Relevance%20of%20Dispute%20resolution%20in%20Franchising%20Industry

1
Relevance of Dispute resolution in Franchising
Industry

• Pravin Anand
• Lahore, 18th December 2007

2
Introduction

• Types of Disputes
• Types of Dispute Resolution models

3
Continued use of IP

• Use of IP after termination
• Education Franchisee Baron vs Galgotia, SAP,
  CFA, KAPLAN, etc
• Defence Termination illegal (eg Ziff Davis)
• Termination justified due to poor quality
  (Pioneer Hybrid case)
• Objective standard or sole judgement of
  franchisor?
• Ex Franchisee refusing to transfer Press
  Registrations for magazines

4
Philips VCD Cases refusal to pay royalty
Philips VCD Compression Technology Injunctions
in Two Suits Anton Pillers executed Licenses of
US 200,000 in One month Market need was
reflected, but result came through a settlement
5
Employee leaving

• Joining competitor
• Can Carry Skill and experience but not IP
• Trade secrets eg customer or client lists (Titus
  case) Confidential information must be specified
  includes know how for manufacturing, managing,
  marketing, customer lists, pricing information
  etc
• Injunctions, Anton Pillar orders eg Summit case
• Doctrine of inevitable disclosure
• Even the competitor may be injuncted

6
Best Technology not given
SCHNEIDER VS TELEMECHANIQUE
Injunction against Joint Venture when permission
to make generation 2 products Declined. No
Acquiescence.
7
Franchisee suffering due to piracy

• Wants to take action quickly
• Sometimes unauthorised no locus standii
• Sometimes unprepared - may create embarrassment
• Tendency to blame shortage of sales to piracy

8
Consumer or third party actions

• Actual ingredients not disclosed (eg Use of
  prohibited meat) against franchisor
• Hygiene not maintained against franchisee
• Software piracy - against both
• Kerl vs Rasmussen (degree of control forms basis
  of liability against franchisor)

9
Competition Law

• Restrictive trade practices
• Wont sell rivals goods
• Territorial restriction
• TELCO case no Per Se rule but rule of reason
  certain restrictions are necessary to promote
  competition
• Sarabhai case Patents excluded but know how
  included
• Gujarat bottling vs Coca Cola that franchisee
  will not deal with competing goods is not
  restraint of trade
• Unfair Trade Practices
• False Advertising

10
Dispute resolution

• Litigation both parties desire strong trade
  mark protection
• New principles, new torts, new remedies
• Alternate Dispute resolution (ADR) eg Settlement
  discussions and mediations
• For speed, confidentiality, expert handling (eg
  Banking institution)
• Early neutral evaluation (Bawa Masala case)

11
Recent Indian Cases on shapes
Louis Vuitton Epi Leather case
Zippo Lighters
12

• Whirlpool case - registered mark injuncted
  Concept of Transborder Reputation

13

• Panda case

• Different goods - Well known brands protected

• Benz case

14

• K-Mart case - unregistered un-used service marks

15
The Yahoo! Case Internet stricter standard
16
Remedies
Anton Piller Norwich Pharmacal John Doe Mareva
Injunctions Combining Plaintiffs Lock breaking
orders In Camera hearings
17
Time Incorporated Vs. Lokesh Shrivastava and Anr.

• Ratio of the Case
• The Red Border Design is distinctive and directly
  associated to the magazine of the Plaintiff
• Defendants magazine is a slavish imitation of
  the Plaintiffs Trade mark/ Trade name
• Distinction drawn between Compensatory and
  Punitive damages the purpose of awarding the
  same
• Time ripe for award of punitive damages, with a
  view to discourage the law breakers
• Quantum of Damages depends upon flagrancy of
  infringement
• Awarded-Punitive Damages of Rs. 5 Lakhs and
  Compensatory Damages of Rs. 5 Lakhs and 6 lakh
  interest

18
John Doe order World Cup Soccer June 2002
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(No Transcript)
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Novel approach eg community service
21
New torts eg Framing or phishing
22
Traditional Knowledge (TK)
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Conclusion

• Even if litigation move to bring in an ADR
  element like mediation or ENE
• Gavin Kennedy in Negotiating Edge dont go red
  go purple