All questions

Intellectual property

i Brand search

The Hungarian Intellectual Property Office (HIPO) maintains an online database of all Hungarian and EU-registered intellectual property (IP) rights, such as trademarks, patents and design rights. Before considering the use of a sign or device as a brand identifier, conducting a search in the HIPO and EUIPO databases is recommended. To avoid the risk of future opposition or cancellation of a trademark the search should cover not only the identical, but also the possible similar versions of the proposed sign to avoid any conflict with earlier registered rights. When considering the scope of the search, special attention must be paid to the goods and services for which the sign or design is to be used. Although the existence of a company name does not hinder the registration of a similar or identical sign as a trademark, a preliminary assessment should include a search of the company register for any commercial and company names that have been in the market for a long time and may cause problems in the future. The principal data on Hungarian companies, including company names, is freely accessible through the online company registry. An online presence may be identified by searching in the official .hu (dot hu) domain registry operated by the Council of Hungarian Internet Providers. As the Hungarian language uses accented letterforms (á, é, í, ó, ö, ő, ú, ü, ű) and such use is also allowed in domain names, a search for variations is strongly recommended to avoid cybersquatting.

ii Brand protection

A Hungarian trademark is obtained through registration with the HIPO. A sign can be registered as a Hungarian trademark, a European Union trademark (EUTM) or as an international trademark designating Hungary under the Madrid Agreement of 1891 Concerning the International Registration of Marks and the Madrid Protocol of 1989. The use of a sign does not create trademark protection in Hungary; a trademark must be registered. Trademark protection has generally been granted for any sign that can be represented graphically and is capable of distinguishing goods or services from those of other undertakings (origin-indicating function). A sign is excluded from trademark protection if it is devoid of any distinctive character. Note, however, that, pursuant to the modification of the Hungarian Trademark Act effective as of 1 January 2019, the graphical representation requirement will be abolished; according to the amendment, signs must be capable of:

  1. distinguishing the goods or services of one undertaking from those of other undertakings; and
  2. being represented on the register in a manner that enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to its proprietor.

The procedure for registration of a trademark begins with the filing of a trademark application with the HIPO or the European Union Intellectual Property Office (EUIPO); registration is granted for 10 years and may be renewed without limitation.

Design protection grants legal protection for the appearance of a product. Design protection is granted for any design that is new on a worldwide level and has individual character, and for which there are no grounds for refusal that exclude it from protection. Design protection can be obtained by filing a design application with the HIPO, with the EUIPO or by filing an international application under the Hague Agreement Concerning the International Deposit of Industrial Designs.

Under the Hungarian .hu top-level domain, domain names may be registered according to the Domain Registration Rules and Procedures of the Council of Hungarian Internet Providers.

A licence for the use of a trademark or design must be given in writing, and to gain effect against third parties, it must be registered with the relevant registry (i.e., the HIPO or the EUIPO).

iii Enforcement

The trademark owner (or licensee) can prevent any third party from using a sign without the proprietor's consent in the course of trade. The Trademark Act contains examples of use that can be objected to: (1) using the trademark on the goods or on packaging thereof, (2) putting on the market or offering for sale the goods under the trademark or stocking them for such purposes, (3) offering or supplying services under the trademark, (4) importing or exporting the goods under the trademark, and (5) using the trademark in business correspondence and in advertising. Moreover, from 1 January 2019, the following further examples will be added to this list: (1) using the sign as a trade or company name or part of a trade or company name; and (2) using the sign in comparative advertising in a manner that is contrary to the Hungarian Competition Act.

Under the Design Act, design protection confers on its holder the exclusive right to exploit the design. The holder of the design protection is entitled to prevent any person not having the holder's consent from exploiting the design. Exploitation covers in particular the making, using, putting on the market, offering for sale, importation and exportation of the product embodying the design, as well as the stocking thereof for such purposes.

The trademark proprietor or the holder of a design right is entitled to start proceedings to stop infringement of such a right. A licensee recorded in the Trademark or Design Register may also commence infringement proceedings in his or her own name if he or she provided the right holder with an opportunity to take appropriate actions against infringement, but the right holder has failed to take actions. The civil law sanctions are (1) establishment of infringement by the court; (2) permanent injunction to cease infringing activity or any activities directly threatening to infringe as well as desist from doing so in the future; (3) providing information about the persons who participated in the production and distribution of the goods concerned by the infringement, and about the business relations created for the dissemination of such goods; (4) public apology; (5) recovery of unjust enrichment; and (6) seizure, transfer, recall and definite removal from the channels of commerce; destruction of the infringing products and the packaging thereof, as well as the means and materials exclusively or principally used for infringement. These sanctions can be claimed regardless of whether the infringer acted in good or bad faith. The trademark or design owner (or licensee) can also claim compensation for damage (in the amount exceeding the unjust enrichment), but for such a claim the general provisions of the Civil Code would apply, requiring the culpability of the infringer to be proven as well.

General civil law applies in relation to questions that are not regulated by the Trademark or Design Acts. Under the Civil Code individual rights enjoy protection. Individual rights include (1) the right to bear a name, (2) protection of goodwill, (3) business secrets and (4) know-how. Under the Civil Code a remedy – an award (lump sum) – for the infringement of individual rights can also apply. For the application of this remedy, it is not necessary to prove the amount of damage or the culpability of the infringer, only the fact of the infringement.

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

The rules of the EU General Data Protection Regulation (GDPR) apply to the processing of personal data by franchisees or franchisors, as controllers or processors, if any of these have an establishment in the EU, regardless of whether the processing takes place in the EU or not. Moreover, the GDPR applies to the processing of personal data of data subjects in the EU even if the franchisees or franchisors, as controllers or processors, are not established in the EU, but their processing activities are related to: (1) the offering of goods or services, irrespective of whether a payment from the data subject is required, to such data subjects in the EU; or (2) the monitoring of the behaviour of such data subject, as far as their behaviour takes place within the EU.

The GDPR imposes various obligations on the controller and the processor regarding the documentation of the data processing activities and transparent communication with the data subjects. The franchisor and franchisee shall also conclude a written agreement about the exact terms and conditions of any data transfer between them. We strongly recommend that franchisors and franchisees either pay special attention to data protection matters or seek adequate legal advice, because if a company fails to comply with the GDPR, the authorities can impose extraordinarily high fines (up to €20 million or 4 per cent of a company's total worldwide annual turnover for the preceding financial year, whichever is higher).

Pursuant to the GDPR, any transfer of personal data undergoing processing or intended for processing after transfer to a third country or to an international organisation shall take place only if: (1) the European Commission has decided that the third country (or a territory or one or more specified sectors within that third country) or the international organisation in question ensures an adequate level of protection; and (2) the controller or processor has provided appropriate safeguards, and on condition that enforceable data subject rights and effective legal remedies for data subjects are available. In the absence of the aforementioned possibilities, a transfer of personal data to a third country or an international organisation shall only take place subject to one of the special conditions set out in Article 49 of the GDPR.

The E-Commerce Act, in full harmonisation with the related EU laws, regulates (1) the service provider's obligations on the provision of data, (2) the service provider's liability, (3) the conclusion of contracts via electronic means, (4) notice and takedown proceedings and (5) the rules concerning electronic advertisements. Crimes in relation to cybercrimes and franchising under the Criminal Code may include the circumvention of protective technologies or technologies protecting information systems, as well as violation of information systems or data.

There is no specific law on social media. This area is primarily regulated by the general provisions of civil law as well as the Data Protection and E-Commerce Acts.