You may not often hear the term ‘bona vacantia’ – but all lawyers learn about it. It rarely impacts intellectual property rights where a lawyer is advising but things can go wrong. Bona vacantia means ‘vacant goods’ and is the term for when ownerless property passes to the Crown (government). Typically, a well-ordered business will dispose of intellectual property assets before it is deemed ‘ownerless’ but if you fail to do that, you can lose it. A recent case in the Enterprise Court demonstrates how frustrating that can be.
Master Kaye sitting in the Enterprise Court had to deal with a situation of bona vacantia, and it is a helpful reminder that if a company closes and a new company replaces it, without an effective assignment of any intellectual property (IP) (in this case, a trade mark), the rights do not transfer. The case concerned a sign which was alleged to enjoy copyright protection and trade mark originally owned by The Notting Hill Shopping Bag Company Limited (called NHBCL in the judgment). Ms Courtenay-Smith was the creator of the sign, and she had traded via a company, but she dissolved it voluntarily, as opposed to forced dissolution as happens in insolvency, and there was no evidence of an intention to ever restore it. Before dissolution, the trade mark at issue and goodwill in the business had not been assigned, meaning those assets automatically passed as bona vacantia to the Crown (under section 1012(1) of the Companies Act 2006).
The claimant alleged that the defendants infringed her artistic copyright subsisting in the logo, but that was a separate issue and here we focus on the dispute over the trade mark. The judge explained the trade mark issue in this way:
“Is the Trade Mark invalidly registered and liable to be deleted from the register because:
- It expired on 2 May 2023 and was not properly renewed on 22 March 2023 by [NHBCL] because it was bona vacantia and, at all relevant times, property of the Crown such that it was not renewed by or with the authority of the Treasury Solicitor.”
The judge found that the company which held the rights was dissolved on 10 April 2018, and that the trade mark had not been assigned or transferred out of the company. It therefore remained an asset of the company which then vested in the Crown bona vacantia. The judge observed that assets which pass bona vacantia to the Crown once brought to the Crown’s attention will generally either be disclaimed or sold, and this can include IP rights. However, it does not matter whether the Crown knows that assets have vested in it. It also does not matter that there was an attempt to use the mark via a restored company; from 10 April 2018 the IP rights of the restored company (meaning the trade mark) had vested in the Crown. Thereafter, only the Crown was in a position to give permission for any continued use of the logo or the brand name or the trade mark. Consequently, any continued use was without the permission or consent of the proprietor.
The lesson here is that if you are closing a business, but perhaps planning on a new similar venture, take advice on your IP rights before you dissolve. Otherwise you may find you have lost your valuable rights!
If you need advice on transferring your intellectual property rights, please contact James Tumbridge.