8