All questions

Intellectual property

i Brand search

The Czech Industrial Property Office (IPO CZ) keeps a database of trademarks and other intellectual property rights valid on the territory of the Czech Republic, whether national trademarks, European Union trademarks or international registrations. The database is available online (at www.upv.cz) and is a very useful tool for searching protected trademarks, similar brands and other intellectual property rights that may be relevant for franchises. The IPO CZ conducts research as part of its paid services, but it is perhaps more common to use the services of specialised law firms or trademark attorneys. The main reason for this is that searches should not be limited to the databases maintained by the IPO CZ. For unregistered brands, business names and the like, it is usually necessary to search in the relevant databases of legal entities (especially the Commercial Register), search among registered domain names, or simply carry out research on the internet. For some rights that may also be relevant, such as image rights, no research can be conclusive because copyright is an unregistered right in the Czech Republic. The results of searches should always be discussed with specialists who can carry out a risk assessment and provide advice on the best way forward.

ii Brand protection

Brand protection is typically obtained via registration of the relevant brand as a trademark by the IPO CZ or as a European Union trademark by the European Union Intellectual Property Office. Although Czech law contains tools to achieve protection of non-registered signs, it is always a good idea to rely on registered rights. Trademarks are protected by the recently amended Trademark Act No. 441/2003 Coll (the Trademark Act), which now defines trademarks as any sign, in particular words, colours, drawings, letters, numbers or the shape of a product or its packaging, or sounds, provided that the sign can distinguish the goods and services of one entrepreneur from those of another and that it is represented in a manner that enables the authorities as well as the public to determine the clear and precise subject matter of the protection. Upon receipt of the application, the IPO CZ carries out a formal search to ascertain that the application meets all the requirements prescribed by law, as well as a substantive search to find out whether the sign concerned is eligible for registration as a trademark. In the event that the IPO CZ finds no legal obstacles to registration of the trademark, it publishes the application in its regular Bulletin; third parties can oppose the registration within three months of publication. From 1 January 2019, brand owners must monitor more actively what third parties are trying to register because the IPO CZ can no longer stop the registration of an identical mark for identical goods and services unless an opposition is filed by the owner of earlier trademark. Also, the IPO CZ can no longer prevent various speculative registrations that could previously have been considered to be in bad faith.

When a trademark is successfully registered, it is protected for 10 years from the priority date, which is usually the date when the application was submitted. This period can be repeatedly extended by an additional 10 years, subject to payment of an administrative fee.

Protection is also granted to designs provided they are new and have an individual character. Applications for registration of Czech national industrial designs must be submitted to the IPO CZ and they are then subject to substantive examination (in contrast to the registration procedure applicable to registered Community Designs, where there is only formal review of the application). When a design is registered, the protection lasts for five years but can be repeatedly renewed up to a total of 25 years.

iii Enforcement

According to the Trademark Act, the owner of a trademark has the exclusive right to use the trademark in connection with goods or services for which the trademark is registered. The term 'use' is defined in a rather broad manner and includes: (1) use of the trademark on the goods or on their packaging; (2) offering goods under the trademark, putting them on the market or storing them for such a purpose or offering or providing services under the trademark; (3) exporting or importing goods under the trademark; and (4) using the trademark in business correspondence and advertising.

According to the Industrial Designs Act (No. 207/2000 Coll), the registration of an industrial design gives its owner the exclusive right to use the industrial design, to prevent third persons from using it without his or her consent, to grant consent to use the industrial design to third parties or to transfer the right to the industrial design.

Intellectual property rights are typically enforced via courts. The relevant rights and claims that are available in cases of intellectual property rights infringement are (with the exception of copyright, which has a separate regulation) all concentrated in the Act No. 221/2006 Coll on Enforcement of Industrial Property Rights (the IP Enforcement Act). The IP Enforcement Act gives the IP owner the right to request that the infringer refrains from the activity that infringes or endangers the rights concerned, and that the consequences of the endangering or infringement be removed, namely by recalling or permanently removing goods and by recalling, permanently removing, or destroying tools or devices determined or used in connection with the activities that infringe or endanger this right. The IP owner can also request information about the origins of the infringing goods and their distribution channels. Regarding monetary claims, the rights holders can claim damages (they can choose whether to claim actual damages and lost profits, if applicable, or the amount calculated as double the standard market licence fee), surrender of unjust enrichment or, in cases of non-monetary harm, reasonable satisfaction, which can take the form of anything from an apology to financial compensation.

Simultaneously with enforcement of intellectual property rights, it is also fairly common in practice to make unfair competition claims. Examples of the activities that are explicitly listed among the types of unfair competition behaviour include misleading advertising, misleading marking of goods and services, and causing risk of confusion and parasitism on reputation, all of which can be especially relevant for franchising. This can be particularly useful for protection against various lookalikes and imitations, where the traditional intellectual property rights may not, for various reasons, provide sufficient protection.

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

The Czech Republic has a relatively long tradition of protection of personal data. The first data protection law had already been adopted in 1992 and this was later harmonised with EU law by Data Protection Act No. 101/2000 Coll, prior to the accession of the Czech Republic to the EU. On 25 May 2018, the Data Protection Act was replaced by the EU General Data Protection Regulation No. 2016/697 (GDPR), which is now valid and effective law throughout the whole EU. The GDPR further tightens the rules for the processing of personal data, as well as imposing severe sanctions for non-compliance. Conversely, some previous obligations were lifted and data controllers, for example, are now no longer required to notify the processing of personal data to the Czech Office for Protection of Personal Data. For more information about data protection law aspects of franchising, see the dedicated chapter of this Law Review on data protection.

Local data protection legislation containing certain specifications or exclusions to the GDPR will probably not become effective before the first quarter of 2019, although this is unlikely to present any major issues for franchising businesses. The only aspect of the GDPR relevant to franchising is the specification of the age of consent for online services, which will have an impact on e-commerce. Under the GDPR, the age of consent in the online world is 16, but Member States can choose to lower this to 13. From this age range of 13 to 16 years, Czech legislators seem to have taken the view that 15 years of age is sufficient for valid consent to data processing in the online world.

Cybercrime is explicitly addressed by the Czech Criminal Code (Act No. 40/2009 Coll), which provides modern criminal law protection for IT systems and data. The criminal offences include unauthorised access to IT systems and information media (hacking), unauthorised use of data and obtaining technology to violate the secrecy of messages, etc. Furthermore, the Czech Republic was one of the first European countries to take the measure of adopting a Cybersecurity Act (Act No. 181/2014 Coll). The Cybersecurity Act imposes duties on telecommunication providers or providers of critical infrastructure (e.g., in banking and the defence sector), consequently it is not likely to burden typical franchise businesses. Its purpose is to make the online environment safer. This may serve primarily to benefit digital franchises. The Czech Republic has adopted the EU Directive on Security of Network and Information Systems, known as the NIS Directive, which will slightly extend the number of subjects affected, and will harmonise the rules with the rest of the EU.

Legal regulation of e-commerce is rather complex and spreads across various laws, including the Civil Code (No. 89/2012 Coll), the Electronic Communications Act (No. 127/2005 Coll), the Consumer Protection Act (No. 634/1992 Coll), the Data Protection Act, the Criminal Code and the Information Society Services Act (No. 480/2004 Coll). The latter is especially relevant not only because it contains rules on the liability of internet service providers, but also for its regulation of email marketing (and spam). Similarly, a wide range of rules apply to social media. Franchises must cope with many individual laws governing personal data protection, personality and privacy rights, intellectual property, consumer protection and advertising regulations. Rather than focusing on social media, these laws are technology-neutral and regulate on a general level.