Quantum Advisory Ltd v Quantum Actuarial LLP
| Jurisdiction | England & Wales |
| Judge | Keyser |
| Judgment Date | 18 January 2023 |
| Neutral Citation | [2023] EWHC 47 (Ch) |
| Docket Number | Case No: IL-2021-CDF-000001 |
| Court | Chancery Division |
[2023] EWHC 47 (Ch)
HIS HONOUR JUDGE Keyser KC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: IL-2021-CDF-000001
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN WALES
INTELLECTUAL PROPERTY LIST (ChD)
Cardiff Civil Justice Centre
2 Park Street, Cardiff, CF10 1ET
Emma Himsworth KC and Guy Adams (instructed by Harrison Clark Rickerbys Limited) for the Claimant
Jonathan Hill (instructed by Acuity Law Limited) for the Defendant
Hearing dates: 1, 2 and 3 November 2022
Approved Judgment
This judgment was handed down remotely at 10.30am on [date] by circulation to the parties or their representatives by e-mail and by release to the National Archives.
HIS HONOUR JUDGE Keyser KC
This judgment was handed down remotely by email to the parties and release to The National Archives. The date and time of hand-down is deemed to be 10.30 a.m. on 18 January 2023.
Judge Keyser KC:
Introduction and Background
This is my judgment after the trial of one of a number of disputes that have arisen between the claimant, Quantum Advisory Limited (“Quad”), and the defendant, Quantum Actuarial LLP (“LLP”), in the context of the commercial arrangements between them. The present dispute concerns the basis on which LLP is permitted by Quad to use the mark QUANTUM ADVISORY (“the Mark”), the ownership of trade mark registrations that LLP obtained for the Mark and various associated marks, and the ownership of goodwill associated with the Mark. A related dispute concerning the ownership of a domain name has now been resolved.
The background to the relationship between the parties has been set out at length in two judgments in an earlier case: my own at first instance, [2020] EWHC 1072 (Comm); and on appeal that of Carr LJ, [2021] EWCA Civ 227, [2022] 1 All ER (Comm) 473. I take the following summary largely from Carr LJ's judgment, supplemented by my own earlier judgment, the parties' helpful agreed case summary, and the evidence in these proceedings.
LLP is an entity formed in 2007 as part of a re-organisation of three businesses providing pension-fund-related services: Quantum Advisory Limited (“Old Quad”: not the claimant), Renaissance Pension Services Limited (“RPS”) and Quantum Financial Consulting Limited (“QFC”) (together, “the legacy companies”).
Old Quad was incorporated in 2000 by a group of former colleagues at PricewaterhouseCoopers LLP: Martin Coombes, Peter Baldwin, Andrew Reid-Jones and David Deidun. Mr Coombes was its single largest shareholder and managing director.
Old Quad carried on business as a provider of administrative, actuarial and related services, primarily for defined-benefit pension schemes. It carried on its business in the name Quantum Advisory, or “QA” for short. In March 2000 it procured the registration of the domain name quantumadvisory.co.uk, and shortly afterwards it established a website at the domain, which it used thereafter for the purposes of its business. It also adopted the style for email addresses of name@quantumadvisory.co.uk. Its letterhead showed the company name, with a QA logo, as well as the website and email addresses.
Also in 2000, QFC was set up for the purpose of undertaking regulated financial services work associated with Old Quad's pensions consultancy and administration work. Mr Coombes was its majority shareholder for regulatory reasons; it was understood that he held his shareholding on trust for Old Quad.
In 2004 Old Quad entered into a joint venture with a team led by former colleagues at Bacon & Woodrow, including Robert Davies and Mark Vincent. The venture involved the creation of RPS, of which Old Quad and Mr Davies were the principal shareholders. RPS was to carry on a similar business to that of Old Quad with a view, following a three-year period of business development, to merging with Old Quad. During this period, engagements with RPS's clients were entered into by Old Quad, which then accounted to RPS for an agreed proportion of the fee income.
By 2007 Old Quad had built up and acquired a substantial and valuable goodwill and reputation under and by reference to the name and mark Quantum Advisory.
By 2007, too, the interests and ambitions of those involved in the legacy companies had begun to diverge. Mr Coombes wanted to diversify (by developing a pensions- and tax-based consultancy), whilst his colleagues did not. It was agreed that there would be a re-organisation of the business. A buy-out of Mr Coombes' interest in Old Quad was financially impossible, given its value, and undesirable for other practical and commercial reasons. A different re-organisation model was instead agreed.
In summary, the business of the legacy companies would be continued by a new entity, which would seek to develop and expand it. However, the goodwill of the existing legacy business would be ringfenced: the clients of the legacy companies (“the legacy clients”) would remain the clients of the legacy companies (or their assigns), but they would be serviced on behalf of the legacy companies by the new entity, which would then receive a fee representing the cost to it of providing the services to the legacy clients. Accordingly, the new entity would not receive any profit element for servicing the legacy clients. Instead, the benefit to the new entity was that it would receive a turnkey business: it would take over all of the staff of the legacy companies and have the full use of their premises and equipment and the Quantum brand, as well as having an established client base on which to build new business. In this way it would be enabled to develop its own business without the usual costs and risks associated with starting a business from scratch.
LLP was incorporated on 12 March 2007 as the new entity in question. The model was implemented in two stages, dealing first with the (unregulated) business of Old Quad and RPS and then the (regulated) business of QFC.
The arrangement for the unregulated business was put into effect in April 2007 but only formalised by an agreement dated 1 November 2007 and made between LLP and Old Quad (“the Services Agreement”). The work relating to the pensions-consulting, actuarial, administrative and investment services that Old Quad had provided to the legacy clients would henceforth be carried out by LLP. Old Quad would pay LLP 57% of the fee income received from those clients; that figure was designed to cover the cost of providing the services to clients, with the 43% retained by Old Quad representing the profit element. LLP was given the right to use the Quantum brand, and the premises, personnel and equipment of the existing business.
The arrangement for the regulated business was formalised by an agreement made in February 2009 between LLP and QFC (the Introducer's Appointed Representative Agreement, referred to as “the IAR Agreement”), under which LLP provided services (on its own account, owing to regulatory requirements) in regulated investment advice and insurance mediation services to the legacy clients.
Shortly after the execution of the Services Agreement, the assets and business, including the goodwill, of Old Quad were transferred to the claimant (at that time called Pascal Company Solutions Limited) and the Services Agreement was novated between the claimant and LLP. Then the claimant and Old Quad swapped names: the claimant changed its name to Quantum Advisory Limited, and Old Quad changed its name to Pascal Company Solutions Limited. In 2011 the IAR Agreement was novated between Quad and LLP. Shortly afterwards, Old Quad was dissolved.
It is common ground that, since about January 2000, first the legacy companies and thereafter both Quad and LLP have traded under and by reference to the Mark. The style of email addresses and the website have continued to be used by both companies. LLP adopted a common letterhead, which displayed the Mark and the corporate names of both Quad and LLP. Similarly, all invoices and emails sent by LLP were in common form for both legacy business and LLP business. In 2009 the branding was refreshed, but the letterhead continued to show the Mark, with a modified logo, and the website and email addresses, and the bottom of the page showed both corporate names. There was a further rebranding in 2016, with a new logo, but the information on the letters and invoices remained materially unchanged. (On each occasion the format of the emails was also modified, to similar effect.) All communications sent out by LLP continued to show both corporate names until about May 2018, when the name of Quad began to be omitted from communications with non-legacy clients. Both entities have at all times continued to use the single website, which contains testimonials from both LLP clients and legacy clients and contains a statement that LLP “trading as Quantum Advisory” “processes business on behalf of Quantum Advisory Ltd”.
In about June 2018 a dispute arose between the parties as to various matters, including whether LLP was bound by the Services Agreement. In my judgment previously mentioned, I held among other things that Quad and LLP were bound by the terms of the Services Agreement. The Court of Appeal upheld that judgment.
Between June and November 2018, without the knowledge of Quad, LLP in its own name applied for registration of four trade marks, as follows:
(a) UK trade mark no. UK00003320701, for the device shown below (“the Q Device Trade Mark”):
(b) UK trade mark no. UK00003320706 (“the Device Trade Mark”):
(c) UK trade mark no. UK00003320709 (‘the Device Series Trade Mark’):
(d) UK trade mark no. UK00003350849, for the word mark QUANTUM ADVISORY (‘the Word Trade Mark’).
The first inkling that Quad had of these actions of LLP came in a letter dated 9 July 2020 that Mr...
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