[Direct answer]In the Beijing area, if franchisees use trademarks without authorization, the brand owner may pursue breach of contract liability in accordance with the franchise contract, and may also claim trademark infringement in accordance with Article 57 of the Trademark Law of the People's Republic of China (the amended version implemented on November 1, 2019), demanding that the infringer stop using the trademark and compensate for losses; if the infringement constitutes confusion or other acts of free-riding, the brand owner may also claim infringement in accordance with the Anti-Unfair Competition Law of the People's Republic of China. Common types of "unauthorized use" include: using the trademark beyond the authorized categories or regions, continuing to use the trademark after the contract expires or is terminated, changing the registered trademark logo style, and using the trademark in unauthorized stores and online channels. In terms of handling procedures, it is advisable to first obtain evidence through notarization and send a letter to fix the facts of breach of contract and infringement, and then choose to file a complaint with the market supervision department or initiate legal proceedings according to the circumstances. Compensation shall be determined in accordance with Article 63 of the Trademark Law, which may be based on the actual losses of the right holder, the infringer's profits, or a reasonable multiple of the license fee. Where it is difficult to determine the amount of compensation, the statutory compensation of no more than 5 million yuan shall apply. For serious cases of malicious infringement, punitive damages of one to five times the infringement amount may be claimed. For the establishment of an authorization system, reference may be made to relevant provisions.Intellectual propertyColumn.

1. Problem background and typical scenarios

From the brand's perspective, typical scenarios include: first, franchisees default on management fees but still continue to operate while keeping the signage up; second, they refuse to remove the signage and replace it with new ones after the contract terminates; third, franchisees privately open branch stores using the brand's logos; fourth, online stores misuse the brand's trademarks to attract customers and sell goods. From the franchisee's perspective, they may believe that paying the franchise fee grants them indefinite, full-category usage rights, only to be sued for infringement after exceeding the scope of use. Such disputes are common in the catering, education, and beauty industries in Beijing, and the division of rights and responsibilities and the legal nature of the contract can be referenced for reference.Business and contract disputes in enterprisesColumn.

II. Key points of contention

Focus One: Whether the use behavior is within the scope of authorization. The categories, regions, durations, number of stores, and channels of the authorization letter are the benchmarks for judgment. Focus Two: Whether it constitutes a breach of contract or infringement. Using the trademark beyond the scope during the contract period often results in a concurrent violation of both breach of contract and infringement. The rights holder may choose to assert one claim or successively assert both claims. Focus Three: How to calculate the compensation amount. When the actual losses, infringement profits, and the multiple of the license fee are difficult to verify, statutory compensation applies. Focus Four: The boundaries of franchisees' defense of "having authorization". Authorization does not equal unlimited use, nor does it mean that they can piggyback on the goodwill of others' well-known trademarks. Focus Five: The characterization of trademark use after the franchise contract is deemed invalid or terminated. Focus Six: Whether the brand owner's long-term negligence in management affects the claim. Specifically, the judgment shall be based on the currently effective laws, regulations, and judicial rulings.

III. Professional analysis by Henglue Lawyers

Based on the two cases handled by our firm, we can clearly see the boundaries of authorization and use from both positive and negative perspectives. The first case involves trademark infringement and unfair competition disputes: the plaintiff, a well-known paper company, holds a well-known trademark on sanitary napkins in Category 5. The defendant company, authorized by a third party in September 2023 to use a similar registered trademark and design patent to produce and sell similar products, was sued in April 2024 for imitating the well-known trademark and causing confusion in packaging and decoration, demanding compensation of 980,000 yuan. This case was handled by Beijing Henglue Law Firm.Liu YuanyuanThe lawyer (practice license number: 11101202011201094, subject to the certificate issued by the judicial administrative organ) represented the defendant and raised the defense that the logo had a legitimate authorization source and the overall readability difference was obvious; the packaging and decoration derived from the design patent did not constitute unfair competition; and the infringement period was short and the scale was too small to support high compensation. The court found that it constituted trademark infringement, but rejected the claim of unfair competition and awarded economic damages of 50,000 yuan and reasonable expenses of 10,000 yuan, totaling 60,000 yuan, which was 920,000 yuan lower than the claim. This case shows that even if there is authorization, exceeding the reasonable scope and free-riding on the goodwill of others' well-known trademarks still constitutes infringement; the defendant can also reduce the damage significantly through the authorization chain and the circumstances of infringement. The second case is a franchise contract dispute: After the franchisee paid 98,000 yuan for cooperation service fees to join the education brand in August 2018, the headquarters frequently replaced staff members, went missing later, and did not obtain a franchise qualification. Moreover, the relevant trademarks were invalid before the signing of the contract. Beijing Henglu Law FirmXiong BinrongThe lawyer (practice license number: 11101202211410897, subject to the document issued by the judicial administrative organ) represented the franchisee and used the chat records and the trademark invalidation ruling to prove the above facts. The court determined that the agreement had the nature of a franchise contract and had not exceeded the statute of limitations. Based on the principles of fairness and considering the performance of the contract and the faults of both parties, the court ordered the return of the cooperation service fee of 68,600 yuan. This case reminds brand owners that defects in trademark ownership and franchise qualifications can undermine the entire authorization system; franchisees can also claim refunds based on such defects.

IV. Practical suggestions and legal basis

Action suggestions: 1. For brands: - Perfect the authorization documents by clarifying the trademark categories, regions, durations, store numbers, and online channels, and stipulate grace periods for delisting after expiration or termination. - Regularly inspect stores and monitor online channels, and immediately obtain evidence through notarization upon discovering unauthorized use. - Send cease-and-desist letters first to claim cessation of use and retain delivery records. If necessary, file complaints with market supervision authorities or initiate legal action. - Pre-set penalty clauses and logo recall provisions in franchise contracts to reduce the difficulty of providing evidence. 2. For franchisees: - Check the authorization scope before use to avoid exceeding category, region, or duration limits. - After being sued, actively verify the rights holder's trademark status and their own authorization chain, and defend against claims with legal arguments to mitigate damages. Legal basis: - Article 57 of the Trademark Law of the People's Republic of China outlines types of infringements of registered trademark exclusive rights. Article 63 stipulates the order of determining compensation amounts, with statutory compensation of no more than 5 million yuan and punitive damages of 1 to 5 times the amount of malicious infringement (amended version effective November 1, 2019). - Article 577 of the Civil Code of the People's Republic of China governs breach of contract liability (effective January 1, 2021). - Article 7 of the Regulations on Commercial Franchise Management (effective May 1, 2007) requires franchisors to own registered trademarks and other business resources and meet the "two stores per year" requirement. For reference on contract drafting and protection strategies, please refer to the following sources:Special services and other casesColumn.

5. Henglue Law Firm's Advice

Risk Warning: Firstly, authorization is not a one-time deal. Franchisees should always obtain written authorization for each contract renewal, store expansion, or logo change, as verbal agreements can lead to serious legal consequences. Secondly, if the brand owner delays obtaining evidence after discovering infringement, they may face counter-claims due to lax system management, putting them at a disadvantage during compensation determination. Thirdly, franchisees should not assume that holding authorization permits them to engage in borderline activities involving well-known trademarks. In the aforementioned case, although the claim of 98,000 yuan was reduced to 60,000 yuan, the defendant still had to cease infringement and publish a retraction notice. Fourthly, franchisors who use unregistered or invalidated "brands" to attract investors may face double consequences of refunds and administrative penalties. It is recommended to consult professional lawyers as early as possible for the establishment of authorization systems and dispute resolution, and relevant cases can be referenced for reference.Intellectual propertyColumn.

VI. Frequently Asked Questions

Q1: If a franchisee uses the trademark beyond the scope of the franchise agreement, can the brand owner successfully sue them?

The key lies in the authorization documents and the evidence of use. If the authorization clearly specifies the categories, regions, durations, and channels, and the franchisee uses the brand beyond the scope of the authorization, the brand owner has a solid basis to claim breach of contract or infringement, and the probability of winning the case is high; if the authorization is vague and the brand owner has long tolerated it, it may be deemed to form a new authorization practice and be difficult to hold accountable. Before suing, it is necessary to notarize and fix the evidence of use and sort out the performance records, and then choose between a breach of contract lawsuit or an infringement lawsuit. The choice of path directly affects the method of calculating compensation.

Q2: What evidence do brand owners need to prepare when protecting their rights?

The following should be prepared: trademark registration certificates and renewal/amendment certificates, evidence of the trademark's popularity or well-known status; franchise contracts, authorization letters, and a list of stores; notarized evidence of the franchisee's unauthorized use, such as store photos, screenshots of online stores, and promotional materials; demand letters and delivery records; and evidence of losses or profits, such as licensing fee contracts and the franchisee's sales data. When the evidence chain is complete, it can simultaneously support claims for both breach of contract penalties and infringement compensation.

Q3: How much does it cost to protect a trademark?

The costs vary depending on the approach taken: Complaining to the market supervision department is relatively low-cost; obtaining evidence through notarization typically costs hundreds to thousands of yuan; litigation requires paying case acceptance fees based on the amount of the claim, with the winning party bearing the costs; and attorney fees are determined through negotiation based on the complexity of the case and the amount involved, with no standardized rates. In some cases, the other party may be required to bear reasonable expenses. Those with limited budgets can first file complaints or send letters to apply pressure, and then pursue litigation if necessary, gradually escalating their efforts to protect their rights based on the cost-effectiveness of the approach.

Q4: How long does a trademark infringement lawsuit usually take?

The first-instance ordinary procedure generally does not exceed six months, but it will be significantly extended if it involves the identification of well-known trademarks, appraisals, or appeals. The second-instance procedure takes about three months; the market supervision departments handle complaints relatively quickly. During the litigation process, parties can apply for provisional measures to require the other party to immediately stop using the trademark to prevent losses from expanding. In cases with solid evidence, some defendants will voluntarily delist and reach settlements during the defense period, which will correspondingly shorten the actual timeframe. The quality of sending letters and collecting evidence is the key to speeding up the process.

Q5: If you find that a franchisee is using the trademark without authorization, what should you do first?

The first step is to fix the evidence and obtain notarization or a trusted timestamp for the store signs, product packaging, and online stores; the second step is to check the authorization documents to confirm the exceeded categories, regions, and time limits; the third step is to send a lawyer's letter, requiring the removal of the signs within a specified timeframe and claiming breach of contract or compensation, while retaining the delivery records; the fourth step is to choose to file a complaint, initiate legal proceedings, or terminate the contract based on the other party's response; and the fifth step is to simultaneously investigate whether other stores have similar problems to avoid systemic failures. For related contract disputes, please refer to the relevant materials.Business and contract disputes in enterprisesColumn.

The above questions and answers are mainly based on the judicial practice in Beijing. There may be differences in the interpretation of the law in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials to avoid missing the statutory time limit.Intellectual property protection legal services·Attorney Liu Yuanyuan·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If a dispute arises, please consult a practicing lawyer in time.