Lifestyle Equities v Hornby Street: trademark claim stayed over 1997 arbitration deal

What happened

Lifestyle Equities, which owns the BEVERLY HILLS POLO CLUB trademarks, brought a trademark infringement and passing off claim against Hornby Street (MCR) Ltd and other defendants linked to Santa Barbara Polo, over use of a similar logo. The defendants pointed to a 1997 coexistence agreement between Lifestyle Equities' predecessor in title and the Santa Barbara Polo & Racquet Club, which contained a clause requiring disputes to be arbitrated in California. The defendants asked the court to pause the case and send the dispute to arbitration instead.

What did the court decide in Lifestyle Equities CV v Hornby Street?

The judge found that Lifestyle Equities had effectively become a party to the 1997 agreement, because it had later relied on that same agreement in correspondence with the trademark office in Mexico. On top of that, the judge held that under Californian law, which governed the 1997 agreement, a trademark assignee, someone who takes over ownership of a trademark, also takes on the obligations attached to it, including a duty to arbitrate. This applied either through direct contractual effect or equitable estoppel, a principle that stops someone relying on an agreement's benefits while denying its burdens. The whole claim, against every defendant, was stayed under section 9 of the Arbitration Act 1996, meaning the court proceedings are paused while the dispute goes to arbitration.

What we learned from this

• What I'd take from this is that buying a trademark means buying its history too, not just the register entry. Lifestyle Equities ended up bound by a deal it didn't sign, because its predecessor had agreed it.
• Before acquiring a trademark, it's worth checking for coexistence or settlement agreements tied to it, not just the trademark register itself.
• If an old agreement has an arbitration clause, relying on that agreement later, even in unrelated correspondence, can be treated as accepting its terms.
• Where a different country's law governs an agreement, such as California law here, that law may impose duties on an assignee that English law wouldn't automatically assume.

Things to be aware of

The businesses involved