Banking giant Barclays and supermarket chain Tesco announced today that they have agreed a deal in which Barclays will acquire Tesco’s retail banking business. Tesco’s press release confirms that they will retain other parts of their financial services offerings, namely insurance, ATMs, travel money and gift cards, on the basis that they remain connected with the company’s core retail offering.
From an intellectual property perspective, this deal involves an intricate carve-out of Tesco’s trade mark rights. Barclays will not simply be absorbing the Tesco Bank business, but will operate it alongside the existing Barclays-branded services, offering credit cards, unsecured personal loans and deposits (as well as other services) under the Tesco Bank brand, for an initial period of ten years.
In order for Barclays to offer services under the Tesco brand, the deal will inevitably include a trade mark licence, and this will detail exactly the types of services that Barclays are allowed to offer, in order to delineate their activities from Tesco’s. The licence will also govern the forms in which Barclays are allowed to use the Tesco name – they may for example always be required to always use the name in combination with the word “Bank”.
Tesco own 21 UK trade mark applications and registrations which protect marks featuring the word TESCO for class 36 services. Some of these will not be relevant to Barclays – the mark TESCO BABY CLUB, for example – whilst others cover a limited list of class 36 services which appear to fall outside of the agreed services. Again, the licence agreement should be expected to list exactly which registrations fall within the scope of the licence.
I would expect (and take this to be confirmed by use of the wording “exclusive long-term partnership”) that this will be an exclusive licence, meaning that only Barclays are permitted to use the Tesco name in relation to the agreed services, whilst Tesco would not be able to grant further licences covering those services to other parties whilst the existing licence is in force. Tesco themselves would also be excluded from providing the agreed services under the Tesco name.
The wording of the press releases confirms that the parties will actively be working together, as Barclays’ Tesco-branded services will be marketed to customers using Tesco’s existing distribution channels (as well as on the open market), so it seems unlikely that it would become necessary in this case, but an additional benefit of holding an exclusive licence is that it permits the licensee to enforce rights in the licenced trade mark(s) in certain circumstances.
An exclusive licence will usually be recorded on the trade mark register, so that the licensee’s interest in the relevant registrations is clear, and this recordal is required in order for the licensee to be legally able to enforce those rights themselves. An exclusive licensee is able to bring proceedings in their own name in the event that the licensor refuses to do so or does not do so within a reasonable timeframe, or otherwise with the licensor’s consent. However the licensee comes to be taking action themselves, there are likely to be few cases where the licensor themselves are not included as either a plaintiff or defendant.
The deal between Barclays and Tesco remains subject to regulatory approval, but is expected to come into effect later in 2024, and as both parties will be offering separate (but related) financial services, it will be interesting to see how the line between them is navigated. As can be seen from the above, the detail of any licence agreement and its implications can be complex, and careful drafting will be key from the outset, particularly where the agreement is likely to be scrutinised by the Financial Conduct Authority.