What's buried in your head-lease?
The advent of the digital age has transformed the retail sector
and the consumer experience.
Shopping centres, with a higher preponderance of retail chains as occupiers, have faced perhaps the most serious threat – why bother to go to a centre when you can reliably get all the same products online from the same retailers, with no risk of them being out of stock?
The industry’s solution has been to transform the workaday shopping centre into a ‘destination’, complete with restaurants, cinemas, leisure facilities, gyms, spas and even hotels. Most cities in the UK now have at least one ‘retail destination’, such as Birmingham’s Mailbox, Sheffield’s Meadowhall, The Light in Leeds or Westfield’s two massive shopping centres to the east and west of central London.
But as Caroline Hayward, partner at Trowers & Hamlins, explains, the property in a shopping centre isn’t just limited to the bricks-and-mortar kind. “When an investor buys a shopping centre, typically they just see it as real estate,” she says. “There is one key document for the transaction, and IP (intellectual property) is buried somewhere in there. Of course IP is not the prime consideration for the transaction, but there are all kinds of issues, which if they’re not spotted at the time, can be tricky and expensive to unwind further down the track. A shopping centre is a going concern, so you need to make sure you own all the IP assets relating to it.”
That means making sure all IP rights owned by the seller are assigned on any acquisition, but it also means ensuring that you own all the rights which are key to the centre’s business.
While this may seem obvious, it’s amazing how many times IP ownership is overlooked, according to Hayward.
"I can think of one instance where the owners of a shopping centre wanted to change their marketing agency,” she says. “The problem was that the agency owned the domain name for the centre, and they refused to hand it over. We managed to get it eventually, but it cost time and money to do it, and it's the kind of hassle you just don't need."
IP and head-leases
One common issue in these days of freelance graphic designers, is hiring a designer to knock you up a logo, corporate identity and even a website thinking you’ll own the rights because you paid the bill (hint: you don’t, copyright remains with the designer unless specifically assigned).
Another issue is making sure that your existing trade mark covers everything your shopping centre currently provides.
“Until relatively recently, ‘shopping centres’ were not recognised as a ‘service’ capable of trade mark protection. That changed with a High Court challenge, following which shopping centres are permitted the same sort of trade mark protection as is afforded to department stores and other shops which sell a range of third party products.
“The importance of this is not only that you don’t want someone else to use the same name as your centre for their own shopping centre, but that you don’t want them to use the name for the same sorts of facilities and services contained within your shopping centre – in other words, if you are, say, Westfield shopping centre, you don’t want a department store called Westfield to open up opposite your shopping centre any more than you want an ‘unauthorised’ Westfield shopping centre.”
Hayward’s advice is to not think of the IP in a transaction as a single issue.
“IP is about constituent parts,” she explains. “And if you widen the coverage of your mark, as one might do in transforming a shopping centre to a leisure destination, you widen the scope of businesses you might want to object to which may be damaging your brand." One complicating issue is where the going concern comes to denote a geographic location, say for instance London’s Canary Wharf or Borough Market. Trade mark rights can be lost in these circumstances, where the name becomes the same as the locality. The result is that - as happened to Canary Wharf Ltd – your trade mark can be cancelled.
But there are still things to consider when commercial exploitation of IP assets might not even be on the agenda.
"Quite often the owner might not even be aware that the name or logo of the shopping centre is protectable as a trade mark, or they may not have had the domain name, or the copyright in the logo, assigned to them. The primary function in the eyes of the business is not to hold and protect IP assets, but it may be detrimental to the tenants of their shopping centre if they don’t.”
Housing Association IP Gaps?
Shopping centres are not the only part of the property industry where an extension of scope has had knock-on effects where IP is concerned. “We as a firm act for a huge number of housing associations,” says Caroline Hayward. “Some of them are very longstanding organisations, which may have no trade mark protection at all, or they may have a registered trade mark which was filed many years ago. If there is a registration, it may just cover ‘housing services’, but the role of housing associations has grown to cover a wide range of ancillary services, such as job search advice, or help with independent living.”
“Your trade mark needs to cover everything that you provide. It may suit a private careers consultancy offering job search advice, or private companies offering building and construction or repairs services, to use your name or use very similar-looking IP assets, colour, logo etc, to imply you’re connected, when you’re not. Vulnerable people are very likely to be taken in by this kind of ruse, and that’s exactly what you don’t want, so make sure you are correctly covered.”