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Intellectual property

To exploit a franchise formula successfully, it is, of course, necessary for a franchisee to be entitled to use the franchisor's store concept, business name and logo, and the franchisor's know how. In the paragraphs below we will outline different ways for a franchisor to protect its intellectual property rights. Know-how is not protected by intellectual property law. Know-how can be protected by putting in place contractual non-disclosure and non-compete obligations.

i Brand search

Trademarks can be looked up online in databases. A franchisor can check if a trademark is already registered at EU level on the website of the European Union Intellectual Property Office (EUIPO). Moreover, registered Benelux intellectual property rights can be looked up on the website of the Benelux Office for Intellectual Property (BOIP). International trademark registrations can be looked up in the database of the World International Property Organization.

ii Brand protection

Trademarks have to be registered to receive trademark protection. In the Netherlands there are no Dutch national trademarks, but one can apply, through the BOIP, for registration of a Benelux trademark, which is protected under the Benelux Treaty for Intellectual Property. If a trademark is registered in the Benelux trademark register, the registrant has exclusive trademark rights in the Netherlands, Luxemburg and Belgium. Moreover, a trademark can be registered as an EU trademark in the EU trademark register. If the franchisor decides to do so, he or she has the exclusive right to the trademark in the European Union.

The procedure for definitive trademark registration takes about three months at the BOIP and six months at the EUIPO and the registration is valid for a period of 10 years and subsequently can be renewed for an unlimited number of successive 10-year periods. In principle, therefore, a trademark can be protected indefinitely. The registration process consists of the following steps: online application and payment of a fee, publication of the application, examination of the application, possible opposition by third parties and formal registration of the trademark (on condition that no successful opposition was made, possible objections were rejected and the application fulfils the registration requirements).

Formal registration for copyright is not required and not possible in the Netherlands. Copyright protection is granted automatically to works that meet the criteria for protection under Dutch copyright law – the work is of a personal character and bears the personal imprint of the author – as the Netherlands is party to the Berne Convention. A franchise formula can qualify as a work within the meaning of the Dutch Copyright Act if it meets the aforementioned criteria. Any unauthorised publication or reproduction of the copyrighted work is an infringement unless a limitation of copyright (such as personal use) is applicable.

The imitation of a copyright-protected franchise formula does not automatically mean that the similar formula infringes the imitated franchisor's copyright. To determine whether there is an infringement, a judge will take into account the individual original elements of the copyrighted formula and assess whether or not the imitative formula is the same overall.

A trade name does not have to be registered to be protected under the Dutch Trade Names Act; protection is granted to a trade name that is actually used. It is prohibited to use a trade name that is (nearly) identical to an older trade name, if this use can lead to a risk of confusion among the public. The greater the extent to which companies conduct different types of business or conduct business at different geographical locations, the less likely the risk that confusion will be established.

iii Enforcement

A franchise agreement usually authorises the franchisee to use the intellectual property rights (usually trademarks and copyrights) of the franchisor. In the event that a dispute arises regarding this right of use (the licence), parties may bring legal action against each other, including initiating summary proceedings to obtain provisional measures. With permission from the trademark owner (the franchisor), the trademark licensee (the franchisee) is able to bring infringement and ancillary claims against third parties where these concern EU marks. In the case of Benelux marks, the franchisee (again with the permission of the franchisor) is only entitled to bring a claim for compensation or remittance for profit, enabling the franchisee to obtain compensation for damage it has suffered because of the infringement.

Moreover, in cases of major urgency and evident infringement (i.e., where delay would cause irreparable harm), an intellectual property owner can request an ex parte injunction from a judge in summary proceedings; this is an injunction granted without notice being given to the infringer.

iv Data protection, cybercrime, social media and e-commerceData protection

Many franchisors collect, use and often share with their franchisees or other parties large amounts of consumer data; for example, in the context of loyalty programmes or (digital) marketing. These large datasets can be analysed with data management programs and big-data applications to improve the franchisor's services and marketing.

This handling of data falls within the scope of data protection law in the Netherlands, under which consumer data qualifies as personal data. Since 25 May 2018, Dutch data protection legislation has been laid down in the General Data Protection Regulation (GDPR), an EU-wide directly applicable piece of legislation aimed at strengthening and harmonising data protection within the EU. The GDPR contains data protection principles that are recognised throughout the EU and regulates – in a nutshell – whether and under which conditions personal data may be used, which precautions need to be taken (e.g., information, consent, notification and pre-authorisation obligations), which rights of the data subject need to be respected (e.g., rights to access, objection, deletion and correction) and which arrangements the parties involved in the processing of the data have to make (e.g., entering into a data processing agreement or implementing data transfer mechanisms).

The GDPR also includes a legal requirement to notify (serious) data breaches to the Dutch Data Protection Authority (DPA) and to the individuals concerned (the data subjects). Under the GDPR, for certain violations, the DPA can impose fines of a maximum of €20 million, or 4 per cent of the company's total worldwide yearly turnover, whichever is higher. The aim of the new legislation is to enforce similar, strict data protection rules in all EU Member States, especially in light of new privacy-intrusive technologies (profiling, big-data applications, etc.). For example, franchisors have to give consumers more control over their personal data by providing them with more extensive information about the processing of their data, and have to grant consumers additional rights. Further, as regards transborder data processing, franchisors no longer have to deal with local data protection authorities in each country in which they have establishments, but instead will be supervised by a single lead authority. The Dutch government has adopted a GDPR Implementation Act (UAVG) to smooth the implementation of the GDPR. This act was drafted with a 'policy-neutral' approach, meaning that no rules were included other than those strictly necessary for implementation of the GDPR and retention of the current privacy practice.

Cybercrime, social media and e-commerce

In the Netherlands statutory laws apply to cybercrime, social media and e-commerce, but none of these are franchise specific. However, if franchisees or franchisors sell products or services through a website to consumers, they are subject to disclosure requirements for distance contracts, requirements for concluding contracts by electronic means and requirements for service providers as set out in the Dutch Civil Code (DCC). Further, on 26 April 2018, the European Commission proposed a draft EU regulation on fairness of platform-to-business (P2B) trading practices in the online platform economy. Complementing EU competition and consumer protection law, this proposal would be the first legislation to provide rules for relations between internet platforms, such as eBay, Google and Amazon, and business and corporate website users.