Background
Zennar Limited and Molssi Fashion Shanghai Limited entered into an English-law licence agreement in January 2020 covering variants of the “Rockfish” trademarks and copyright registered in China, Taiwan and Hong Kong. After Korean company AU Brandz acquired Zennar in February 2024, AU Brandz planned physical pop-up stores in China selling goods under the “Rockfish Weatherwear” brand.
Molssi sent cease-and-desist letters to AU Brandz and the Chinese mall operator, asserting its exclusive rights under the licence and threatening enforcement. Zennar alleged that the letters breached the agreement’s confidentiality and infringement-notification provisions, as well as an implied restriction on independent enforcement. Zennar terminated the agreement on 4 April 2025 and sought a declaration that the termination was valid. Molssi denied the breaches, argued that the agreement was relational and carried duties of good faith, and counterclaimed for declarations that the licence remained effective and that Zennar itself was in breach.
The Court’s Holding
Mr Justice Richard Smith held that Molssi breached clause 7.1 by disclosing commercially sensitive details of the licensing arrangements to the mall operator and breached clause 3.7 by failing promptly and fully to notify Zennar of the suspected infringement. Molssi also breached an implied term that it would not itself take steps to enforce the licensed rights unless and until Zennar consented. The agreement allocated decisions about enforcement to Zennar, including whether litigation should be pursued at all.
The breaches were irremediable. Once Molssi disclosed the confidential information and independently threatened enforcement, the resulting loss of control, commercial difficulties and exposure of the parties’ dispute could not practically be undone. The court also rejected Molssi’s characterization of the agreement as relational, declined to imply a general duty of good faith, and held that the prevention principle did not excuse Molssi’s conduct. Zennar validly terminated the agreement on 4 April 2025; its claims succeeded and Molssi’s counterclaims were dismissed.
Key Takeaways
- An exclusive licensee may still be contractually required to notify the licensor and obtain its consent before taking enforcement steps.
- Disclosure of commercially sensitive licence terms to an uncontrolled third party can constitute an irremediable confidentiality breach.
- A detailed, arm’s-length commercial licence does not become a relational contract merely because it is long-term or requires cooperation.
Why It Matters
The decision underscores that exclusivity does not necessarily confer autonomous enforcement authority. Licensors and licensees must follow the agreement’s allocation of responsibility for suspected infringement, even where contractual enforcement procedures appear slower or less attractive than direct action.
It also illustrates the practical approach to remediability under termination clauses: the question is whether the consequences can be put right for the future, not simply whether the offending conduct has ended or whether the breach was repudiatory.