SPORTS LICENCING AND PROTECTING TRADE SECRETS WHEN A COMPANY FRANCHISES

"People equate patents with secrecy, that secrecy is what patents were designed to overcome. That's why the formula for Coca-Cola was never patented. They kept it as a trade secret, and they've outlasted patent laws by 80 years or more."

-Craig Venter

The word "Sports Licencing" refers to contracts made between teams, individual athletes, and the manufacturers of goods. Every team in the world uses partnerships and agreements to generate new clothes and fan goods as well as new uniforms with players. Workers in this specialist field also lessen the possibility of counterfeiting and prevent businesses from violating the trademarks of teams and specific players. To develop new deals, they collaborate with a variety of individuals.

 

·         Interacting with athletes and teams

Sports licencing professionals frequently collaborate closely with clubs and the players on those teams. They may also work with AAA farm clubs and teams lower on the professional ladder, but they frequently work with collegiate and professional teams, including the MLB and NFL. The needs of teams, managers, and anybody else working for the team are taken into account by experts in this subject, and solutions are found to fulfil those needs. They might work with a team to get their new logo on t-shirts and other items, or they might assist a player and his or her agency in finding endorsement arrangements.

 

·         Preventing Counterfeit 

One of the biggest issues facing the sports licencing sector is counterfeiting. When a business makes unauthorised use of a team's emblem or players without permission, this happens. This might involve creating and marketing fake team-branded apparel, rugs, or even forging the player and coach's signatures on items. According to industry analysts, counterfeiting can cost the sector millions of dollars annually. They collaborate with the federal government to look into allegations of forgery and to prevent others from creating and distributing goods in violation of intellectual property and trademark regulations.

Teams competing at the professional level, amateur leagues, and collegiate levels are all included in the sports industry. They supply supporters with high-quality goods and other things while assisting teams in acquiring the equipment they want for practises and games. Sports licencing could soon be a $1 billion market thanks to yearly sales growth.

 

·         Protecting trade secrets when a company franchises

By issuing licences to franchisees, franchising can be a successful model for business expansion for the franchisor. In general, this provides a franchisee access to use the franchisor's information, procedures, "know-hows," and trademarks and sell branded goods or services using their name and goodwill. Expanding the number of franchisees ensures the franchisor's commercial and geographic reach. Franchisees may be required to pay upfront costs and ongoing royalties to the franchisor in order to obtain the licence.

Due to the lack of any formal safeguards, one of the worries for people looking to franchise their firms in Bangladesh may be the preservation of their trade secrets. The reluctance could be caused by apprehension of franchisees disclosing commercial secrets. Neither the protection of trade secrets nor the franchising industry as a whole is specifically covered by legislation in Bangladesh. This sector's entire scope is managed by unique contractual agreements between the parties. As a result, the industry frequently suffers from a regulatory gap.

In our nation, a franchise is a legally binding arrangement between the franchisor and the franchisee based on the Contract Act of 1872. In these agreements, a franchisor may transfer its trademark and goodwill in accordance with chapter 5 of the 2009 Trademarks Act. It can be assumed that the franchise's primary guiding principle would be the franchise agreement, which must be exhaustive if certain facets of the franchisor's intellectual property are to be protected. In reality, clauses regarding intellectual property, such as trade secrets, are frequently absent from or poorly written in private contracts between franchisors and franchisees.

Because they only provide post-breach remedies and do not guarantee breach in the first place, non-disclosure agreements are frequently insufficient to safeguard the protection of trade secrets.

The biggest drawback for a franchisor would be the worry that their trade secrets will be compromised. The definitions of trade secrets and strategies for protecting them have been outlined by the World Trade Organization (WTO). Effective penalties against the theft of proprietary information are demanded. This procedure might be carried out by means of an agreement with thorough and effective non-disclosure clauses. The clauses should be changed, if they weren't already. Effective attorneys can identify gaps in current contracts and explore options for amendment.

For a company like KFC, it might be the Colonel's special spice blend, for Coca-Cola, it might be the syrup's recipe, and for some others, it might be the customer database, which essentially serves as their trade secret. These facts suggest that a prospective trade secret disclosure or leak that occurs without the company's knowledge or permission could result in the company's demise.

 

Since the trade secret is already going out and it takes a while for the court to implement its remedy, the business owners are uncomfortable with the idea of post-breach court sanctioned remedies.

As a result, having a complex plan of control, which must be explicitly spelled out in the franchise agreement and which, if violated, could subject the franchisor to liability, is an alternate method of protecting trade secrets. After defining the confidential information (for example, the ingredients in a product, the recipes for a meal, etc.), exclusion clauses from access must be specified.

Written by

Vanshika Sahu

LinkedIn