Cross Border Trademark Protection and the Madrid Protocol

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06.01.2004

Eric P. Stevens

The Madrid Protocol, an international trademark treaty, went into effect in the United States on November 2, 2003. This treaty will appreciably reduce the costs U.S. companies will pay to obtain overseas trademark protection.

Background: Domestic Trademark Protection for U.S. Businesses

U.S. businesses obtain domestic trademark rights in one of two basic ways - through "common law" use and through use coupled with a federal registration on the Principal Register of the U.S. Patent and Trademark Office (the "PTO"). If a particular name or symbol immediately qualifies as a "mark," the first person to use the mark in commerce in connection with particular goods or services (the "senior user") automatically acquires legal "common law" rights in the mark. Common law rights enable the senior user to file suit to preclude others from using the same mark, or a confusingly similar one, in connection with similar products or services.

Common law trademark rights suffer from two significant limitations. First, the legal protection afforded to owners of common law rights extends only as far as the geographic area in which the product or service is marketed. Thus, whenever common law trademark owners seek to expand sales into a new market, there is a risk they will be stymied by someone who has prior trademark rights in that market. Second, common law legal protection begins only from the date on which a new product or service is actually available for sale on the market. Thus, there is a risk a person can lose rights during the lag time between deciding on a product or service name and taking the named product or service to market.

Overcoming these common law limitations is an important reason businesses federally register their marks on the Principal Register of the PTO. While common law protection is limited to the geographic area in which the mark is used, the owner of a federally registered mark has protection that can extend throughout the United States. Further, the PTO allows a business that has selected a mark -- but has yet to offer the product or service bearing that mark for sale -- to reserve rights in the mark by filing an "Intent to Use" or "ITU" federal registration application. If the PTO ultimately determines the mark is available, the PTO will issue a "Notice of Allowance" of the application. The applicant has six months from the date of the Notice of Allowance to take the product or service to market. The six month period can be extended. Once the mark goes to market, a "Statement of Use" is filed and the PTO will issue a certificate of registration. The registration gives its owner priority rights in the mark that begin from the date the initial ITU application was filed rather than from the date of first use.

For a U.S. business, domestic trademark protection involves a three step process:

Creating and clearing the mark. The ideal first step is to select a proper mark and clear the mark by conducting a search to determine if it is available for adoption or if someone else has registered, or is using, a confusingly similar mark and therefore the mark is not available.
Registration. Once an acceptable "clear" mark is found, most of the time businesses should proceed to seek the maximum protection afforded by a federal trademark registration. The cost of a federal registration is fairly minor compared to the benefits registration provides, particularly the freedom it gives a business to expand - on its own timetable -- to new U.S. markets without worry that someone will develop prior rights in the mark in the new target market.
Maintenance. After the mark is in use and registered, there are several steps a business needs to take to ensure continued U.S. protection. Among other things, businesses need to make appropriate periodic filings with the PTO to maintain and renew the registration, continue using the mark in the same form and in connection with the same products and services with which it was registered, and properly display the ® symbol in connection with the mark.

Cross Border Protection for U.S. Businesses Prior to the Madrid Protocol

Businesses that seek to market products and services across international borders have to deal with the trademark laws of each individual country in which they plan to do business. This generally means following the three-step clearance, registration, and maintenance process on a country by country basis. Businesses with a portfolio of international trademarks typically establish - with the assistance of U.S. counsel -- a network of attorneys throughout the entire international area in which they do business to assist with clearance, registration, and maintenance of trademark rights.

A business that plans to adopt a single mark for use in several countries should first employ counsel to conduct a search to find a mark that is clear in each jurisdiction of intended use. Once a clear mark is found, the business will file an application to register the mark with the PTO. Pursuant to the Paris Convention, another widely accepted international trademark treaty, a U.S. business typically has six months from the date of filing its U.S. federal registration application to file subsequent trademark registration applications in each country in which it seeks protection. Each application must be filed by counsel licensed to practice in that jurisdiction. If the registration applications in the U.S. and the other countries are ultimately accepted, the U.S. business can claim the date of the initial U.S. application as the priority date in each Paris Convention country that awards its own national registration.

After obtaining these national registrations, the business must carefully monitor its trademark portfolio to ensure it maintains its rights in accordance with each nation's particular trademark laws. Among other things, this means keeping up with a myriad of renewal dates, additional filing and other requirements (such as the need in many countries to file license agreements with the trademark authorities). The costs and time it takes to keep up with this complex web of international rights and obligations can be impressive.

There have been efforts among groups of countries to simplify this process. One successful effort is the "Community Trademark" or "CTM" registration process instituted by the European Union. A U.S. business can use local counsel in Europe to file a single application to register a European Community Trademark. If successful, the CTM registration provides enforceable trademark rights throughout all countries of the European Union.

Cross Border Protection for U.S. Businesses Using Madrid Protocol

The Madrid Protocol is an attempt to reduce the red tape and expense associated with seeking international trademark protection. As of March 31, 2004, there were 75 countries that had adopted the Protocol. Pursuant to the Protocol, a U.S. business that owns either an existing federal registration or a pending federal registration application can file, with the PTO in English, an "International Application" for registration of the mark. Through this application, the business seeks an "International Registration" (an "IR"). The applicant can seek an "extension of protection" from any one or more of the 75 member countries of the Protocol by designating that country in the application. The fee for the application depends upon a number of factors, including particularly the number of countries designated in the application.

Once filed with the PTO, an International Application faces three discrete levels of scrutiny. First, the PTO examines the application to make sure it satisfies PTO requirements. Assuming it passes that hurdle, the PTO then certifies the application to the International Bureau of the World Intellectual Property Organization in Geneva Switzerland (the "International Bureau"). If the International Bureau approves, it will issue an "International Registration" and then forward the application to each individual designated country. Each country then examines the application and decides whether to issue an "extension of protection," which is the equivalent of a trademark registration, for that country.

Thus, assuming an application immediately satisfied everyone that examined it, an applicant in the United States could use U.S. trademark counsel to file a federal trademark registration application and a separate International Application with the U.S.P.T.O., pay a single filing fee for the International Application, and ultimately end up with a single International Registration that carries with it enforceable trademark rights in 75 different countries. This should save considerable time and cost over the prior way of accomplishing the same thing, which was to pay 75 separate lawyers around the world to prepare 75 different trademark registration applications. Further, the owner of an International Registration can renew all rights associated with the International Registration through a single filing from the United States every 10 years.

Limitations of the Madrid Protocol

While the Madrid Protocol is a quite useful tool for U.S. businesses seeking cross-border trademark protection, it is easy to overstate its significance. The Protocol does not change the fact that a business must comply with the various differing trademark regimes of each country in which it does business.

Among the limits to the utility of the Madrid Protocol for U.S. businesses are the following:

The Madrid Protocol does not simplify the trademark clearance process.
While U.S. counsel can file an International Registration application with the PTO in the U.S. and seek extensions of protection from as many as 75 countries, each country ultimately examines the application under its own local law. If the local trademark office refuses registration and the U.S. business wants to challenge the refusal, the challenge most likely will have to be handled by qualified trademark counsel in that country.
Although Madrid Protocol's renewal procedure supplants country specific renewal procedures, businesses must still comply with other country-specific post registration maintenance requirements that may require local counsel.
Many countries do not adhere to the Madrid Protocol. At this point, for instance, the Madrid Protocol is widely adopted in Europe and Asia but not in Canada, Mexico, or South America.
Sometimes, there will be good strategic reasons to seek trademark protection in Europe through the CTM registration procedure rather than the Madrid Protocol. Among other things, with a CTM registration, a trademark owner whose mark is infringed in Europe could file a single lawsuit and obtain an injunction that would be valid in all European Union member countries. By contrast, the trademark owner who owns an International Protection with country-specific "extensions of protection" in Europe would be forced to seek legal relief on a country by country basis. Currently there are efforts under way to allow a Madrid Protocol to designate the entire European Union as one of the designated parties in its International Application. The resulting extension of protection, if granted, would be equivalent to a CTM registration.

Conclusion

Businesses that market, or plan to market, their products and services across national borders should be sure to clear, register, and maintain their trademarks and service marks in each country they have on their target market list. A business that makes an early initial investment in cross border trademark clearance and protection will create important assets and avoid headaches, expenses, and potential litigation it might otherwise face. Now that the U.S. has joined the Madrid Protocol treaty system, the process of obtaining cross border trademark protection has become a little bit cheaper and less cumbersome.

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06.01.2004