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How can franchisors protect their intellectual property (eg, trademarks and copyright)?
Intellectual property owned by the franchisor may include:
- trade names;
- patents; and
- know-how (commercial secrets).
Trade name and corporate name certificates are required by the National Register of Corporate Bodies before the incorporation of a company. The issuance of a trade name certificate provides the applicant with provisional protection over the trade name for a three-month term. This protection prevents other applicants from requesting a similar trade name certificate. Trade names are also protected if the applicant has already registered a trademark with the Industrial Property Institute which has been communicated to the register.
At national level, trademarks and logos are protected by the Industrial Code. In order to register a trademark or logo, the franchisor must file an application before the Industrial Property Institute. Trademarks and logos may also be registered at a European level with the European Union Intellectual Property Office.
Portugal is also signatory to the World Intellectual Property Organisation (WIPO) Madrid Agreement Concerning the International Registration of Marks 1891 (the Madrid Agreement) and the WIPO Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks 1989 (the Madrid Protocol).
Copyright protection aims to protect the author and the work produced by the author as an original creation of the human mind. Copyright protection generally protects literary, artistic, dramatic and musical works. Copyright provides protection for the author’s rights, which includes moral and economic rights. The scope and exercise of the economic rights must always respect the author’s moral rights.
Copyright protection is not subject to registration and arises as soon as a work is created. However, in order to provide evidence, some authors and associations of authors choose to voluntarily register their works, usually in domestic associations which register such works.
Designs and patents may be protected at national, European or international level.
Must IP licences be registered?
Licences to use registered intellectual property (eg, trade names, corporate names, trademarks, logos, patents and designs) must be made in writing and should be registered in order to be opposable to third parties.
How can franchisors protect their know-how and trade secrets?
Know-how protection in Portugal is limited. Unauthorised use of know-how by persons other than the rights holder may be regarded as unfair practice and a violation of the trade secret. Consequently, administrative fines may be applied whenever the know-how:
- is secret and measures have been taken to maintain secrecy;
- has commercial value; and
- is transmitted without the owner’s consent.
What are the consequences of a franchisee’s breach of the franchisor’s IP, know-how or trade secret rights and what remedies are available to the franchisor in this regard?
The franchisor may terminate the franchise agreement and seek indemnity.
If a franchisee breaches the franchisor’s IP rights, they may be subject to:
- administrative fines; or
- for criminal offences, imprisonment of up to three years or a fine.
In order to investigate criminal offences (ie, the illegal use of rights), the IP rights holder/franchisor must file a complaint within six months of learning of the infringement.
If a franchisee breaches a franchisor’s know-how or trade secrets, they may be subject to administrative fines under the Industrial Property Code. The new provisions in the code concerning know-how and trade secrets have been in force since 1 January 2019. The rest of the code will come into force on 1 July 2019. Further, the new Article 353 establishes a five-year deadline for the enforcement of any remedies for breaching a franchisor’s know-how or trade secrets.
In addition to obtaining compensation, complementary measures can be requested in court – for example:
- a temporary prohibition on certain business activities;
- the loss of the right to partake in fairs or markets; or
- a temporary or permanent closure of the establishment.
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