Trademarks and other intellectual property rights are a key part of franchising. For the franchisor with an established brand, franchising can help build a national or international presence very quickly. However there can be pitfalls, especially when choosing and putting resources into developing new brands or sub-brands, explains Tom Phipps, Intellectual Property specialist and part of Ashfords' Franchising Team.
McDonald's is a case in point. McDonald's is an international brand which relied on franchising to become a global phenomenon. It protects its brand vigorously.
In 2008, Future Enterprises applied to register MACCOFFEE as an EU trademark for goods classes relating to food and drink. The application was initially successful, but McDonald's applied to invalidate the registration on the ground that it conflicted with its earlier mark, MCDONALD'S, and others in its portfolio, including MCFLURRY, MCMUFFIN and MCRIB.
The Court ruled that there was a sufficient degree of similarity between the marks to establish a link in the mind of the public between MACCOFFEE and the pre-existing family of McDonald's marks, and given the reputation that McDonald's enjoys, it was "highly likely that MACCOFFEE rode on the coat-tails" of the McDonald's brand, "to benefit from its power of attraction, its reputation and its prestige", and thus the use of MACCOFFEE took unfair advantage of the repute of McDonald's trademarks.
The decision has important implications. Famous brand owners will potentially be emboldened by the MACCOFFEE outcome. But how far will the principle that a famous brand with a reputation enjoys wider protection now be taken?
The case depended on the food and beverage link. There is no doubt that McDonald's is an enormous brand across the EU. While Future Enterprises defended its position, it didn't offer any convincing explanation as to why MACCOFFEE had been chosen as a brand that distinguished it from McDonald's.
The key message is to choose brands carefully so as to minimize the risk of challenge. Pre-application searches, both of UK and international trademark registers as well as unregistered brands, are well worth their cost.