31 January 2019
Advising perfume manufacturer on termination of distribution functionality
After a staged international expansion, both to control brand development and manage growth, the UK-based manufacturer was forced to review its international position after an overactive distributor sought to purse its own sales agenda without reference to clearly agreed scope of distribution and territory restrictions.
In circumstances where the conduct amounted to a clear breach of the terms of the distribution agreement, identifying at the same time real risks to on-going trade mark protection through un-controlled trade without licenses in unplanned territories, steps were taken quickly by the team to advise on risk avoidance strategy and immediate termination for cause on a contractual and common law basis.
Simon commented: “In this case, fortunately, we were able to take advantage of relatively clear mechanism to terminate set out in the agreement, but situations like this – where an international distributor runs away with their own sales agenda – have the potential to cause serious problems, both jurisdictionally and in IP risk.
"This situation really demonstrates the advantages of careful consideration of scope before entering into distribution arrangements, and particularly in negotiating termination and dispute resolution clauses”.