The Severability of Trade Marks and Goodwill under Australian Law: A Franchise in Disguise

Abstract

"A good name, like good will, is got by many actions and lost by one." --Lord Francis Jeffery. Although it is an essential asset of any business, there is markedly little agreement about what exactly goodwill is. In the seminal judgment of Lord Macnaghten in 'Inland Revenue Commissioners v Muller & Co's Margarine Ltd' ('Muller & Co's Margarine') goodwill is described as an 'attractive force' composed of 'elements'. A recent joint judgment of the High Court of Australia describes goodwill as 'a valuable right or privilege' to make use of such forces or elements, a 'quality or attribute' that derives from 'sources' being the assets of the business. The intention of this paper is not to revisit the broad question of 'What is goodwill?', but rather to focus more specifically on the legal relationship between business names and goodwill in business sale transactions in order to answer two questions: first, whether the sale of a business and its goodwill under Australian law inherently includes the name of the business and second, what rights the business vendor and purchaser respectively have to such a name if excluded.