Franchises affected by trademarks piracy

January 02, 2008

Around 80 franchising companies in the country are affected by piracy of their trademarks and concepts, estimates Enrique Alcázar, director and partner of Alcázar&Aranday consulting company.

According with the Mexican Franchises Association (AMF in Spanish), in Mexico, there are 750 firms operating under this scheme; hence, affectation reaches one of each 10 trademarks in the sector. Nevertheless, volume of affectations would increase to 320 cases, if infringers would not desist of the illegal practice before starting and administrative procedure, remarked Alcázar.

Pursuant the Industrial Property Law, indemnity to be paid to an affected company should be higher than 40% of the sells registered by the infringer during the illicit.
Karen Feher, responsible of the Industrial Property area at Feher&Feher attorneys, remarked that the cost of registering the ownership of a trademark in one class, amounts to less than 2 thousand 500 pesos in a procedure that takes around six months.

Enforcement of any of the 45 classes of registrations (products and services) considered by the Mexican Industrial Property Institute (IMPI in Spanish) is of 10 years and only protects the trademark within the country, she said.

While Ferenz Feher, director general of Feher&Feher consulting company, assured this year at least 200 trademarks credited the registration of ownership. Carlos Roberts, president of AMF, added that from the universe of franchises in the country, 500 operate under an strict franchise concept, as the remaining represent “business opportunities”. He also said that a “business opportunity” does not offer technical assistance, neither income for royalties a is the case of selling of machines for cafeterias.
Karen Feher commented that unauthorized use of identify also happens with the decoration of the premises and the architectonic design, that could also be protected.

Enrique Alcázar, from Alcázar&Aranday, said that the cost for crediting the use of the trademark should be seen as an investment and as a way to minimize the risk of eventual affectations from third parties.

He added that piracy will face an increasing tendency as the number of participants in the sector increases, and that the most popular trademarks will be the more subjected to plagiarism. He referred that worldwide tendency in business is to encourage intellectual property over production and tangible assets, as it generates more value to a trademark.

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