Intellectual propertyi Brand search
There are currently millions of registered trademarks in the world and several hundred thousand of them are in force in Portugal. Determining the ability to use a trademark in the Portuguese market is essential before large investments are made in marketing and packaging, and, importantly, before entering into a franchise agreement.
Registered trademarks can be searched in a number of public databases or, alternatively, it is possible to hire specialised companies to conduct in-depth clearance searches. Two of the most popular public databases used in Portugal are TMview and the database of the National Institute of Industrial Property (INPI).
In performing a trademark clearance search, it is necessary to bear in mind the criteria used for assessing the likelihood of confusion, namely issues of priority, similarity of goods and services and similarity of the marks from visual and phonetic perspectives. One should remember that no search provides a 100 per cent guarantee that the trademark application will proceed to grant nor that there will be no third-party opposition.
Indeed, in assessing the viability of a trademark application, it is important to remember that, inter alia, company names may be used as basis for opposition and that foreign trademarks often benefit from a six-month priority period, during which they can claim protection in Portugal. Unregistered trademarks that are used in commerce also have limited protection for an initial period of six months and may be invoked in opposition proceedings.
Furthermore, given that Portugal is a Member State of the Madrid Agreement and Protocol and of the EU, it is necessary to remember that European Union and international trademarks may also be in force in Portugal.
Whereas the process of searching and clearing a trademark is a well-understood and common procedure, verifying the non-existence of conflict in other areas (image rights, business process, etc.) is highly complex and carries with it significantly more risk. These risks should be duly taken into consideration in franchise agreements.ii Brand protection
The 'brand' is normally considered to be the central element of a franchise deal. Indeed, it is the brand that franchisees use and exploit in a certain territory to attract more customers and increase sales. The franchisor must, consequently, authorise the franchisee to use one or more brands and ensure that they are protected and maintain their value and attractiveness. Registration of the brand is fundamental to provide the franchisee with comfort in relation to the rights it is using.
The Portuguese trademark registration process is governed by the Portuguese Industrial Property Code, approved by Law-Decree No. 36/2003 of 5 March 2003. The 2003 Industrial Property Code is set to be replaced (for the most part) by a new Industrial Property Code as of 1 July 2019 (approved by Law-Decree No. 110/2018 of 10 December 2018).
The relevant authority for registering Portuguese trademarks or patents is the INPI. In brief, the request to register a trademark is filed and subsequently published in the official Industrial Property Bulletin. There is a two-month period in which the application may be challenged by any interested party. The applicant has a further two months in which to contest the challenge, as provided by Article 17 of the Industrial Property Code.
INPI will only start examining the application after the two or four-month period referred to above; the purpose of the examination being to ascertain and confirm whether the application meets the criteria foreseen in the law (the 'absolute grounds of refusal') and that the trademark is not likely to be confused with an already existing registered trademark (the 'relative grounds of refusal'). The application is only approved following this examination, after which it is registered and published in the official Industrial Property Bulletin. These decisions can be appealed to the Intellectual Property Court, currently seated in Lisbon, or, if all interested parties agree, to an arbitral court set up at the ARBITRARE centre.
Decree-Law No. 125/2006 of 29 June 2006 created the 'on-the-spot trademark' regime, according to which it is possible to buy a pre-approved trademark equivalent to the company name chosen at the same time that an 'on-the-spot company' is incorporated.
Article 316 of the Industrial Property Code establishes that industrial property benefits from the same protections as those established for property in general. An owner of a registered trademark may file a claim against anyone infringing the owner's trademark rights, namely using, without authorisation, in the course of trade, a mark that is identical or similar to the one registered, on products and services identical or similar to those included in the aforementioned registration and, as a consequence, causing a risk of confusion in the market.
Special protection exists in Portugal for well-known or prestigious marks. An owner of an unregistered trademark also may file a claim under the unfair competition chapter of the Industrial Property Code or under the general rules of non-contractual or contractual liability set forth in the Civil Code.
Article 317 of the Industrial Property Code establishes that certain behaviour by competitors may be considered unfair competition, including any acts that mislead consumers as to the identity of the company and origin of the products or services.
Furthermore, Article 318 establishes that the unlawful acquisition, disclosure or use of a competitor's trade secrets is considered illegal.
As with Portuguese trademarks, which are registered in a manner almost identical to that seen in other European Union countries, other intellectual property rights such as patents and designs also follow approval procedures closely based on EU legislation or international treaties.
In Portugal, it is standard practice for the obligation to protect the brand to fall on the franchisor, since that is one of the essential aspects of the franchise agreement.iii Enforcement
The types of action available to a foreign trademark holder will largely depend on the circumstances of such a trademark being registered or in force in Portugal. If the trademark is in force in Portugal, the foreign trademark holder may file a civil trademark infringement proceeding against the infringer, requesting that the infringement cease and, additionally, requesting compensation in cases where damage has occurred. In situations of great urgency, it is possible to request a preliminary injunction for the cessation of the infringing activity.
The foreign trademark holder may instead or in addition file a criminal complaint against the infringer, given that trademark infringement constitutes a crime under Portuguese law. Such a complaint would be investigated by the Portuguese public prosecutor and it is for the latter to decide to bring a case to court. The plaintiff also can request compensation under this procedure. The criminal complaint would have to be filed by the trademark owner within six months of him or her becoming aware of the infringing actions.
Furthermore, a foreign trademark holder may file a complaint of unfair competition, which is considered a misdemeanour under the Industrial Property Code. The complaint is filed with the Economic and Food Safety Authority, a police agency, and it is then decided by the INPI. In the context of franchise agreements, the improper use of a trademark generally gives rise to a breach of contract, the consequences of which are typically resolved by either a judicial court action or arbitration (depending on what is stipulated in the agreement). In relation to third-party infringements, it is customary for the franchise agreement to stipulate the parties' obligations and the mechanisms agreed for pursuing enforcement through the courts.iv Data protection, cybercrime, social media and e-commerce
Personal data is often a vital component of a franchise agreement, and customer lists and supplier contacts are often valued information that the franchisee wishes to access when entering into a franchise agreement. Conversely, the franchisor is often interested in having access to information on sales and other financial matters that may contain personal data (e.g., invoices).
The importance of personal data protection has been growing considerably in Europe and, naturally, also in Portugal. Great care should be taken to ensure that personal data are collected in a legal manner and that any transfers of personal data (particularly across borders) are done lawfully. Direct marketing is also tightly regulated and it is necessary to ensure that the legal criteria for sending marketing materials are in place. The main law regulating personal data processing in Portugal is the General Data Protection Regulation, which entered into force on 25 May 2018. Former Portuguese Law No. 67/1998 of 26 October, which also regulates personal data protection, is also still in force.
Another important aspect of franchising deals is the access to common IT systems or databases. This access should be regulated since unlawful access to these IT systems may constitute a crime. Law No. 109/2009 of 15 September approved the Cybercrime Law, transposing into Portuguese law Council Framework Decision 2005/222/JHA of 24 February on attacks against information systems, and it has also adapted Portuguese law to the Council of Europe Convention on Cybercrime. Pursuant to Law No. 109/2009 of 15 September, several software infringements are punishable as criminal offences. These include, by way of example, computer sabotage and unlawful hacking or unlawful copying of a protected program. Companies and any equivalent legal entities may be held liable for the crimes established in this legislation.
The protection of software and the general consequences for software infringement are foreseen in the Copyright and Neighbouring Rights Code (as amended) and also in Law-Decree No. 252/94 of 20 October (as amended). E-commerce is regulated in Portugal primarily under Law-Decree No. 7/2004 of 7 January (as amended).