You have done your homework. Your brand is important to your business and the licenses to use it underpin your franchise agreements. You have taken all the brand protection advice on board and your trade marks are registered. Job done. Or is it?
Registering your trade marks is a really important step in protecting your brand but even once registered, trade marks are not invincible and can require ongoing investment. Without this, they can become vulnerable.
The need to make this ongoing investment was highlighted in the recent decision of the European Union Intellectual Property Office (EUIPO), in relation to McDonald's BIG MAC trade mark.
There has been a long standing trade mark dispute between McDonalds and Supermac’s, an Irish fast food chain. As part of this dispute, Supermac's applied to the EUIPO to revoke McDonald’s BIG MAC trade mark on the basis that it had not been used in the EU between 2012 and 2017. If a trade mark is not used in the first five years of registration or any subsequent five year period, then a third party can apply to revoke it on the grounds of non-use.
Most of us will be aware that McDonalds uses a BIG MAC mark, and has done so for some time, but, extraordinarily, it did not file good enough evidence to support this. This clearly demonstrates that, while making use of your trade mark is important, use alone isn't enough and a rights owner also needs to be able to evidence that use.
McDonalds claimed that it was commonly known that it sold millions of products under the BIG MAC mark and filed evidence including employee affidavits, website print outs, packaging materials and an extract from Wikipedia on the Big Mac burger.
However, as far as the EUIPO was concerned, this was not enough and McDonalds did not hit the required thresholds:
At first instance, McDonalds' case fell short and the mark could be revoked. Their investment in defending their mark was simply not enough. Perhaps not surprisingly, McDonalds is appealing the decision and we await the outcome: the food may be fast but legal process is not.
The key takeaway from this matter is that trade mark owners must be prepared to invest in their mark in order to continue to benefit from their protection.
However, the non-use ground is only one of a number of reasons that trade marks can become vulnerable and which can ultimately result in a forced rebrand. It is therefore critical that franchise agreements deal with all such contingencies by, for example, giving a franchisor the right to change its brand at its own discretion and requiring its franchisees to rebrand at the franchisee's expense. This brand substitution right will then manage the risk of a franchisee claiming damages against the franchisor for the costs of a rebrand as well as potentially other losses.
Ultimately, franchisors need to use and invest in their brands but make sure in the event of a necessary rebrand that their franchise agreements are drafted to cover all potential circumstances.
By Jo Pritchard, legal director and Pauline Cowie, partner at TLT
This article was first published by Global Franchise
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2019. Specific advice should be sought for specific cases. For more information see our terms & conditions.