Building A Fence Around Your Restaurant Business

In recent times, businesses associated with food and restaurants have hit national and international headlines. Here in Malaysia, there was the Sri Paandi vs Sri Paandi fight, then the famous McDonald’s vs McCurry battle, and more recently, our spat with Singapore and Indonesia on the origins of certain dishes. It would seem that Malaysians are finally realizing that the restaurant murasaki Sushi business is an industry, just like any other non-food industry. There is an extraordinary amount of creativity involved in the business – yet how many owners of restaurant businesses are aware of the significance of identifying their unique features, claiming proprietary rights to them and maintaining their rights?

If you are dining out, think of what attracts you to a restaurant, besides the parking facilities. Is it the catchy name; the interior decoration – furniture, display items on the wall, floor or ceiling patterns/designs, etc; the menu card with imaginatively-named menu items; dishes displayed or served in a uniquely arranged manner, perhaps with uniquely designed cutlery and plates; the uniforms of the restaurant staff; the type of music played; the popularity of the chef? This article addresses the manner in which creative elements in the restaurant business are protected – and kept away from competitors’ reach.

What’s in a name?
Often, the trade name of the restaurant (i.e. the name on the signages, menu card and so forth) may not be the same as the registered name or incorporated name of the restaurant. For example McDonald’s® may be the trade name of the restaurant but the owner of the fast-food chain in Malaysia is Golden Arches Restaurants Sdn Bhd. Unless the trade name is registered as a trademark in the country, others may adopt identical or similar names. Taking action against unregistered marks is a difficult and expensive affair with uncertain results. So when starting out a restaurant business, once the trade name has been selected, the owners are advised to quickly register the trade name as a trademark. If the owner allows others to use the same trade name for similar restaurants under a license, then the licensing agreement needs to be registered at the Trademark office.

If it looks good… protect it?
The general ambiance of a restaurant’s interior is difficult to protect, and even more so to enforce, unless the other party virtually copies all elements of the interior. One way to circumvent this is to obtain and use specifically and exclusively designed interior articles for the layout of the restaurant and its bars, tables, chairs, counters, cutlery, and so forth.

The intellectual property rights – in particular, the industrial design rights – of the articles can be owned by the restaurant. Once registered, no one can reproduce the same design or articles, even the original manufacturer of the articles. Items like photographs, artistic paintings, the uniforms of the staff can also be protected by copyright, with the rights assigned to the restaurant. No one can reproduce the same photographs, paintings or uniform. However, the restaurant may of course reproduce the articles for their other branch restaurants.

All about the menu
The design of the menu card with all its artistic work, if original, would be automatically protected under Copyright law. Of course, if an external designer/artist was engaged to design the card, then the restaurant should obtain an assignment of the copyright if there has been no contract of commissioning the work.

The protection of menu items is more challenging. Even if the menu item is a common dish that is widely available in other restaurants, the menu items can be called by unique names. The unique names can be claimed as trademarks so that other restaurants cannot call the same dish by your trademark. This is what McDonald’s® is doing by referring to their dishes as McChicken®, McEgg®, Filet-O-Fish®, and so forth. Other restaurants can offer for sale the same chicken or fish meal, but they cannot refer to it as McChicken®, McEgg®, or Filet-O-Fish®.

So you have a “secret” recipe – what now?
Most restaurants keep the recipe for their signature dishes as trade secrets. However, calling the recipe a “trade secret” is insufficient if the management does not take appropriate management steps to maintain the recipes as trade secrets – just like how Kentucky Fried Chicken® keeps their recipe as a trade secret. Only a few privileged staff should be informed of the ingredients and the methods of preparing and making the food. Confidentiality agreements should be entered into as well.

Because shapes matter
Certain food items, like biscuits, lollipops, cakes, ice-cream, fruit carvings and such can be protected by Industrial Design Laws. If the restaurant owner produces naan bread or kuih lapis in unique shapes then the shape can be protected by Industrial Design. Others cannot adopt identical or substantially similar shapes. But if the food item is in liquid form, then the shape of the container, if uniquely designed, can be protected by Industrial Design Law.

Famous Chefs – What do they bring to the table?
In Malaysia, chefs mainly remain anonymous or stay in the kitchen. Restaurants do not generally advertise their service by referring to the name of the chef. But in many western countries, restaurants regularly promote their business by naming the chef, and highlighting their culinary achievements and credentials. Problems then arise if the chef leaves the restaurant and joins a competitor, when the latter starts promoting the name of chef. Here, one has to deal with the combined issues of employment contracts, trademarks, trade secrets, and so forth. It is a complex area, and not entirely appropriate for an article of this nature.

The business of running a restaurant is a creative one, from coming up with the name of the business to the interior of the restaurant, the manner of presenting the dish, the recipe of the dishes, employment contract with a famous chef, and so much more. Unless the owner takes steps to protect the creative elements in the business, he has no one to blame but himself if his ideas are copied. Of course, copying is done once the business is successful, as success generally begets imitations. But action to protect the creative elements must be taken much earlier in the business to stop the copycats even before they begin!

Note: The trademarks identified in the article belong to their respective owners. The author does not claim any proprietary right whatsoever; they are used merely for educational purposes.

This article is intended only to provide an overview on Intellectual Property Law in relation to the restaurant industry (focusing on Malaysia, in particular) and should not be treated as legal advice on the issues discussed. For specific queries on IP matters, please contact us for further assistance.

Kandiah P is the Managing Director of KASS International, an established intellectual property firm with offices in Malaysia, Singapore and Indonesia. He has been practicing in the area of Intellectual Property Law since 1987 and has vast experience in assisting local and international clients in obtaining patents, trademarks and industrial design rights on a global scale, and also specializes in identifying patentable inventions, designing around patented technology, creating new products together with clients, and advising on the commercialisation of IP Rights.