US firms breached Umbro licensing terms, rules Court of Appeal

Umbro created two licences for companies in the US to use: one related to 'on-field' football kit such as might be worn while playing a game, and another for 'off-field' kit that might be worn by fans and spectators.

The Court of Appeal has ruled that each of the two licensed companies strayed into territory covered by the other's licence, and that Umbro knowingly allowed some of that activity to happen.

Umbro is a UK sports clothes maker, and it issued Dick's, a large chain of US shops, with a licence to market on-field wear. It issued Hudson Bay with a licence for off-field wear.

Hudson Bay sued Umbro, claiming that it had allowed Dick's to market clothes that fell under its licence, while Umbro counter-claimed that Hudson Bay marketed clothes covered by the licence held by Dick's.

The Court of Appeal found that there was confusion about the exact limits of on-field and off-field wear which made the case difficult. It backed the High Court's earlier finding that the defining characteristic of on-field wear was that it had no pockets.

"It is clear that the 'decisive' factor in the [High Court] Judge's view was the absence of pockets, and in this he was supported by the evidence of Mr Thompson of Hudson Bay and Miss Jackson of Umbro US," said the ruling. "Thus, Mr Thompson said in his witness statement that he and Miss Jackson 'operated … throughout on the [understanding] that products without pockets were 'on-field'."

"He also stated more than once in cross-examination that adding pockets converted on-field garments into off-field garments, and that removing pockets converted garments the other way," said the ruling. "The pocketless soccer basics and the tracksuits the subject of Umbro UK's counterclaim, and the tracksuits the subject of Hudson Bay's claim, were all on-field wear."

Barbara Jackson, an executive from a US Umbro subsidiary had told Hudson Bay that it could market the pocketless shorts and t-shirts, and the company claimed that it therefore had the authority to do so.

But the Court said that Jackson did not have the authority to give that permission, that such a decision would have to come from Umbro in the UK.

The Court said that Jackson had authority in relation to the agreement, but that because the clothes in question fell outside of that agreement, approval for their sale would need to come from the UK.

"This was not a case where there was any real belief, or even doubt, on the part of Miss Jackson or Mr Thompson as to whether pocketless shirts and shorts fell within the scope of the Agreement. They both worked on the basis that pocketless shorts and shirts were on-field wear, as I have explained," the ruling said. "Both parties not merely suspected, but believed, and had talked on the basis, that the clothes in issue, namely the pocketless soccer basics, were on-field wear, and therefore excluded from the scope of the Agreement."

The High Court had also found that Dick's had sold some material that qualified as off-field wear, and that Umbro had authorised that activity. The Court of Appeal upheld that ruling.