Trademark dispute generally may give rise to injunctive relief

Relations between franchisors and franchisees are often riddled with business disputes leading to litigation between them. Often in California and other states the litigation takes place over the terms of an ongoing franchise agreement with respect to how it should be interpreted and enforced. In other cases, the dispute may be between a franchisor and a former franchisee. The latter kind of conflict often pertains to a trademark dispute in which the franchisor claims continuing trademark infringement by its former franchisee that is continuing to run a business similar to the franchisor’s business.

In one case, a pizza chain recently sued a former franchisee in a federal district court. It claims trademark infringement and unfair competition. The Fox’s Pizza Den Company claims that its former franchisee has continued to run a pizza shop secretly using the Fox Pizza Den name, and has been selling pizza and other products with the use of the actual registered trademark of the company. Fox’s is seeking a preliminary and permanent injunction to stop the ongoing infringement from continuing.

The detailed facts are not reported so that it is unknown how long the two businesses have been separated. In some instances, the name may be used inadvertently during the early days of a transition from having a franchise to not having one. When a franchise expires or is otherwise withdrawn from the franchisee, it is illegal for the franchisee to continue by using the same materials, ads, containers and other paraphernalia that it used when the franchise was alive.

This is the type of business litigation and trademark dispute in which an injunction is generally available as a remedy in California courts. The continued use and infringement of the copyright is something that cannot be fully compensated by monetary damages. Irreparable harm could be suffered by the owner of the franchise if a company succeeds in continuing to use the trademark and other proprietary materials that make up the unique qualities of the franchise and its registered trademark.

Source: pennrecord.com, “Pizza chain sues former franchisee, alleging trademark infringement“, Gene Johnson, May 23, 2016

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