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Example Case Study - Intellectual Property

A foreign company had entered into a franchise agreement with a Thai company to use its trademark in Thailand. During the contract term, the Thai company registered copycat versions of the foreign company's trademark. When the registrations were approved, the Thai company terminated the agreement to pursue its own business. The foreign company took legal action to cancel the registrations, arguing it had prior rights. The court ruled in favor of the foreign company, finding the Thai company acted in bad faith by registering imitating trademarks. The lessons highlighted the importance of registering trademarks in the destination country before franchising and ensuring franchise agreements precisely define intellectual property ownership and usage rights.

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338 views2 pages

Example Case Study - Intellectual Property

A foreign company had entered into a franchise agreement with a Thai company to use its trademark in Thailand. During the contract term, the Thai company registered copycat versions of the foreign company's trademark. When the registrations were approved, the Thai company terminated the agreement to pursue its own business. The foreign company took legal action to cancel the registrations, arguing it had prior rights. The court ruled in favor of the foreign company, finding the Thai company acted in bad faith by registering imitating trademarks. The lessons highlighted the importance of registering trademarks in the destination country before franchising and ensuring franchise agreements precisely define intellectual property ownership and usage rights.

Uploaded by

Ahs Sadi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Case Study - Bad faith of franchisee

imitating franchisor's trade mark in


Thailand

Background:
A foreign company (“Foreign Company”) had registered its trade mark in its head-
quarter country but had not done so in Thailand. It entered into a franchise
agreement with a Thai company (“Thai Company”), permitting the Thai Company
to “use” its trade mark in Thailand. During the contract term, the Thai Company
sneakily filed and registered copycat marks in Thailand, imitating the Foreign
Company’s trade mark. As soon as the registration was approved, the Thai Company
terminated the franchise agreement to pursue its own business exploiting the newly
registered trade marks.
Trade mark:
A trademark is the face of your brand or company. Usually in the form of words, logos,
pictures, names, numbers and/or taglines, trademarks are used in trade to identify the source
of products/services and distinguish it from competitors in the marketplace.
Action taken:
The Foreign Company took legal action against the Thai Company requesting the
cancellation of the imitated trade marks on the basis of better rights, meaning on
their prior trade mark ownership abroad and the bad faith of the Thai Company’s
registration. All of the initial decisions were in favour of the Foreign Company.
However, the Thai Company took its claims to the Supreme Court.
Outcome:
The court reviewed previous franchisor-franchisee disputes in an effort to identify the
grounds of the better rights of the Foreign Company and establish the bad faith of
the Thai Company. The court considered written agreements and found that they
addressed the Foreign Company as the owner of the trade mark. During the
proceedings, the Thai Company admitted to seeing the Foreign Company’s trade
marks at trade fairs in other countries before entering into the franchise agreement.
In the end, the court ruled that the Foreign Company was the owner of the trade
marks, and that the Thai Company acted in bad faith by registering trade marks that
imitated those of the former. Therefore the latter’s trade marks has been canceled.
Intellectual Propety (IP) Lessons:

 A franchise agreement is a legally binding contract specifying the rights, costs,


and responsibilities of a franchisor and a franchisee in the franchising
relationship. Its typical component is a clause allowing the franchisee to use
the franchisor’s IP assets to reap the commercial benefits of a successful
brand or business model.
 Register your trade marks in the destination country before entering into a
franchising contract to be on the safe side and discourage the franchisee from
infringing your trade marks to avoid an unnecessary trial.
 Consult a lawyer with local expertise to prepare a precise and thorough
franchise agreement, ensuring the inclusion of comprehensive clauses on the
ownership of the IP subsisting in the products or services, the franchisor’s
right to use such IP and setting strict limitations on such rights during the
term and after the expiration of the agreement. Imprecise drafting may open
up an avenue for the franchisee to misinterpret the contract.

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