Predicament And Choice Of Protection For Trademark Right In International Franchising

Focusing on the special problem in cross field of International Franchising and Parallel Imports of trademark goods, this essay has comprehensively probed into the protection for trademark right of international franchisee in our country. It is made up with four sections: section one introduces the predicament of protection for trademark right of international franchisee; section two has deeply probed into the intrinsic characteristics of international franchising and franchise; section three has deeply examined the nature of parallel imports of trademark goods in international franchising; the last section shows the choice of protection for trademark right of international franchisee under the current predicament in our country.From a typical case, section one brings in the current predicament of protection for trademark right of Chinese international franchisee, which includes lack of theoretical research and practical legislation. In international franchising in China, international franchisees always take a weaker position, not only because, as the counterparty of franchising contract, franchisors usually are some transnational corporations and famous enterprises who can be as rich as a country, while comparatively franchisees have much less economic power. What's more, the exclusive right of trademark-use a franchisee gets is more liable to be infringed, of which the infringement from a third party's parallel imports is typical. When the third party comes into the marketing extent of the franchisee through parallel imports and sells the same trademark goods, as his price is always lower than the franchisee's, the franchisee's market has been taken up and profit damaged, the reason or key point of which is that the franchisee's exclusive right of trademark-use has been infringed. The complexity of rights in franchising decides that it is more complicated and even difficult to protect the right of trademark in franchising than in a simple intellectual property rights licensing relationship. When the franchising is developed trans-nationally which gives rise to more and more international franchising, the problem of intellectual property rights protection becomes more difficult. Not only because of the differences of legal culture and institutional circumstances international factors lead to, but also international franchising usually relates to international well-known corporations, enterprises and trademarks which contain great deal of commercial benefit. While it is always the real question as the protection for those trademarks that haunts the business sellers and becomes a controversial question in academic community.Section two develops the research on preceding problems, and deeply probes into the intrinsic characteristics of international franchising and franchise. The researcher first defines the"international franchising"and points out the essential feature of international franchising as a contractual relation, and then further clarifies the particularity of international franchising by comparing it with legal relations such as chain operation and agency system, after which the researcher argues that the center of international franchising is transfer of franchise. In a franchising, if the content of authority is strictly classified, the contract actually includes intellectual property rights licensing like trademark, operation pattern licensing and other rights licensing the franchisor permits, and compound of all these rights is the center of international franchising which is franchise. Then through probing into the object of franchise and comparing it with intellectual property right, the researcher has pointed out the fundamental feature of franchise as a separate property right. The object as a kind of intangible property decides that, different from the existing property rights, franchise has become an independent property right, more precisely an intangible property. And the nature of property right has been further conclusively proved by its transferability and economic value. Although franchise has not been explicated stipulated in the legislations and it still must be gained by contract, this cannot be a barrier to it to be an independent property right. Differences between franchise and intellectual property right in object, personal nature and content also prove the preceding conclusion. Finally, from the content of franchise, the researcher further reveals franchise is not only a single right, but"a bundle of rights"in which intellectual property right plays the most important part.Section three is mainly an introspection on the nature of parallel imports of trademark goods. As a co-existing problem in transnational flow of intellectual property goods, there are different forms of parallel imports in different fields. It is probably biased to consider it generally good or bad, while also inflexible to simply agree or disagree with it. The research deems that we should see this problem under a specific circumstance or a specific parallel import model, and then show the position that we ought to forbid or permit it through analyzing its nature in specific kind of case. Thus, drawing on the viewpoint of relevant scholars, the researcher has classified parallel imports and clarified which category the parallel import of trademark goods in international franchising belongs to, and then probed deeply into the nature of parallel import of trademark goods from perspective of jurisprudence and economics, for which the conclusion is that parallel import has the fundamental features of tort, but we cannot yet affirm the liability of tort due to lack of subjective conditions. However, from the perspective of beneficial balance, it is hardly a wise choice to protect the rights of parallel importers but abandon the exclusive right of trademark-use of franchisees. That how to protect the trademark right of franchisee to maximize his benefit or at least prevent imbalance should be a question we must consider.In section four, the researcher points out how to protect the infringed trademark right of international franchisee under the current circumstance and realistic predicament of our country. Given the existing resources of legislation, if we turn to remedy from breach of contract, international controversy of parallel imports and franchisor's balance of benefit will become a theoretical and practical barrier. While remedy from tort can be a choice fit for the reality. But according to current legislation in our country, as franchising is neither a legal right nor an absolute right, remedy from tort can be difficult. Even if it can be legalized, it will be difficult to ascertain the parallel importer's liability of tort due to lack of subjective condition. Under such a circumstance, the researcher deems that prevention is better than remedy. In the current legal system, we can draw on the Trademark Law in effect and the legislative experience of"putting trademark licensing contract on record"from"Explanations on Problems of Application of Law about Trial on Civil Trademark Dispute by the High Court"which is enforced in October, 2002 and bring in an institution of"putting international franchising contract on record". That means franchise is made known to third party by entrusting certain function to administrative departments like Administrative Bureau for Industry and Commerce. Once the international franchising contract is put on record, it means the potential parallel importer is informed about his competitor's franchise. Because if the parallel importer wants to come into the marketing extent and start operations, he must first get the permission from relevant administrative departments, and when he prepare to do that he will be informed about the existing franchising enterprise in this extent. If the importer still proceeds on the parallel import, his intention of infringement will reasonably be inferred, which means he must bear the liability of tort. Not only does this design of institution save legislative resources, but also it can be effectively directed against the parallel imports in international franchising. For parallel importers it functions as a risk alarming, while for franchisees it has greatly reduced the cost of burden of proof for turning to remedy of tort. As different countries held different attitudes toward parallel imports, the institution of putting international franchising contract on record which aims to realizing max benefit franchisees of our country has not yet been reflected in other countries'legislations. However, the researcher deems this is just a meaningful anticipation that we have made in the permitted space for legislation by TRIPS, and is the native wisdom we have demonstrated to solve Chinese problem.