How can franchisors protect their intellectual property (eg, trade marks and copyright)?
Franchisors should consider, as a priority, protecting their trademarks, domain names, copyright (eg, in respect of their operations manual, marketing materials and website text) and any databases that they own.
Since copyright subsists automatically once the work is created, franchisors will not need to register their copyright in the United Kingdom. Trademarks are protected in the United Kingdom by applying for a UK trade mark at the UK Intellectual Property Office, and in Europe by applying for an EU trade mark at the EU Intellectual Property Office. Franchisors should consider registering brand names and any logos used by the business as trademarks. The franchisor will need to determine which goods and services any trade mark protection will be required to cover. Any registrations should be sufficiently broad to cover all 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 or services, as this could lead to consumer confusion.
Databases may be protected as a form of copyright (which requires no registration) or by way of a separate database right (which is an automatic right).
Domain names are not registered centrally, so they must be registered through a registrar. A domain name is registered for a set period and will need to be renewed.
Thereafter, IP rights can be protected by a combination of contractual obligations on the franchisee, and by legal proceedings in respect of infringements.
Must IP licences be registered?
No, there is no legal requirement to register IP licences in the United Kingdom.
How can franchisors protect their know-how and trade secrets?
Know-how and trade secrets may be recorded in the franchisor's operations manual, the text of which would attract copyright protection (though this would protect only the form of expression of the know-how and not the underlying ideas).
Franchisors typically protect their know-how through contractual confidentiality and non-use obligations imposed on the franchisee in the franchise agreement.
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?
Breach of contractual provisions regarding use of intellectual property will give the franchisor the right to terminate the franchise agreement. Infringement of intellectual property by the franchisee would also entitle the franchisor to seek redress through the courts – for example, by seeking an injunction to restrain the infringing use or by claiming damages in respect of it. If the IP breach involves products such as infringing branded goods, the franchisor may also be entitled to delivery up and destruction of any such goods or an account of profit for its sale. The franchisor could also request an undertaking from the franchisee not to infringe its intellectual property in future. Under common law, a claim can also be brought for the tort of passing off, when one party takes advantage of the reputation of another. This can be by using a similar name to the party with a good reputation or implying a link with its goods or services. A successful claimant needs to demonstrate:
- strong goodwill in its brand;
- that there has been a misrepresentation; and
- that damage (eg, loss of business) has been suffered as a result of that misrepresentation.
This can be difficult to establish when contrasted with establishing a claim for trademark infringement.
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