Wed 10 May 2023

Trustee duty to consider intellectual property and the learnings (thus far) from The Captain Tom Foundation Inquiry

Many charities have valuable assets, and they are not always found in the most obvious of places, such as bricks and mortar. Those assets which are less obvious, can make a trustee’s role in maximising best value for the charity, all the harder.

In June last year the Charity Commission (the charity regulator in England & Wales) opened a statutory inquiry into The Captain Tom Foundation after identifying concerns around the charity’s management and trustees’ decision making, but in particular around the consideration by trustees of intellectual property matters.

The recent statutory inquiry by The Charity Commission’s includes concerns that there was a failure by the trustees to consider intellectual property implications during the establishment of the charity. It is alleged that this resulted in a private limited company trade marking variations of the name in several classes without objection. The outcome of the inquiry remains to be seen but this serves as a warning and reminder to all trustees to consider all assets – including those of intellectual property and the opportunities more generally which intellectual property can create for charities.

Trustee duties 

In Scotland, trustee duties can be separated into general duties and specific duties, both of which are found in the Charities and Trustee Investment (Scotland) Act 2005 (2005 Act).

Whilst there is no general or specific duty which directly requires trustees to consider intellectual property issues, this requirement is arguably found in the general duty to act with care and diligence.

OSCR has issued guidance on the general duties which set out that trustees must act with care and diligence and this includes ensuring that the charity’s beneficiaries, assets, and reputation are protected (which includes understanding and assessing potential opportunities and risks). In addition, OSCR’s guidance notes that trustees must make sure that the charity’s name and logo, designs, copyright are not used without the charity’s permission.

Therefore, indirect intellectual property implications arise from the overarching duty to act in the interest of the charity, and in particular the duty to act with care and diligence. Trustees need to be mindful of these duties and the fact that this applies not just to the protection of physical property and funds but also to the protection of intellectual property rights and any potential to generate income.

The Captain Tom Foundation Inquiry – what is it about?

The Charity Commission of England & Wales opened up a statutory inquiry on 16 June 2022. An inquiry is a statutory power granted to The Charity Commission and is used in serious cases of apparent misconduct/mismanagement or regulatory concern. The high-profile nature, the amount of donations, and the alleged mismanagement are all factors which likely led to an inquiry being raised into The Captain Tom Foundation.

The Captain Tom Foundation, which was established in June 2020, is being examined by The Charity Commission on a number of counts, however it is “concerned that a failure to consider intellectual property and trade mark issues when the charity was established provided Club Nook Limited, a private company controlled by Hannah Ingram-Moore and Colin Ingram-Moore [Sir Tom’s daughter and husband], the opportunity to trade mark variations of the name ‘Captain Tom’ without objection from the charity. This may have generated significant profit for the company.”

The inquiry by The Charity Commission will look specifically at whether the trustees have:

“been responsible for mismanagement and/or misconduct in the administration of the charity and whether, as a result, the charity has suffered any financial losses, including through any unauthorised private benefit to any of the current or previous trustees;

adequately managed conflicts of interest, including with private companies connected to the Ingram-Moore family; and

complied with and fulfilled their duties and responsibilities under charity law.”

The examination as to whether the trustees complied with and fulfilled their duties and responsibilities under charity law arises from claims by The Charity Commission that the trustees failed to consider intellectual property rights which resulted in no intellectual property rights being registered by the charity. According to The Charity Commission, this subsequently allowed Club Nook Limited, a private company incorporated in April 2020 controlled by Hannah Ingram-Moore and Colin Ingram-Moore, the opportunity to register trade mark variations of the name ‘Captain Tom’.

From a review of the UK Trade Mark Register it shows that Club Noon Limited had pre-existing trade marks including ‘Captain Tom’, ‘Captain Sir Tom’, and ‘Sir Tom Moore’ which were all registered in May 2020, prior to the establishment of the charity. However, trade marks (for the same word marks) were also registered by the company in August 2020 for separate classes, particularly classes 32 and 33. The Charity Commission allege that the failure to consider intellectual property may have led to significant profit for the company which it believes could involve the gin-deal with Otterbeck Distillery (as a commercial participator). The exact circumstances in which this profit arises is unclear and is likely to be discovered during its inquiry during which The Charity Commission will have the opportunity to examine the contractual arrangements between the charity and the family-owned companies.  

What next?

The findings of the inquiry remain to be seen and we will provide further updates on any lessons to be learned once released. However, what will be of particular interest is what commentary The Charity Commission provides in relation to any alleged failure to consider intellectual property rights on the part of the trustees. The outcome of the inquiry will be keenly awaited but the case itself serves as a gentle reminder to trustees that all potential assets should be considered including those of intellectual property.

What should trustees be considering in light of this case? Whilst there are indeed many things trustees should consider, trustees should:

  • always be mindful of their trustee duties to act in the interest of the charity and this includes a duty of care and diligence – are the transaction being considered in the interests of the charity and are you maximizing the value of not just the charity name and branding, but also where you are developing bespoke products and services, what assessment is made of the value vis-à-vis intellectual property, whether by way of simple protection or consideration of licensing options;
  • assess whether the intellectual property is both capable of and of value in being registered;
  • consider the external implications of failing (where it would have been appropriate to do so) to register intellectual property including the registration and exploitation by others; and
  • review contracts to ensure that intellectual property is protected (this would include ensuring that any IP a third party develops for the charity is assigned to the charity (to ensure it is free to use it as it wishes without restriction) and any IP the charity holds or creates and shares through, for example, its commercial participator arrangements, that the IP is properly protected and the value maximised by obtaining an adequate fee)).

Please remember, the law requires that a commercial participator must have a written agreement with the charitable organisation before commencing fundraising activity detailing key requirements. It is essential that trustees consider any risks to the arrangement by applying appropriate due diligence and conflicts of interests checks and ensure that the arrangement is in the best interest of the charity.

How can we help?

Our specialist Charities & Social Enterprise team can assist you in assessing intellectual property rights and ensuring compliance with duties and responsibilities under charity law. We regularly advise clients in the charity sector on their intellectual property rights and assist with the registration of intellectual property rights including trade mark applications.

This article was co-written by Amina Amin, Solicitor and Arina Yazdi, Trainee Solicitor.

Make an Enquiry

From our offices we serve the whole of Scotland, as well as clients around the world with interests in Scotland. Please complete the form below, and a member of our team will be in touch shortly.

Morton Fraser MacRoberts LLP will use the information you provide to contact you about your inquiry. The information is confidential. For more information on our privacy practices please see our Privacy Notice