THE FRANCHISE AND TRADE DRESS PROTECTION IN MEXICO
Most of the Franchises invest their resources and time in obtaining a key differentiator from its competitors; such as the set of colors, designs, architectural layout and decoration of their commercial stores, among other elements, that promote a unique and different experience to their consumers. This is the Trade Dress or Commercial Identity.
The Trade Dress involves the appearance and identity of a product or a service, and indubitably it is one of the most valuable assets of a Franchise, since it is a key element to obtain Brand awareness, to distinguish a Brand from its competitors, and define a clear position of the Brand in the market.
Based on the entry into force of the amendments to the Industrial Property Law (“LPI”) on August 10, 2018, from that date onward, it will be possible in México to protect the Trade Dress concept as a trademark, one of the most relevant aspects of a Franchise.
Previously, in order to be able to protect a trademark it had to be a “visible sign, that distinguished products or services from others of the same species or class in the market”, limiting the protection of certain assets, which were not acceptable under the definition of “visible sign”.
Currently, Article 88 of the LPI has been reformed and defines a trademark as “any sign perceptible by the senses and capable of being represented in a way that allows to determine the clear and precise object of protection, which differentiates products or services from others of the same species or class in the market.”
This amendment allows the protection of new figures, that is, the Non-Traditional Trademarks.
Likewise, section VII is included in the Article 89, and indicates that a trademark may constitute “The plurality of operative elements; image elements, including, among others, the size, design, color, layout, label, packaging, decoration or any other that, combined, differentiates products or services in the market (…)”.
This amendment to Article 89 of the LPI, represents a great achievement for Franchisors, since it opens the opportunity to protect assets that previously could not be protected, as it is, the Trade Dress of a commercial establishment or product packaging /wrapping, which constitute distinctive elements of a Franchise.
In some legislations, such as the one in the United States of America, the protection of the Trade Dress is possible. Below some examples of trademarks registered in that country:
- IN-N-OUT BURGERS Registry No.: 4839216®
- MICROSOFT CORPORATION Registry No.: 4036534®
In the case of a service Franchise, the Trade Dress can be constituted by the set of elements that make up the image of the business, for instance, the decoration of the establishment, architectural layout, colors, designs, shape, façade of the building and, in the case of restaurants, menus, as well as any other element used to distinguish themselves from their competitors. These elements are usually detailed in the Corporate Identity Manual, a document that contains all the information regarding the institutional identity of the Franchise, which is usually delivered to the Franchisees when they are part of a Franchise System.
Also, the appearance and image granted to a product by means of its design and packaging can be part of the Trade Dress of a Franchise, as long as there is an association between the packaging elements (e.g. colors used) and the products that are being sold.
To determine whether a combination of items can be registered as Trade Dress, two substantive elements must be considered: functionality and distinctiveness.
It is important to consider that if one of the elements is functional for the proper use thereof, instead of being distinctive, registration cannot be granted.
This is due to the fact that a balance is sought between the rights conferred by a patent and those conferred by the registration of a trademark. This is intended to prevent the owner of a brand from appropriating an element that is functional, for an undetermined time.
In this regard, to consider certain elements as Trade Dress, it must mainly distinguish services and products from others of the same kind, so that the consumer can associate these elements with a single company.
Additionally, the importance of protection of the Trade Dress of a Franchise should be considered, as well as, the benefits that this will grant to all Franchisee´s when becoming part of the Franchise System. The Corporate Identity is part of one of the basic manuals delivered to the Franchisee, who must follow the instructions, in order to maintain uniformity of the units of the Franchise. Accordingly, we can understand the Trade Dress as a combination of elements that allow the public to associate said elements with a particular owner, resulting from their distinctiveness.
Thus, every Franchisor must identify and protect the Trade Dress designed and used as part of its Franchise System, a key differentiating element against its competitors, such as: i) packaging of its products, ii) Colors, smells, sounds, textures associated with the business and iii) interior and exterior design of the premises (facade). In this manner, it will be possible to prevent the competitor from using the distinctive signs and obtaining the required protection to all the elements that are part of the identity of a Franchise.
These reforms represent a benefit to all Franchisors and Franchisees, since they grant protection to their intangible assets. The Franchisors have already taken the time and resources in designing a unique and distinctive identity and must consider these modifications to the LPI and new modalities to protect their intangible assets, since the Trade Dress is a fundamental part of a Franchise.
If you have any question, please let us know.
Mexico City, August 14th, 2018