The Never-ending Licence That Ended: Court Of Appeal Clarifies Licence Termination Rights

The Court of Appeal has delivered a notable judgment on the interpretation of term and termination provisions in intellectual property licence agreements. The decision in Zaha Hadid Limited v The Zaha Hadid Foundation [2026] EWCA Civ 192 emphasises that the precise language used in licence agreements can be decisive and that "indefinite" and "perpetual" are not the same thing.

Setting the scene

The dispute concerned a trade mark licence from the celebrated architect, the late Dame Zaha Hadid (the licensor or the "Foundation"), to her architectural firm (the licensee or the "Company") for a running royalty on net income. After her death, the Zaha Hadid Foundation became the licensor and the Company continued trading under Zaha Hadid's brand, paying annual royalties to the Foundation. The Company gave 12 months' notice to terminate in March 2024.

The licence agreement provided that it would "commence on the Effective Date and shall continue indefinitely, unless terminated earlier in accordance with this clause 12" (a one-way termination clause exercisable only by the Foundation).

While the Foundation enjoyed explicit termination rights (including, for example, termination without cause on notice, for material breach and for insolvency), the Company had no express right to terminate and so the issue was: could the Company terminate the agreement on reasonable notice or not.

At first instance, the High Court held that the Company did not have express termination rights and therefore it could not terminate the licence. "What the parties plainly meant, although perhaps it was inelegantly expressed, was that the Licence Agreement would continue unless the Licensor chose to terminate it". The Company appealed.

The Court of Appeal's decision

The Court of Appeal overturned the High Court's decision, finding that either party could terminate the licence on reasonable notice even though the Company did not have express termination rights.

The crux of their reasoning was that the words "continue indefinitely" indicated an agreement of indefinite, rather than perpetual, duration. Sir Colin Birss explained that these are fundamentally different concepts: describing the duration of a contract as "indefinite" is not the same as describing it as "perpetual", and that the two terms "are not synonyms". Whereas an agreement of indefinite duration "can be brought to an end at some unspecified time in the future" a perpetual agreement cannot end, absent express terms to the contrary.

Subsequently, where the parties truly intend for the agreement to be of indefinite duration, a power to terminate on reasonable notice by either party follows as part of those intentions, even where such termination right is a "kind of implied term".

Sir Colin Birss accepted that, in some contexts, the terms conceivably could be used synonymously, but on the wording and structure of this particular licence they were not, particularly given the commercial context. For example, the Court stated that it is not far-fetched to think that a group of architects might want to change their name in the future, and also that it may not make business sense for the Company to continue to promote the licensed trademarks over decades or centuries, noting that architectural styles change with shifts in technology and taste.

Given that the licence fee is reported in the first instance judgment to be "payable whether or not the Marks are used", a perpetual (versus indefinite) duration would not have made commercial sense for the Company. The termination clause was, the Court held, "clearly the place in the document to find out what the parties intended about the duration of the contract", and the word "indefinitely" was used so as not to lock the parties together in perpetuity.

Perhaps the most unusual aspect of the Court of Appeal's decision is its interpretation that "unless terminated earlier in accordance with this clause 12"  is not prescriptive – in the context of this licence, it did not mean that termination may only occur in accordance with such termination clause. Instead, the Court found that an additional (implied) right for either party to terminate on notice was not inconsistent with the specific termination rights granted to the licensor, mentioning also that general contract interpretation principles are factors to be considered but do not determine the outcome.

Key takeaways for licensors and licensees

This decision carries important practical lessons for anyone involved in drafting or negotiating licence agreements:

• Be precise about duration. Wording that a licence will "continue indefinitely", without clear language that it is perpetual, may be construed as a licence of indefinite duration, terminable by either party on reasonable notice even where the express termination provisions are one-way only. If the commercial intention is a genuinely perpetual arrangement, the drafting should use unambiguous language to that effect, and ensure the termination clause is consistent with that intention. But pressure test this with the parties first – circumstances could change, and it may benefit both parties to have an exit route!
• Do not rely on silence. If a licensor intends that the licensee should have no right to terminate, that intention should be stated expressly and aligned with the duration wording, rather than relying on the mere absence of an express termination clause. As this case demonstrates, courts may imply a right to terminate on reasonable notice where the duration language leaves scope for that interpretation.
• Review existing agreements. Parties to existing licence arrangements would be well advised to review their duration and termination provisions in light of this decision, particularly where licences are described as "indefinite" without further qualification. An ambiguity that may have gone unnoticed could, as this case illustrates, prove decisive in a dispute.

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