Brand protection in foreign countries is challenging. Just ask Steve Jobs who recently found out from an observant American ex pat that a very convincing knockoff Apple store was selling authentic apple products in Kunming, China. The store billed itself as an official Apple retail store and was so convincing that even the employees believed they were working for the California computer and consumer electronics maker. Recently, twenty-two more such stores were identified in China. Apple has vast resources to protect and enforce their brands overseas. Fighting foreign trademark infringement when you are a small businesses is more difficult. Perhaps surprisingly, the Madrid Protocol system offers big business brand protection at a price small businesses can afford
China is world famous as a source for counterfeit luxury brands such as Rolex and Louis Vuitton. But as small to mid-sized American businesses begin to look overseas for opportunity in the face of sputtering domestic growth, the risk that their brands will be exploited increases dramatically. For these businesses, it is much more likely that a foreign competitor will use a similar name or logo to sell similar products and services than rather than produce plainly counterfeit goods. In either case, if customers are likely to be confused by the similarity of the trademarks as to the source of goods and services they are purchasing than when someone is infringing the trademark of another. Whether you are the infringer or the victim of infringement and whether you have recourse to protect yourself is largely determined by whose mark has priority in the country or region at issue.
Registration of a trademark is one of the simplest ways to show when use of a mark began with regard to certain goods or services and goes a long way to demonstrating priority and, in some countries, provides enhanced statutory protections and remedies to a victim of infringement. In the past, registration and maintenance of trademarks in multiple foreign countries was a complex and expensive task that was out of reach for smaller companies. The process was significantly simplified for holders of U.S. trademark registrations in 2003 when the U.S. adopted the Madrid Protocol which provides a system for extending trademark protection into each of the 83 other member states.
To file an international application a U.S.company must already have a registered U.S. trade mark or a pending U.S. application. In practice, U.S. and international applications are commonly filed virtually simultaneously although this is not necessary and it is often advisable to take advantage of the 6 month grace period in which to file the international application while still retaining the benefit of the earlier U.S. filing date. This generally permits the applicant to have at least a first response to the U.S. application from the USPTO so as to identify potential issues before filing internationally. Fees for international filings are based on the number of member states designated by the applicant which may be as few as one and as many as all 84. The USPTO certifies that the international application is properly based on a U.S. registration or application and forwards it to the International Bureau (IB) of the World Intellectual Property Organization (WIPO ) in Geneva. If the application is in order the IB will register the mark, publish it in the WIPO Gazette, send a certificate to the applicant, and notify the Offices of the designated member states. Each member state then has 12 or 18 months (depending on the policy of the country) to approve or refuse the extension of protection to that country based on their own national standards of registerability. In practice, few countries issue a certificate of registration and most applicants are “notified” of registration by the closing of the time for refusal without action by the member state, at which point the trademark is deemed registered in that country. The protection afforded to marks registered under the Madrid Protocol is the same as to any other mark in a country. If a country initially refuses to extend registration for a mark the applicant may respond and continue to pursue registration.
The greatest benefit to international registration of trademarks under the Madrid Protocol is the cost savings which are achieved through lower filing fees and a streamlined process, in English, that usually eliminates the need for legal counsel in each country. Savings also come after registration through ease in management of the trademark portfolio; and yes, even a small company with a few marks in one or a couple of countries has a potentially valuable trademark portfolio. Many managerial tasks can be done for all member countries by a single filing with WIPO and additional member states can be later designated as a business expands into new geographic markets.
There are, of course, some disadvantages. For the first five years of its existence the International Registration (and the registration in any member state to which it has been extended) is dependent on the continued existence of the underlying U.S. registration such that if the underlying registration is abandoned, cancelled or narrowed for any reason during the first five years, the International Registration will be similarly affected. One other disadvantage particular to U.S. filers is that the U.S. imposes markedly higher standards on trademarks than many other nations with respect to identification of goods and likelihood of confusion. As a result, an international application founded on a U.S. basic application may offer narrower protection than could be had from a national application in the individual country that is free of the U.S. requirements imposed on the underlying registration.
Despite these drawbacks, the Madrid Protocol offers significant savings and ease of ownership if your businesses is considering entering international markets. The break even point for filing costs, as compared to individual national filings, is low and additional countries may be added later as growth continues. So, if you are considering looking outside the U.S. for opportunities until the tide turns on the U.S. economy, recognize that your brand is a valuable asset and taking it overseas involves some risk. However, understanding and protecting against these risks is not out of reach for businesses of any size. Your business, whether small or large, can use tools like the Madrid Protocol to safely extend your presence and reach.