BattleKart v Chaos Karts: Key takeaways for franchisors

The recent IPEC decision in BattleKart Europe SA v Chaos Karts 1 Ltd & Others offers franchisors timely reminders about the importance of protecting proprietary systems and managing early‑stage commercial discussions.

The dispute centered on an extended‑reality (XR) karting concept developed by BattleKart which later alleged that a UK operator - after initial franchise conversations - went on to launch a competing immersive karting experience using BattleKart's patented technology. However, the court ultimately held that BattleKart's patent was invalid, causing the infringement claim to fall away.

Patent invalidity underscores the limits of IP protection

Although the defendants accepted that they would infringe BattleKart’s patent if it were valid, the court concluded that the patent lacked an inventive step and included added matter, meaning that:

• The underlying technologies (tracking and projection systems) were already well‑established in the sector.
• Combining those technologies was considered obvious to a skilled team at the priority date.
• The patent could not support an infringement claim, even though the defendants accepted they would have infringed the patent if it were valid.

For franchisors, this highlights a recurring challenge: even robust IP portfolios can be vulnerable if the underlying innovation is built on widely available technologies. Patent registration alone is not always a fail‑safe mechanism for protecting operational models. Whilst patents will often form part of a wider IP strategy, this should be in combination with other IP rights, such as trade mark registrations, which will often be amongst the most valuable rights in a franchise business.

Informal pre‑contract engagement carries real risk

A crucial commercial backdrop to the litigation was the absence of any confidentiality agreement during the parties’ early‑stage franchise discussions. BattleKart’s prospective UK operator engaged in exploratory talks in 2017, but with no NDA or structured pre‑contract process in place. Years later, the same operator launched Chaos Karts using its own technology stack, built from accessible industry tools.

The case illustrates the risks when:

• Early conversations become substantive before terms are agreed.
• Operational detail, commercial thinking or technical direction is shared informally.
• No records are kept of what information was disclosed to a prospective franchisee and when.

This scenario is all too familiar across franchising. Early conversations - often optimistic and informal - can create exposure for a franchisor if sensitive information is shared before protections are agreed. A lack of procedural discipline may leave franchisors relying solely on IP rights that, as this case shows, may not withstand challenge.

Commercial clarity is as important as legal protection

Beyond the IP analysis, the judgment carries practical operational lessons:

• Using NDAs as a baseline: confidentiality arrangements remain essential to safeguarding know‑how, operational models and go‑to‑market strategies.
• Documenting early interactions: clear records and structured engagement help prevent later disputes over who disclosed what, and when.
• Understanding tech-based vulnerabilities: franchisors whose products rely on integrated or commoditised technologies should consider layered protections, such as trade secrets management and robust franchise agreement terms.

Implications for franchisors

This case serves as a helpful reminder that protecting proprietary systems requires a combination of IP strategy, contractual hygiene and operational discipline. To that end, protecting a franchise concept requires a balanced and proactive approach, as follows:

• Combine IP strategy with contractual discipline - neither is sufficient alone.
• Front‑load protections before entering into discussions with prospective operators.
• Ensure commercial processes evolve in parallel with technical innovation, especially in fast‑moving digital or immersive sectors.
• Adopt a risk‑aware mindset at the pre‑contract stage, where the greatest exposure often arises.