Protection of key intellectual property rights for franchisors

Article by Graeme Payne

Bird & Bird

In the first of a series of articles, Graeme Payne, Partner in the international Franchising, Licensing and Multi-Channel Strategies Group at Bird & Bird examines the key intellectual property rights that form part of a franchise business and how they should be protected. The next article will focus on the enforcement of intellectual property rights and what steps a franchisor should take to prevent infringement and where a franchisee or third party infringes the franchisor's intellectual property rights.

The key intellectual property rights which typically form part of a franchise business concept are: trade marks; domain names; copyright – particularly in respect of materials such as the operations manual, website text and advertising, marketing and promotional literature – and database rights. To a lesser extent patents, design rights and image rights may play a role in the franchise business concept.

As copyright is a non-registrable right the key registered (or registrable) right is the trade mark or the franchisor's brand rights as they are commonly referred to. For the franchisor looking to register its trade marks, searches should be carried out for both existing identical and similar marks and consideration given as to whether these existing trade marks are being used against identical or similar goods and/or services to those of the franchisor.

It is also recommended that general internet searches be carried out to check what trade marks are being used in the public domain, particularly those which are not registered and thus not identifiable on the trade mark registers but which could still pose a threat to the franchisor’s trade marks because of their use in the public domain.

If the franchisor’s trade mark is not registered and there are no registered trade marks identified through the searches that are identical or similar to that of the franchisor’s trade mark, an application for registration should be made as quickly as possible. If, however, searches identify that there are already registered trade marks identical or similar to that of the franchisor, the franchisor could be at risk of having infringement proceedings brought against it for the use of its trade mark and should therefore stop all use of its trade mark and consider what changes could be made to its trade mark so that the mark cannot be deemed identical or similar to any currently registered trade marks. The new trade mark should then be registered to ensure it is protected going forwards. The decision to rebrand – so to avoid potential legal action – can often be clouded by an emotional attachment to a brand that the franchisor has developed. For the would-be franchisor, however, a commercial decision should be taken before granting franchise rights, as the more widely known the brand, the greater the risk of legal action by brand owners who believe the franchisor's brand infringes theirs.

In addition to carrying out regular trade mark searches, it is advisable, particularly so that expensive opposition, invalidity and/or infringement proceedings can be avoided, that a trade mark watching service is set up to ensure that the franchisor is continually notified of any potentially conflicting trade marks which are being applied to be registered.

To protect the franchisor's brand it is therefore important that the franchisor's trade marks (and domain names) are correctly registered.

The franchisor will need to determine which of its goods and services should be subject to registered trade mark rights for the purposes of the franchise business and provide a description of each. It is often advisable to seek the advice of a specialist trade mark solicitor when preparing the trade mark application, in particular which goods and services should be included in the trade mark specification. Ideally franchisors should work with advisors who have both franchise and trade mark specialists 'under one roof'.

For UK trade marks, applications are made to the UK Intellectual Property Office (UKIPO). For franchisors looking at additional expansion in Europe it is advisable to obtain a Community Trade Mark (CTM) which provides trade mark protection in each Member State of the European Union. A CTM application is made to the Office for Harmonisation in the Internal Market (OHIM) in Alicante, Spain. Alternatively an international registration can be applied for (specifying the individual countries in which it is desired to protect the trade marks) through the World Intellectual Property Organisation (WIPO) under the Madrid Protocol.

It is important to ensure that the franchisor’s registered trade mark specifications are sufficiently broad to cover all the goods and services currently offered by the franchise business to ensure that no other entity can use identical or similar trade marks in relation to identical or similar goods and services, thus causing the consumers of the franchise business to be confused as to the origin of the goods and services being offered to it. The trade mark specification should also cover goods and services that the franchise business might be looking to expand in to in the future and thus not limit the direction and growth of the franchise business.

Graeme Payne, Partner
Direct: +44 (0)20 7982 6474
Tel: +44 (0)20 7415 6000
graeme.payne@twobirds.com