Franchisors that own intellectual property (patents, copyrights, or trademarks)for use as part of the franchise system have long been confronted with an unfortunate and misguided presumption that their intellectual property rights automatically gave them market power — an essential element of many antitrust claims — in the system’s patented, copyrighted, or trademarked products and services. From an antitrust perspective, this presumption, although rebuttable, created a significant hurdle for franchisors accused of an illegal tying arrangement — which requires, as a preliminary element, proof of market power in the allegedly tying product (often the franchise itself).
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Reprinted with permission from the July 2006 edition of the Law Journal Newsletters – Franchising Business & Law Alert. © 2006 ALM Properties, Inc