How to effectively register and protect a trademark in franchising

Trademarks play a very important role in promoting companies’ products and services. This is particularly true in franchising, as within the commercial formula of a franchising network the brand qualifies the uniform image of the franchisor, and therefore constitutes one of the essential aspects for determining the success of the network itself. The owner of a registered trademark has, in general, the right to make exclusive use of it and to prohibit third parties, except for their own consent, from using identical or similar trademarks in their economic activity. But not all registered trademarks have the same degree of protection. It is important for every franchisor to know, both during the registration of the trademark and subsequently, which are the tools and conditions that allow them to effectively protect their trademark; and therefore be aware of the importance of the search for anteriority of the trademark, of how to enhance the distinctive capacity of the same, of how to monitor the registration of similar trademarks by competitors, affiliates and former affiliates, of how to react effectively in judicial proceedings against acts of counterfeiting or unfair competition to the detriment of one’s own brand.

1.The importance of the trademark for a franchise network

The trademark plays, as is well known, a very important function in promoting the products and services of a company, in particular with the growth of the Internet and globalized communications. The choice between two or more products or services belonging to the same category depends on various factors, such as the quality of the product or service, the reliability of the company, the efficiency of customer assistance, the marketing strategy implemented by company, etc.

In this context, the potential customer, when he chooses to buy a certain product or to use a certain service, tends to be guided by an emotional flow, giving priority, very often, to the product or service distinguished by a brand known to him. It is therefore well understood the importance for a company to use a recognizable and easily distinguishable brand, in order to establish a relationship of trust with the potential buyer, generating in him the conviction that its products or services are among the best. on the market.

This is especially true in franchising. Within the commercial formula of a franchising network (the so-called Franchise package), the trademark – which is granted for use to all franchisees – is the element that qualifies the uniform image of the franchisor, and therefore constitutes one of the essential to determine the success of the network itself.

But precisely for this reason, the trademark must be designed and registered in very careful way, so that it can be effectively protected both towards competitors and towards affiliates and (above all) former affiliates of the network, avoiding that these subjects can use similar trademarks, creating confusion among the public and damaging the value of the brand.

The damage that can derive to a franchising network from trademark counterfeiting or its improper use can in fact be enormous. The illegitimate use of a similar trademark by a competitor can, for example, mislead the potential buyer who, believing he is dealing with a certain franchise network, finds himself interacting with another company, and, perhaps, to obtain a poor product or service that can induce him to stop buying from the “original” franchising network.

Let’s see in summary what are the most important aspects to consider from the legal point of view so that a franchising network can register a trademark in such a way as to be effectively protected.

2.The registration of the trademark

The reference legislation on the subject of trademarks is contained in the Italian Legislative Decree n. 30/2005 (Industrial Property Code, CPI). Pursuant to art. 7 CPI, a trademark can consist of any element capable of distinguishing the products or services of one company from those of another, or by:

• a name;
• one or more words;
• a graphic sign;
• a sound;
• a combination of these elements.

The registration of a trademark is not mandatory, but it is necessary in order to exercise the rights that art. 20 CPI recognizes the trademark owner (see below, par. 5).

The registration of the trademark prevents third parties (not authorized by the owner who registered) from using a similar or identical trademark, and therefore confers the exclusive use of the trademark in the country or countries in which it was registered, for the goods or services indicated in the registration application (classes).

Therefore, the franchisor company, owner of a registered trademark, can legitimately prevent other subjects from using a sign equal or similar to its own trademark in commercial activity, thus protecting itself against all conduct that make the trademarks “confusing” in the eyes of consumers.

Furthermore, the registration confers ownership on the person entitled to enter into license agreements, that is, to grant the use of the trademark temporarily to third parties. In the case of franchising, the franchisor can in fact grant the use of the brand in a non-exclusive license to the franchisees.

When a trademark is filed, the franchisor must choose the goods and services of his interest using the classes of goods and services of the Nice Classification. The identification of the classes during registration is very important, mainly for two reasons:

• in the first place, because it is necessary that the chosen classes do not enter into conflict with other classes similar to those claimed for other brands;
• secondly, because it is necessary to take into consideration not only the current productive address of the franchisor, but also the possible future choices, in order to be able to prohibit the use of the trademark for classes of products or services that could still be of commercial interest within the network; in fact, once the registration application has been filed, it can no longer be modified and to add new products or services it will be necessary to file a new trademark.

A trademark can be registered at national (Italian), community or international level.

The registration of the trademark at national (Italian) level allows the franchisor to protect the trademark throughout the Italian territory; in this case, the registration application must be submitted to UIBIM (Italian Patent and Trademark Office)   or at the Chambers of Commerce.

The registration of the trademark at Community level, on the other hand, allows the franchisor to protect the trademark throughout the territory of the European Union; in this case, the registration application must be submitted to the EUIPO (European Union Intellectual Property Office) or alternatively, to one of the central industrial property offices of the Member States, which in turn will forward it to the EUIPO.

Finally, the registration of the trademark at an international level allows the franchisor to protect the trademark in all the countries that have signed up to the Madrid Agreement and Protocol..

The choice of the type of registration essentially depends on strategic reasons, and is made on the basis of the use that the franchisor intends to make of the brand, the products or services that he will identify and therefore the market that is believed to be more attractive for the network. in franchising.

From the filing of the first trademark application, a period of 6 months begins (the so-called right of priority) within which it is possible to extend the registration of the trademark abroad, prevailing over any other trademarks registered in the previous months.

Therefore a franchisor can, for example, first register the trademark in Italy, and subsequently extend the registration application in other countries, based on the commercial needs of the network, backdating the effects of the second registration.

Once the priority period has expired, the trademark can always be filed in other States, but in this case the effects, also for the purposes of examining the novelty, will apply from the date of the new filing.

3.The search for anteriority

Before submitting the application for registration of a trademark, the franchisor must verify that the trademark possesses the requisite of novelty. It is in fact necessary that the trademark to be registered is not identical or similar to an earlier trademark, already filed in the State or States in which the application for registration of one’s trademark is to be filed, for the same class and for products/services. identical or similar.

The search for anteriority is used precisely to ascertain the presence of trademarks already registered, the same or similar to the one to be registered, for an identical or similar product category, and which for this reason could generate an opposition or a subsequent counterfeiting action. by the owner.

Most of the national trademark offices, in the examination phase of the requests, do not verify the novelty requirement; this implies that a trademark, even if accepted by the Office at the time of registration, could subsequently be declared invalid following a request by the owner of the earlier trademark.

The search for anteriority of a trademark, therefore, although not mandatory by law, is essential to eliminate or in any case significantly reduce the risk of suffering legal action by the owners of other trademarks.

This research can be carried out by the franchisor independently, using the databases of the brands published online; however “do it yourself” is highly inadvisable, as it is entirely preferable to contact qualified experts   in the sector. This is because:

 

• these studies also make use of private databases and are able to suggest to the franchisor the most appropriate protection strategy (for example, to modify in whole or in part the trademark that one intends to register, or to appropriately select the product classes);
• he search for anteriority on the trademark is considerably complex, as it is not sufficient to ensure that identical trademarks do not exist to what one intends to file, but it is also necessary to verify that there are no “similar” trademarks, and establishing when this similarity exists is often difficult from a technical point of view;
• it is also necessary to verify that the trademark that one intends to register has not already been adopted by others as an Internet domain name, because this could compromise the validity of the registration and in any case cause confusion on the market;
• even after the trademark has been registered, it is advisable to continue to “monitor”, making sure that other subjects (competitors, former affiliates, etc.) are not registering identical or similar trademarks; this control is carried out using a surveillance service offered by specialized consultants.

4.The distinctive ability of the trademark

Another very important analysis that the franchisor must carry out when registering the trademark is that which relates to its distinctive ability. This assessment is very important for the protection of the trademark, as it determines the degree of effectiveness.

The most distinctive character of a trademark is when words or figures are used they do not have any type of relationship with the product or service marked, or when generic names or commonly used words are used that are modified and / or combined with each other in an imaginative and non-descriptive way. When a trademark consists of a sign that has no relevance to the product it distinguishes, it defines itself as a strong brand.

For example, the “Apple” brand would certainly be not very distinctive if it were used by an apple distributor; not being in any way related to the “apple” product, but identifying products for computers, smartphones or tablets, it is a strong brand.

Furthermore, a trademark is also considered strong if it is endowed with reputation, that is, it is known by a significant part of the public interested in the products or services bearing the trademark, also due to the extent of the investments made by the company to promote it.

When a brand is strong, minimal variations of it are not sufficient to avoid the danger of confusion; therefore the owner of a strong trademark can prohibit third parties from using any trademarks that do not differ significantly.

Conversely, a trademark with little distinctiveness, as it is descriptive of the nature or quality of a product, is called a weak trademark. Weak trademarks benefit from reduced legal protection, as slight modifications of a trademark are sufficient to avoid confusion, and therefore to be legitimately used by the owner.

The identification of the distinctive capacity of a trademark, for the purposes of protection against counterfeiting acts by third parties, is considerably complex, and must be carried out on a case-by-case basis, taking into account the overall impression of the sign in the eyes of the public.

Two brands can be considered identical, in fact, when one reproduces the other by making differences so insignificant that they can go unnoticed by an average consumer, taking into account the overall impression produced by the signs, the level of attention that varies according to the products in question and the fact that the consumer does not make a direct comparison but a mnemonic one.

Moreover, a trademark with little distinctive capacity as descriptive, although less protectable, is easier to associate with a product or service in the consumer’s mind, and therefore has undoubted advantages from a commercial point of view for the franchising network. A delicate balance must therefore be struck between the need for brand protection and commercial success, which can be achieved with the help of an expert in the sector.

5.The protection of the trademark: a) the infringement action

Counterfeiting occurs whenever there is a use by others of the same or similar, unauthorized trademark, with the result of creating confusion (even potential) in the consumer.

Counterfeiting is not necessarily linked to the intention to copy someone else’s trademark; often a franchisor notices the existence of a competitor who has a brand that resembles his own in a completely random way, without the companies ever coming into contact with each other. Even in this case, however, the legitimate owner of the trademark is protected.

Pursuant to art. 20 CPI, the owner of a registered trademark has the right to make exclusive use of the same, and therefore to prohibit third parties, without their consent, from using in their economic activity:

• a sign identical to the trademark for products or services identical to those for which it was registered;
• a sign identical or similar to the registered trademark, for identical or similar goods or services, if due to the identity or similarity between the signs and the identity or affinity between the goods or services, there is a risk of confusion for the public, which can also consist in a risk of association between the two signs;
• a sign identical or similar to the registered trademark for even non-similar products or services, if the registered trademark enjoys a state of reputation and if the use of the sign without just reason allows to take unfair advantage of the distinctive character or reputation of the trademark or bears prejudice to them.

The action to protect the brand can also be carried out by the franchisor also in via urgent precautionary measure, thus prohibiting the competing company to use a trademark that is considered illegitimate.

It is advisable to contact one for the exercise of trademark counterfeiting actions law firm specializing in franchising.

6.Trademark protection: b) unfair competition

The franchisor owner of a registered trademark can be protected against the counterfeiting of his own trademark, i.e. with respect to the use by a competing entrepreneur of distinctive signs identical or similar to his own trademark, also through an unfair competition action, pursuant to art. 2598 of the Italian Civil code.

Paragraph 1 of art. 2598 of the Italian Civil Code, in fact, prohibits acts aimed at producing confusion in general with the products and/or services of a competitor, also made with the use of names or distinctive signs capable of producing confusion with the names or distinctive signs legitimately used by others.

The confusion of a product and/or service and/or a distinctive sign must be assessed in relation to the consequences that competitive acts may have on the average consumer, or on the consumer with ordinary diligence, and who makes his choices regardless of a careful comparison between two products.

When the confusion between products and/or services occurs by virtue of the recovery of the most distinctive element of the copied product or service, we speak of servile imitation. Slavic imitation consists in the reproduction of the characteristics of the brand endowed with individualizing efficacy. that is, suitable, by virtue of their distinctive ability, to link a product or service to a specific company.

The injunction of the illegitimate use of the trademark by the competing company can also be obtained through the action of unfair competition, as well as compensation for damage and the publication of the sentence.

Also for the exercise of unfair competition actions it is appropriate to one law firm specializing in franchising.

7.Trademark protection: c) opposition

A further form of protection for the franchisor who owns a registered trademark is represented by the opposition to the registration of the trademark. This is an administrative procedure, introduced by the CPI and concretely activated with the Italian Decree of the Ministry of Economic Development of 11 May 2011.

After the trademark filing request, in fact, the offices ensure its publication so that it is brought to the attention of third parties. This form of advertising allows those who believe they have the right to oppose the registration of the trademark.

The opposition to registration is an administrative procedure that allows you to request the rejection of an application for registration of the trademark. The opposition application must be filed for national trademarks with the UIBM, which verifies the formal requirements and decides on admissibility.

Upon the outcome of this decision, the parties will be able to decide whether to reach an agreement (in this case the opposition is extinguished) or remit the decision to UIBM, which will decide on the merits, accepting or rejecting the opposition.

It is therefore advisable for the franchisor to contact a law firm specialized in franchising not only in the preliminary phase of the search for anteriority and registration of the trademark, but also to subsequently monitor the conduct of competing companies.

 

Avv. Valerio Pandolfini

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The information contained in this article is of a general nature and is not to be considered an exhaustive examination of the various issues, nor is it intended to express an opinion or provide legal advice. Specific legal advice must be provided with regard to individual cases.