Trademarks in International Franchising

Depending where you plan on franchising, there are both domestic and international laws that protect intellectual property rights (IPR). The Paris Convention is one of the most well-known international conventions on IPR. The convention applies to a wide array of IPR including but not limited to, patents, trademarks, service marks, and trade names.

Article 6bis of the Paris Convention protects the proprietor of a well-known mark from other marks that are confusingly similar. Two rights are granted by Article 6bis: first, the right to object to the registration of a mark that could be confused with the well-known mark, and second, to prohibit the use of a mark that is confusingly similar with the well-known mark. These rights are in addition to any other rights that are granted when registering the mark.

The key issue is whether a mark is deemed as “well-known.” Countries usually set this as a high threshold. One of the leading cases regarding the “well-known” standard is South Africa’s case McDonald’s v MacDonalds in 1996. McDonald’s lost in the lower court but won on appeal. Given McDonald’s global reputation, they thought this would be an easy win. However, there were some domestic legal issues which the lower court did not find in McDonald’s favor.

The lesson to be learned from the McDonald’s case is that franchises expanding internationally must have a carefully thought out plan on how to proceed. From a purely trademark perspective, this can include looking at whether the country is a party to the Paris Convention, what registration requirements are there domestically, is there any other trademark already in existence that could be confused with the mark, and evaluating whether the mark can have the protection of a “well-known” mark.

If you have any further questions about intellectual property related matters in international franchising, please contact international franchise attorney Mario L. Herman.