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Adding to the Franchisor's Arsenal

By Raymond Millien
September 16, 2003

Franchisors have long packaged a business model along with a collection of intellectual property that includes service marks, trademarks, trade names, logos, trade secrets, and copyrighted materials (eg, operating manuals, product information sheets, and advertising collateral), in order to form a business opportunity that is attractive to potential franchisees. In order to protect franchisees from unfair competition, franchisors have always had federal copyright, trademark, and trade dress infringement actions and state law trade secret and unfair competition actions as part of their legal arsenal against such competitors. This arsenal also includes state law breach-of-contract causes of action against insurgent franchisees failing to 'follow the rules' of the business model (ie, failing to honor the obligations set forth in the franchise agreement crafted by the franchisor). In today's economic and technological climate, one more option should be considered for inclusion in a franchisors' arsenal ' business-method patents and the threat of a federal patent infringement suit against unfair competitors and insurgent franchisees.

U.S. Patent Law Basics

A patent is a grant by the United States federal government that entitles the owner (the individual inventor(s) or a company to which the inventor(s) assign their rights) to exclude others from making, using, selling, offering to sell, or importing an invention into the U.S. The rights granted by a U.S. patent are enforceable only in the United States, and last a period of 20 years from the date on which the application was filed. (Almost every country in the world has its own patent laws, and thus patent protection must be separately applied for in the countries where a franchisor operates.)

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