Marketing advice
No charge
Why you must register your trade mark with the Intellectual Property Office before it starts charging, Jonathan Chadd explains
At the core of almost all rights granted under a franchise agreement is the right for the franchisee to use the franchisor's registered trademark. The use of such trade marks by franchisees is fundamental to the operation of the franchise yet many franchisors fail to register with the Intellectual Property Office (Trade Marks Registry) the fact that their franchisees are licensed users of their UK trade marks.
This is surprising since such registration secures additional protection for the franchisor in formally identifying the franchisee as a licensed user of the trade mark. Most importantly, in any claim for damages or other remedies against infringers the sum claimed by a trade mark proprietor (ie, usually the franchisor) may be significantly greater if such proprietor has taken the simple step of having registered the trade mark licences it has granted since any losses suffered, or likely to be suffered by a licensed user of the trade mark, will only be taken into account in infringement proceedings if that licence has actually been registered.
What does registration cost?
Currently there is no fee imposed by the Intellectual Property Office to register a trade mark licence. However, this is set to change from 6 April 2010 when a fee of £50 will be introduced in respect of each licence registered. For a franchisor with an extensive network of franchisees this will represent a significant cost.
It would therefore be sensible for all franchisors to review immediately the extent to which they have taken steps to register their franchisees as licensed users of their trade marks and to promptly register those who need registering before the April deadline when the new fee is payable.
Before doing so, however, franchisors need to check the terms of their franchise agreements to ensure that they have excluded any right for their franchisees to bring infringement proceedings in their own name under section 30 of the Trade Marks Act, since registration will give them that right if it is not specifically excluded. If it is not provided for in the franchise agreement a simple side letter can address the issue before registration is secured.
Where the franchisor company itself holds a licence from the individual proprietor of the UK trade mark, to use it and sub licence its use by its franchisees, then registration of the licence to the franchisor is vital. In that case the parties will almost certainly not wish to exclude the provisions of section 30 of the Trade Marks Act.
For further information on this or any other trade mark issues please contact Jonathan Chadd or Kitty Rosser at LPIP the in house trade mark management and advisory service of Leathes Prior Solicitors on 01603 610911.
