Usage trademark rights after termination of licensing unlawful?

The right of a franchisee to use the trademark and logo(s) of the franchisor is a permanent component of a franchise agreement. If a franchise agreement is terminated, it is important that the former franchisee does not continue this use. Using the trademark name of another party without his permission is in principle unlawful. In recent preliminary relief proceedings a licensor acted against the unlawful continued use of his trademark name. Dutch intellectual property lawyer Hidde Reitsma discusses the ruling.


Licences for use of trademark rights in the Netherlands

The reason for the preliminary relief proceedings was the following. The claimant operates a fitness concept under the name FunXtion. This concept is executed with licences by sports centres all over the country, including the respondents. FunXtion offers its licensees promotion materials and posters with the FunXtion logo. The claimant filed FunXtion as a trademark with the Benelux Trademarks Office. The respondents were entitled to use the fitness concept, the trademarks and the marketing materials of FunXtion for a usage fee.

Unlawful use of brand name and logo

After the licensing agreements were terminated, the claimant found that the respondents were still using the term FunXtion in several media and on the advertising boards of the fitness centres. In preliminary relief proceedings the claimant demands that the respondents are ordered to cease any use of the Benelux trademark FunXtion or equivalent characters forthwith.

Use of sign identical to trademark for the same service

According to the court in preliminary relief proceedings, the respondents infringed on the trademark rights of the claimant. The sign ‘FunXtion’ that the respondents used is identical to the trademarks of the claimant. Furthermore, the respondents used this sign in commerce for the same (sports) service as that for which the claimant registered its trademark.

Trademark infringement: claim to cease the use

It does not matter that the respondents have not actually used the fitness concept after termination of the licensing agreements. They used the trademark without permission. Based on the Community Trademark Regulation, the holder of the trademark is entitled to prohibit the use of a sign that is equal or similar to his trademark and if this sign is used in commerce for the same or similar products or services as for which the trademark is registered.

Risk of confusion of average consumer

A precondition is that there should be a potential risk of confusion of the public, i.e. the risk of association with the trademark. To assess whether there is an infringement the risk of confusion has to be assessed based on the impression that the sign and the trademark leaves with the average consumer A natural person who does act in the course of a profession or business.
» Meer over consumer
of the products or services. In this case there was no doubt that there was an infringement.

AMS Advocaten for acting against trademark infringement

In a franchise agreement a franchisee can operate the business concept of the franchisor for a fee. The permission to use the trademark, the logos and the concept of the franchisor within this scope is an integral part of this. Allowing the use of a trademark or an intellectual property right for a fee is also called a licence. If the franchise or licensing agreement is terminated, this also terminates the right of the franchisee for a legitimate use thereof.