Right To Terminate A Trade Mark Licence On Reasonable Notice - UK Court Of Appeal Overrules High Court

The Court of Appeal has clarified when a right to terminate a trade mark licence may be implied. In Zaha Hadid Ltd v The Zaha Hadid Foundation [2026] EWCA Civ 192, 27 February 2026, it held that the presence of express termination for one party does not prevent an implied right of termination for the other party, even where the agreement contains no express right for that party to do so.

The decision is significant for trade mark and brand licence agreements expressed to continue 'indefinitely', particularly where the licensee is required to pay ongoing royalties. The commercial expectation in such an arrangement may be that the licence continues until the licensor exercises its termination rights. This judgment highlights that, absent clear drafting to the contrary, a licensee may nevertheless be able to terminate the agreement on reasonable notice – thereby bringing the royalty stream to an end.

The trade mark licence under consideration here was between licensor, the Zaha Hadid Foundation (the Foundation) which is the holder of Dame Zaha Hadid's ZAHA HADID trade marks following her death in 2016, and licensee, the Zaha Hadid Limited (the Company) which operates the international architectural practice founded by Dame Zaha Hadid.

The Court of Appeal (Sir Colin Birss (Chancellor of the High Court), Lord Justice Peter Jackson and Lord Justice Popplewell) all agreed that, although there was no express provision for the licensee's right to terminate with reasonable notice, it was implied in the contract.

Background

The parties which were both organisations set up by the renowned architect Dame Zaha Hadid prior to her death, were in dispute as to whether the Company (the licensee) could terminate the trade mark licence agreement on reasonable notice, despite the contract not granting it an express termination right.

The Company's stated intention in terminating was not, ultimately, to relinquish the use of the name Zaha Hadid in its practice, but to renegotiate the terms of the contract in order to reduce the licence fee which was set at 6% of net income. In March 2024, the Company gave 12 months' notice of its intention to terminate. It was accepted by the Foundation that 12 months would constitute reasonable notice, however the Foundation did not agree that the Company had a right to terminate as there was no express provision for this in the contract.

In the High Court ([2024] EWHC 3325 (Ch), 20 December 2024), Adam Johnson J had held there was no term in the contract granting the Company the right to terminate on reasonable notice, and he had decided not to imply a term due to the fact that the submissions before him had been on construction ("Mr Bloch KC has firmly put his argument as one based on construction alone, and made it clear in submissions that he is not seeking to imply a term.") and instead rejected the Company's arguments based on restraint of trade. The Company appealed this decision.

Contractual interpretation

The central question was whether the licence agreement, which was expressed to continue "indefinitely unless terminated earlier in accordance with Clause 12" could nevertheless be terminated by the licensee on reasonable notice.

Clause 12 set out express termination rights for the licensor (the Foundation) only, including a right to terminate on three months' notice and immediate termination for a breach by the licensee.

The licensor (the Foundation) argued that these unilateral express termination provisions demonstrated that the parties had deliberately allocated termination rights asymmetrically, with the effect that the licensee had no ability to terminate the agreement. The Court of Appeal rejected this interpretation.

In the leading judgment , Sir Colin Birss C. emphasised that describing an agreement as continuing 'indefinitely' does not mean the same as 'perpetually'. The wording of the contract "does not purport to lock the parties together forever".

Importantly, the Court held that the presence of express termination rights for one party does not necessarily exclude an implied right of termination for the other party. The fact that the Foundation, as licensor, had specific termination rights, did not mean that the Company as licensee was locked in to the agreement. Instead, the Court concluded that the agreement, properly constructed, was one that continued indefinitely until terminated; in the absence of language clearly excluding the licensee's ability to terminate, a right for them to terminate on reasonable notice could be implied.

As such, it was held that a right for the licensee to terminate with reasonable notice was implied in the contract. Lord Justice Peter Jackson and Lord Justice Popplewell both agreed with this construction.

Restraint of trade

As the appeal was allowed with regard to the construction of the licence, it was not necessary to address the restraint of trade issue. Nonetheless, Sir Colin Birss C. offered brief commentary on the issue. The 'trading society' test as outlined by Lord Wilberforce in Esso v Harpers Garage [1968] AC 269, comes from the English courts' restraint of trade doctrine and is a way for the courts to assess whether a contractual restriction on a party's ability to trade is reasonable and therefore enforceable. This test, as iterated by Lord Wilson in Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd [2020] UKSC 36, assesses whether a term (i.e. the proposed restraint)

Although Sir Colin Birss C. noted that this test was not universally applicable, he stated that it would be concerning in the instance of trade mark licences which "could be an example of a class of agreement in which terms which might appear restrictive (such as restrictions on marketing and requirements to use the mark coupled or not with a best endeavours clause) are in fact accepted as part of the structure of a trading society".

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