Intellectual property plays an integral role in franchise agreements and a franchisor’s objective is always to protect the various types of intellectual property and brand value attached to their business. Breach of franchise agreements may risk infringement and therefore, in such cases, it becomes essential for a franchisor to claim relief from the courts. The Food and Beverage Industry relies immensely on their trade marks, trade secrets and brand image and given the risks associated with public health and safety attached, franchisors also have to ensure that standards are being maintained and regulations are being followed.
In the case of M/S Copenhagen Hospitality and Retails & Ors. v. M/S A.R. Impex & Ors., the Plaintiffs sought relief against the Defendants for breach of their franchise agreement claiming trademark infringement, passing off, infringement of copyright, trade dress, breach of confidentiality and misappropriation of trade secrets.
The Plaintiff is the owner of the pizzeria La Pino’z and has around 175 franchised outlets in India. In April 2021 they were informed that the hoardings and display boards of most of their franchise outlets in Ahmedabad were being removed and replaced with “LA MILANO PIZZERIA” with a similar logo as that of the Plaintiff’s. Upon investigation, they found the Defendant to be in violation of their master franchise agreement wherein the Plaintiff and the Defendant had agreed to operate and manage the “LA PINO’Z PIZZA” franchise and sub-franchise in the state of Gujarat. The Defendant had replaced the name from “LA PINO’Z PIZZA” to “LA MILANO PIZZERIA” and was creating a deceptively similar brand as that of the Plaintiff’s by using identical/similar branding products and marketing tools, including the menu and the names of their pizzas.
The Plaintiff provided evidence to prove that the Defendant was passing off his goods, services and business as that of the Plaintiff’s. With regards to the menu for instance, “SPRING BLING”, “LOVER DELIGHT”, “BURN TO HECK” “AMERICAN RETREAT”, “MILANO RETREAT” and “7 CHEESY/CHEESE7” were deceptively similar names to the Plaintiff’s pizzas on their take-away menu. In fact, the Plaintiff even alleged that the Defendant was using the same oregano and chilli flake packaging as that of the La Pino’z brand. The Plaintiff also contended that the Defendant was using social media and was continuing to operate the social media handles of the Plaintiff even after violating the master franchise agreement and opening their own pizzeria.
In view of the evidence in favour of the Plaintiff, the Delhi High Court decided that they had made out a prima facie case in their favour and that they would suffer irreparable harm if relief was not granted. The Court restrained the Defendants from infringing the Plaintiff’s registered mark and “from selling the pizzas under the impugned names SPRING BLING, LOVERS DELIGHT, BURN TO HECK, AMERICAN RETREAT, MILANO RETREAT and 7 CHEESY/CHEESE 7, which is infringing the Plaintiffs' registered trade marks SPRING FLING, LOVERS BITE, BURN TO HELL and ENGLISH RETREAT, and misuse Plaintiff's product names/marks LAS VEGAS RETREAT, CHICAGO RETREAT and CHEESY 7.” In addition, the Court also restrained the Defendants from using the Plaintiff’s proprietary products, accessing the Plaintiff’s social media accounts or any websites and even using the trademark “LA PINO’Z PIZZA'' in any derogatory manner or in any public or private communication.
Intellectual property carries immense value for brand owners, especially franchisors. Trademark/copyright infringement in such cases becomes a matter where violation of intellectual property rights also involves violation of contractual obligations as well. The Defendant in this case was found in violation of the master franchise agreement and the Court in this decision has rightly exercised its discretion to find in favour of the Plaintiff, striking down such blatant infringement.