I commented on the trial judge’s decision in Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 (22 March 2005) to refuse Pacific Brand’s action to terminate the licence to Underworks because it had not acquired that right here.

The Full Court of the Federal Court has now handed down its decision.

Whilst it did not agree with everything decided by the trial judge it refused Pacific’s appeal.

In November 2000, Sara Lee granted Underworks an exclusive right in Australia to use the King Gee marks in relation to men’s underwear and socks and the Stubbies mark on children’s socks and underwear for a period of five years in the first instance. In February 2001 Sara Lee sold its Australian apparel business to Pacific Dunlop Ltd ("Pacific Dunlop"). Pacific Dunlop then sold the rights to Pacific Brands which sought to terminate Underworks’ licence.

Assignment of certain rights will only be precluded where, for example, there is a contractual or statutory prohibition, a public policy reason, or the identity of the parties is material to the contract. In this case the agreement was specifically with Sara Lee and could not be transferred to Pacific Brands.