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The Madrid Protocol Arrives in the United States: Will It Be Good for U.S. Businesses?

09.09.2003

The Enactment of the Madrid Protocol in the United States

What Is the Madrid System? How the Madrid Protocol Addressed the Problems of the Madrid Agreement and Became a Viable Option for the United States

Mechanics of the Application, Review and Maintenance Procedures under the Madrid Protocol

Advantages of the Madrid Protocol for U.S. Companies

Limitations of the Madrid Protocol for U.S. Companies


The Madrid Protocol, long anticipated by U.S. businesses, is now almost a reality. But, will it be the panacea that U.S. businesses have hoped it would be? There can be no doubt that, in certain countries and under certain circumstances, U.S. companies will benefit enormously from securing international protection for their trademarks through the Madrid Protocol. However, in other countries and under other circumstances, direct national filings may be the better course of action.

The long road to enactment of the Madrid Protocol in the United States was not an easy one. It began in 1989, when the Madrid Protocol Diplomatic Conference first promulgated the Protocol as a mechanism for eventually incorporating the proposed Community Trade Mark into an international trademark system resembling that of the Protocol's ancestor, the Madrid Agreement. In fashioning the Protocol, the Conference also addressed some of the perceived shortcomings of the Madrid Agreement that had caused the United States, Japan, and several key European Union members, such as Great Britain and Sweden, to refrain from joining the treaty. The Madrid Protocol entered into force on December 1, 1995 and became fully operational five months later, in April 1996.

But ratification of the Protocol in the United States met with some early obstacles. Among these was a dispute between the European Union on the one side and the United States and several other non-European countries on the other side, regarding whether the European Union ought to have a vote in the Madrid Union separate and apart from the individual votes of its member states. The solution was that while the European Union may act as a voting proxy for a member country, the organization does not otherwise enjoy separate voting rights.

After resolution of the voting rights dispute, the United States House of Representatives, in April 1999, passed legislation implementing the Protocol. But action stalled in the Senate for several reasons, including the 2000 Presidential elections, a subsequent change in control of the Senate, and the disruption of congressional schedules brought about by the terrorist attacks on New York and Washington and anthrax contamination of the U.S. Senate office building. The Act was approved by the House in September 2002 and then by unanimous consent of the Senate on October 3, 2002.

President Bush signed the Madrid Protocol into law on November 2, 2002. The instrument of accession was deposited with the International Bureau of the World Intellectual Property Organization on September 2, 2003. So on November 2, 2003, the United States will become the 60th signatory country to the Madrid Protocol. The final implementing rules will be issued by the United States Patent and Trademark Office shortly before then. Significantly, the enabling legislation provides for an amendment to the Trademark Act, adding Sections 60 to 74.

The Madrid System, encompassing the Madrid Agreement and its counterpart, the Madrid Protocol, provides an international trademark filing system that affords trademark owners from the respective member countries the opportunity to file their trademarks simultaneously in other member countries through a single filing with their home country trademark offices. Although separate treaties, the Madrid Agreement and Madrid Protocol, nonetheless, share similarities and directly interact with each other in limited, but significant ways. The treaties are administered by the World Intellectual Property Organization ('the International Bureau') which is based in Geneva, Switzerland.

Under the Madrid Agreement, which was adopted in 1891, a trademark owner in a member country ('Country of Origin') may file an application for an international registration on the basis of a trademark registration ('basic registration') granted by the trademark owner's national trademark office ('Office of Origin'). At the time of filing of the international application, the trademark owner designates those member countries of the Agreement to which the owner wishes to extend the protection of the international registration that ultimately will issue from the international application. The trademark owner pays a fixed fee for each request for extension of protection of the international registration. The Office of Origin then forwards the application to the International Bureau. The Bureau, after assuring itself that certain formalities have been satisfied and the relevant fees paid, issues an international registration for the mark, publishes it in the international trademark gazette, and forwards it to the designated countries, where the requests for extension of protection of the international registration are examined by the national trademark offices. The national offices of the extension countries are given a twelve-month period to examine the requests for extension of protection and either approve or reject them. If approved (or if not rejected in a timely manner), each request for extension of protection of the international registration becomes, in effect, a national registration with a registration date corresponding to that of the international registration

At last count, 54 countries had joined the Madrid Agreement (including most of Europe, China, and the Russian Federation). Yet many important countries did not join—the United States, Canada, the United Kingdom, and Japan, most notable among them.

Enter the Madrid Protocol. The Protocol is like the Madrid Agreement, but with a few significant differences. Under the Protocol, the owner of a home-country trademark application or registration that was filed in a member country of the Protocol (known respectively, as the 'basic application' or 'basic registration') files an international application ('the Protocol Application') with its Office of Origin. In its Protocol Application, the trademark owner designates those member countries of the Madrid Protocol to which an extension of protection is sought. The Office of Origin then forwards the Protocol Application to the International Bureau. As under the Agreement, the Bureau then issues an international registration for the mark and forwards the requests for extension of protection of the international registration to the national trademark offices of the countries designated by the trademark owner. The requests for extension of protection are then examined by the national trademark offices. Each such office has up to 18 months to refuse protection—and possibly more if its national practice provides for an opposition period. If the national trademark office does not refuse protection within that time frame, the mark is deemed protected.

Significantly, 40 member countries of the Madrid Agreement are also among the 60 signatory countries to the Madrid Protocol.

The Madrid Protocol contains a number of innovations that address the primary concerns of the countries that have not joined the Madrid Agreement. Notable from the U.S. perspective are the following:

  • Under the Protocol, unlike under the Agreement, a Country of Origin application may
    serve as the basis for an international registration.
  • Under the Protocol, the time limit for notifying refusals has been extended from 12 months
    under the Agreement to 18 months, with a possible extension in the case of opposition practice.
  • Under the Protocol, the harsh effects of the Madrid Agreement's 'central attack' provision2
    have been somewhat ameliorated. While the Protocol retains the Agreement's 'central attack'
    provision, it also contains a provision permitting the transformation of the international registration,
    under the appropriate circumstances and within the prescribed time limit, into a series of national
    applications that retain the priority date of the international registration.
  • Under the Protocol, unlike under the Agreement, a national trademark office may elect to
    charge its own national fees for the examination of Protocol Applications. From the U.S.
    perspective, this is an improvement over the Madrid Agreement's mandatory fee structure,
    which fails to adequately distinguish between the costs of operation in examination and non-examination countries.
  • Under the Protocol, applications may be filed in French or English instead of solely in French,
    as provided under the Agreement.
  • Under the Protocol, eligibility for membership is no longer restricted to countries (as was the case
    under the Agreement) but includes organizations as well, paving the way for eventual membership
    by the European Union among other organizations.

MECHANICS OF THE APPLICATION, REVIEW AND MAINTENANCE PROCEDURES UNDER THE MADRID PROTOCOL

We now examine the specifics of the application, review, and maintenance procedures under the Protocol.

The Application

Eligibility. The Protocol provides that an eligible applicant is a person (i.e., an individual or a business) who is a national of, or is 'domiciled or has a real and effective industrial or commercial establishment' in, a Protocol member country or in the territory covered by a member organization. The applicant must also own a home country trademark application or registration (the 'basic' application or registration) that will serve as the basis for the international registration.

The Form. Applicants must complete a six-page application form accessible at the International Bureau's website (<www.wipo.org>). The form requests certain basic information: the applicant's Country of Origin; the applicant's name and address; the basis of applicant's entitlement to file under the Protocol (e.g., domiciled in a Protocol country); applicant's representative (if any); the number and date of applicant's basic application and/or basic registration3; any claim of priority under the Paris Convention; a reproduction of the mark; colors claimed (if any); and various miscellaneous indications (e.g., a description of the mark, disclaimed elements, and a translation of any foreign words in the mark into English).

Under the Protocol's Common Regulations, goods and services must be identified and classified according to the International Classification of Goods and Services. If the International Bureau disagrees with the classification approved by the Office of Origin, the Bureau may propose a re-classification to the Office of Origin (which, of course, may entail additional fees for the applicant). Of note, an applicant may limit the goods or services with respect to one or more countries to which it seeks an extension of protection of its international registration, either by eliminating an entire class or specific goods or services within a class.

After designating (from a list of treaty countries) those countries to which the Protocol application applies, the applicant signs the application form and indicates the fee payment total and method. There is a basic fee of 653 Swiss francs (or approximately $470, by current exchange rates) for black and white marks and 903 Swiss francs (or $650) for color marks. A 'supplementary fee' of 73 Swiss francs (or $50) applies for each class of goods and services beyond the first three classes. An additional 'complementary fee' of the same amount applies for each country to which the Protocol Application is being extended. Notably, however, under the Protocol, each national office has the opportunity to 'opt out' of the system of supplementary and complimentary fees, and instead charge an applicant an amount equal to the fee it would charge a national applicant that had filed directly in its territory, minus any cost savings of the international procedure (the 'individual fee').

The Protocol Application is filed by the applicant with its Office of Origin—in the case of a U.S. individual or business, with the U.S. Patent and Trademark Office—which certifies the existence of the basic application or basic registration and, thereafter, forwards the application to the International Bureau on behalf of the applicant.

The Requests for Extension of Protection. Where the Office of Origin is located in a country that is a signatory to the Madrid Protocol but not to the Agreement, the applicant may only seek to extend the protection of its international registration to other signatory countries or organizations of the Protocol. For example, because the United States is not a member of the Madrid Agreement, a Protocol applicant in the United States may extend the protection of its international registration only to the signatory jurisdictions of the Protocol. Consequently, the dozen or so countries that are signatories to the Madrid Agreement, but not to the Protocol, would be off-limits to the Protocol applicant in the United States.

Article 3ter of the Protocol allows the applicant to supplement its extension designations after the issuance of the international registration. The effective date of the later extension is the date the supplemental request was recorded by the International Bureau.

The Protocol provides a novel method for yet another territorial expansion of the international registration. Under Article 4bis, an existing national registration may be 'replaced' by (i.e., folded into) an international registration, with no loss of priority to that earlier national registration. Thus, where a mark that is the subject of a national or regional registration in a Protocol country is also the subject of an international registration extended to the same country, the international registration is deemed to replace the national or regional registration in that country. A national registration eligible for replacement must (a) be registered in a Protocol-member country or jurisdiction; (b) identify a mark identical to that indicated in the international registration; (c) be registered in the name of the owner of the international registration; and (d) specify goods or services that are entirely covered by the international registration. A purported benefit of replacement is the centralized mechanism afforded by the international registration for continuing maintenance of (such as renewals of and recordals against) the former national registration.

Priority Date. The date of the international registration is the date the Protocol Application was filed with the applicant's Office of Origin, provided the International Bureau receives the application in good order from the national office within two months of the date of filing. If the application is missing certain critical information or is not received by the International Bureau within the two-month period, the date of the international registration will be the date on which the appropriately completed application was received at the Bureau. The Madrid Protocol also enables applicants to establish an earlier priority under the Paris Convention if the Protocol Application contains the necessary details of such priority claim and is filed within six months of the filing date of the application from which priority is claimed.

Review of the Protocol Application and Requests for Extension of Protection

Nature of Review. The International Bureau engages in no substantive examination of the Protocol Application and instead grants an international registration if the application fulfills basic filing requirements and the relevant fees are paid. Consequently, an international registration, standing on its own, is worthless. Rather, it is the territorial extension of the international registration to one or more Protocol countries—which occurs after an examination of the requests for extension of protection by the relevant national trademark offices—that endows the trademark owner with meaningful rights. Notice of the international registration is published in the International Bureau's Gazette. The notice indicates the countries and organizations to which the trademark owner has sought an extension of the protection of its international registration.

A Protocol Application may be predicated upon a basic application, as well as a basic registration. While the examination of the basic application by the Office of Origin may be similar to the examination given the requests for extension of protection by the various national trademark offices, the examinations may also fundamentally differ: The basic application will be examined and either accepted or rejected according to the national laws of the Country of Origin. However, under Article 5 of the Protocol, requests for extension of protection of an international registration may be denied by offices in countries where protection is sought on only one or more grounds found in the Paris Convention, namely that the mark in question (a) conflicts with prior rights in that country; (b) is not distinctive; or (c) is not registrable on public policy grounds.

When an extension of protection is denied by a national office, the national office notifies the International Bureau, sending it a copy of the notification of rejection. The International Bureau in turn sends the rejection notice to the owner of the international registration. If the owner of the international registration wishes to contest the rejection, it must engage a local agent in the relevant country to respond to the Official action rejecting its application. If the response is successful, the request for extension of protection will be granted by the national office.

Length of Review. Under Article 5, the Protocol provides that each national office has a time limit of 18 months within which to grant or deny protection to a request for extension of protection to its territory. This contrasts with the 12-month time limit under the Madrid Agreement. However, this 18-month period may be extended by up to seven months to enable oppositions that could be filed after the end of the 18-month review period. If such an opposition is possible, the national office must notify the International Bureau in advance of the conclusion of the 18-month period. The national office must also notify the Bureau of any oppositions that are actually filed, either during the initial 18-month period or, if relevant, during the seven month extension. Oppositions will be allowed to run their course under the relevant national law. Consequently, an opposition may prolong, for several months or even years, the final outcome of the request for extension of protection.

Oppositions and Central Attack

Owners of prior rights may act against extensions of protection of an international registration in one of two ways—either by opposing the extensions of protection nationally and on a country-by-country basis, or by a 'central attack' taken against the basic application or registration.

Oppositions. While some of the national offices in Protocol countries publish in their national gazettes requests for extension of protection to their territory, other national offices do not do so, relying instead upon the International Bureau-published notice. In the case of non-publishing registries, the owners of prior rights may need to make arrangements to monitor progress at the relevant national offices. For example, a non-publishing registry may be located in an important market for the owner of prior rights (e.g., a market infiltrated by counterfeiters). In other instances, there may be no publication by the national office owing to the absence of applicable opposition procedures, such as in the Russian Federation or in the Benelux. In such cases, the owners of prior rights will need to consider cancellation of the extension of protection or, under appropriate circumstances, 'central attack.'

Central Attack. Central attack is a key feature of both the Madrid Agreement and the Madrid Protocol. During its initial five years, the international registration is dependent upon a valid basic application or registration. Once the five year period concludes without incident, the international registration becomes independent of the basic application or registration and any subsequent adversity suffered by the basic application or registration will not affect the validity of the international registration. Article Six of the Protocol provides that the protection resulting from an international registration may no longer be relied upon if the basic application or basic registration underlying the international registration, prior to the conclusion of the first five years of the life of such registration, 'has been withdrawn, has lapsed, has been renounced or has been the subject of a final decision of rejection, revocation, cancellation or invalidation in respect of all or some of the goods and services listed in the international registration.' The international registration will also fail if the aforementioned adverse events conclude after the initial five year term, but were commenced within the initial five year period.

The consequences of a successful central attack are formidable. By means of a central attack that invalidates the basic application or basic registration upon which the international registration is dependent within its first five years of existence, the owner of prior rights may topple the international registration, and all the extensions of protection along with it.

Under the Madrid Agreement, a successful central attack is fatal to the international registration, with the registration's owner forfeiting all relevant national rights. By contrast, under Article 9quinquies of the Protocol, the owner of a failed international registration may 'transform' the international registration into direct national or regional applications enjoying a filing date corresponding to the date of the international registration, 4 provided, however, that the owner files such national or regional applications within three months of the cancellation of the international registration. The new applications also must be for a mark identical to that of the failed international registration and the identified goods or services must be covered by the international registration.

Renewals and Period of Validity

The international registration is issued by the International Bureau for a ten-year term and is renewable for successive ten-year terms. There is just one registration term that applies to all relevant national protection. Six months prior to the conclusion of the registration term, the International Bureau directly notifies the registrant of the upcoming expiration date. Under Article 7 of the Protocol, a renewal is achieved 'by the mere payment' of the appropriate fees. Through one filing at the International Bureau, it is possible to renew the international registration and all the national extensions of protection that flow from it. Similarly other filings, such as changes in the name and address of the trademark owner and assignments, may be accomplished centrally.

ADVANTAGES OF THE MADRID PROTOCOL FOR U.S. COMPANIES

Under appropriate circumstances, there are enormous benefits that may be obtained from the Protocol's centralized application and maintenance procedures, as compared with the alternative of separately filed national applications and separately maintained national registrations.

Cost. The first of these advantages—and probably the most sought after—is cost savings. Under the Protocol, there is no need to engage agents in each of the countries to which an extension of protection of the international registration is sought since the relevant national trademark offices will receive notice of the requests for extension of protection directly from the International Bureau. Owing to the absence of local agents, there is no need under the Protocol to provide powers of attorney to the national offices or to worry about the process or cost entailed with legalizing such powers, as some countries require in relation to national filings. Moreover, the Protocol's centralized system greatly reduces the time the trademark owner (or its representative) would otherwise need to devote to instructing agents, coordinating multiple filings, and attending to individual national filing requirements, hence, resulting in additional cost savings. Indeed, cost savings under the Protocol can be considerable. In an issue brief on the Madrid Protocol, the International Trademark Association estimated that the cost of registering a mark through direct national filings in the United States plus 10 other countries would be approximately $15,000, whereas under the Protocol, the cost of protecting the mark in the same 11 countries would be closer to $5,800.

Ease of Administration. A Protocol Application is uncomplicated and undemanding. The information required by the application is easily provided on a six-page form requiring only a non-legalized signature and a single payment. Thus, the Protocol affords a simple and assured way of obtaining an early priority in relation to filed rights in several countries instead of dealing with the vagaries associated with multiple filings. Moreover, an international registration is easier to administer than its direct national counterpart. There is simplified docketing for the trademark owner as there is only one registration number and one registration date and consequently only one renewal deadline for the international registration and all the extensions of protection that flow from it. Moreover, the international registration is renewed by means of one fee payment to the International Bureau. Further, the Protocol provides for a centralized method for recording changes affecting the international registration, including changes of ownership and address. This makes administration easier and less costly for the trademark owner.

Speed of Examination. Extending the protection of an international registration through the Protocol to each Member country of interest to the trademark owner may be faster than the process for obtaining national registrations by direct applications. For example, Italy (a member of the Protocol) and Brazil (a prospective member) are among several countries that have a reputation for examining national applications slowly—sometimes taking years to complete review of a national application. By contrast, the Protocol, with limited exceptions, requires the national offices to either accept or deny a request for extension within an 18-month period.

Taken together, all of the above factors should cause U.S. companies to embrace the Madrid Protocol as a welcome addition to international trademark practice.

LIMITATIONS OF THE MADRID PROTOCOL FOR U.S. COMPANIES

While there can be no doubt that U.S. companies will sometimes benefit from securing international protection through filing under the Madrid Protocol, that will not always be the case. We now turn our attention to the limitations of the Madrid Protocol for U.S. companies. Generally, these limitations fall into three categories: First are those that result from the restrictive nature of U.S. trademark practice, particularly as it would be carried forward into an international filing; second, are those that result from the unique aspects of foreign trademark practice, including those of which U.S. applicants might not be aware were they not to engage local agents; and third are those that result from the inherent limitations of the Madrid Protocol system itself.

Limitations Based on U.S. Practice

As discussed above, an application for an international registration under the Madrid Protocol must be based on one or more home country applications and/or registrations. Once issued, the international registration can be territorially extended to the member nations of the Madrid Protocol designated by the owner of the international registration. The trademark offices of the designated countries may then either accept or refuse the requests for extension of protection.

U.S. trademark practice, however, has a number of restrictive aspects. Furthermore, there are several important discrepancies between U.S. practice and the practice of other member countries that have joined or contemplate joining the Protocol. Because of this, the Madrid Protocol's requirement of a Country of Origin basis may pose serious disadvantages to those U.S. companies that seek to secure international trademark protection by proceeding under the Protocol, as opposed to through direct national filings.

The Restricted Specification of Goods and Services Based on a U.S. Home Application or Registration

Possibly the main disadvantage to U.S. companies that seek international registration through the Madrid Protocol is the scope of the goods or services that may be covered by the international registration and hence the extensions of protection that flow from it. In the United States, the Patent and Trademark Office requires that a fairly detailed specification of goods or services be set out before it will pass an application to publication. A considerable amount of time is often spent during the examination process in narrowing the original specification until the U.S. Trademark Examining Attorney will accept it. And, the goods and services that can be included are further limited to those in connection with which the mark actually has been used, or for which there is a bona fide intention to use the mark.

Unlike in many other countries, it is not possible in the United States to obtain the registration of marks for class-wide headings or extremely broad categories of goods (e.g., 'clothing' or 'computer software') or services (e.g., 'business consulting services'). For this reason, a Madrid Protocol application based on a U.S. application or registration would tend to include a narrower identification of goods or recitation of services than might otherwise be included in a comparable application filed directly on the national level.

A U.S. company will not be seriously disadvantaged by extending its international registration under the Madrid Protocol to countries where local practice also mandates that an application contain a fairly detailed specification of goods or services. For example, while the Canadian Trade Marks Office may permit a somewhat broader specification of goods and services than in the United States, it nonetheless requires a fairly detailed specification. Similarly the Hong Kong Trade Marks Registry requires a fairly narrow specification, particularly with respect to service marks and descriptive marks. If and when these jurisdictions join the Madrid Protocol, they may be well-suited to U.S. companies seeking international registration extensions.

By contrast, a U.S. company may be seriously disadvantaged by proceeding under the Madrid Protocol in those countries that permit an applicant to file (and will ultimately issue a registration) for a broad range of goods and services, sometimes embracing one or more entire class headings, and without requiring the applicant to state a bona fide intention to use the mark on all (or any) of those goods or services. Benelux (which conducts no substantive examination and permits the registration of marks for class-wide headings) is a prime example.

Obtaining the broadest possible specification of goods and services may not always be necessary, or even desirable, however, and may not be a reason to forego the benefits of the Madrid Protocol. In those countries where the scope of infringement protection extends beyond the goods and services that are actually covered by the registration, to similar goods and services, broad specifications of goods and services may not be necessary to protect the mark. Countries such as Germany and the United Kingdom are in this category.

In addition, broad specifications of goods and services may only give an illusion of broader protection. If use of the mark by a U.S. company is only for a limited number of the goods or services covered by its foreign registration, that use will not support the entire registration in a cancellation action based on non-use. The broad infringement protection the U.S. company might obtain from a registration containing a wide specification may be relatively short term, and in the long run, costly. In France, a country that recognizes the principle of partial cancellation, for example, a registration may be cancelled in respect of any of the goods or services for which it has been registered and in relation to which it has not been used for a period of at least five years.

There are countries in which narrow specifications of goods and services may well create a problem, however. If infringement protection would be limited only to the goods and services actually contained in the registration, it may be better to undertake direct national filing in order to obtain broader protection. This is the case under the current trademark law of India (a possible future member of the Madrid Protocol), for example, where the registrant must resort to the common law remedy of passing off if a third party uses the registrant's mark in connection with goods or services only similar to those actually contained in the registration.

The Relative Difficulty of Obtaining a Home Registration in the United States

Unlike in some other countries, where there is no substantive examination of trademark applications, the United States Patent and Trademark Office subjects applications to rigorous examination, including the citation of prior identical and confusingly similar marks appearing on the Register. The United States Register is also among the world's most crowded. For this reason, it is more difficult to obtain a home country registration in the United States than it is in many other countries that are parties to the Madrid Protocol (e.g., France, Benelux, Italy). Many applications fail in the U.S. because likelihood of confusion objections under Trademark Act Section 2(d) cannot be overcome.

If the underlying home country application—in this case, the U.S. application—fails, the Madrid Protocol allows the owner of an international registration to convert the international registration into direct national applications in the countries to which the international registration was extended. However, in some countries (Benelux for example), the trademark owner might well be able to obtain a viable trademark registration faster if it filed directly for any mark for which it expects a serious challenge in the U.S. trademark examination process. In countries where trademark rights arise exclusively or substantially from registration and not use, direct national filing may be preferable.

The Inability to File Early Because of the U.S. Requirement to State Use or a Bona Fide Intent to Use

In the United States, a valid trademark application must contain a statement either that the applicant has used, or that it has a bona fide intent to use, the mark in commerce. In the United States, an applicant cannot get a filing date until it has either used or alleged an intent to use the mark in commerce. By contrast, national applications in many other countries do not require a statement of the applicant's use or bona fide intent to use the mark. Consequently, nationals of other countries will sometimes have the advantage of being able to file valid applications for the same mark in their home countries earlier than their U.S. counterparts who rely on the Madrid Protocol.

This can be particular challenging in first-to-file countries, where trademark rights have no common law basis and the protection afforded foreign marks (even those that are well-known internationally) may be sorely lacking. For instance, if the U.S. owner of a mark in the apparel field makes a conscious decision to hold off expanding into fragrances or luggage for a number of years, it may not be able to file a U.S. intent-to-use application for those goods. Unless this company undertakes a program of direct national filings in countries of potential interest in the short term, the U.S. company may be locked-out later, internationally. The problem will be especially egregious in severe piracy jurisdictions, such as Vietnam or China, where one should anticipate that pirates will file applications for logical extensions of the goods and services contained in U.S. applications. What's worse, such piratical applications could form the basis for international filings under the Madrid Protocol!

Limited Ability to Tailor the Specification on a Country by Country Basis

Because the U.S. Register is the most crowded in the world, an applicant often has to restrict its specification of goods or services in the United States so as to avoid a conflict with another mark (whether real, or imagined by the Trademark Examining Attorney). Under the Madrid Protocol, the limited U.S. specification will carry over into the international registration and the requests for extension of protection based on it. While it appears that it will be possible to restrict the identification of goods and services contained in a request for extension of protection under the Madrid Protocol (to avoid a conflict with another mark in that country), it will not be possible to expand the specification beyond that contained in the basic application or registration. If the specification has had to be unusually narrowed to avoid a problem in the U.S. that does not exist abroad, it may be preferable for the U.S. company to seek international protection of its mark through direct national filings, as such applications would not be similarly restricted.

Limitations Based on the Form of the Mark as Applied for in the U.S.

Under United States practice, a block letter registration of a mark provides coverage for all forms of display of the mark. Thus, in the United States, a block letter registration is often the preferred form of registration, as it allows for changes over time in the presentation of the mark, provides broad infringement protection, and helps to keep the Register clear of other similar marks that might otherwise be found to be distinguishable and, therefore, registrable. In addition, in the United States, use of a mark in a special form of display will support a block letter registration, avoiding the registration's vulnerability to cancellation for non-use.

In those countries where practice in this regard is similar to that of the United States (e.g., Benelux, France and Italy), the U.S. company that seeks to extend its block letter form international registration based on a U.S. application or registration will not be disadvantaged. However, not all countries share the U.S. practice regarding the form of a mark. In China, for example, a mark must be used in the exact form in which it is registered in order for use of the mark to be deemed proper. Otherwise, the registration will be vulnerable to cancellation for non-use. If a mark registered in block letter form is actually used in a stylized format, the registration would be vulnerable to cancellation on that basis.

Additionally, in some countries, it may be more important, from an infringement standpoint, to protect the distinctive form in which a mark is displayed than to protect the word or words that make it up. For example, throughout Asia, a common form of infringement involves getting 'the look' of the mark the same, although the word or words may be different. This is often a viable option for counterfeiters in Asia because the local populations of the various Asian countries generally do not read English or are not familiar with Latin characters, and may not recognize the English word or words included in the mark. What they are perceiving is the shape of the mark as a whole.

Finally, in some countries, certain block letter marks may not be as easily registrable as in the United States. For instance, in the United Kingdom and those countries whose trademark laws are based on that of the United Kingdom (e.g., Singapore), it is often more difficult to register a common name (such as ANNE KLEIN) in block form because, in the absence of evidence of long-standing use of the mark in that country, the Registrar may take the position that the mark is non-distinctive. Accordingly, to achieve registration in such a country, it is sometimes necessary to file the mark in a special form of display, such as a signature or script. This can be particularly problematic if, under the law or practice of a given country, it is not possible to amend the form of the mark after application. In such a case, it would be preferable, and may even be necessary, for the U.S. company to file directly in that country rather than by way of requests for extension of protection under the Madrid Protocol.

Limitations Based on the Language of the Mark as Applied for in the United States

Generally speaking, a U.S. company will obtain registration of a word mark in English, and its international registration, based on the home country application or registration, would likewise be in English. If the U.S. company translates the mark into the local language when marketing its goods or services in a particular country, the extension of the international registration may not provide the necessary protection for the mark.

For instance, a television producer might distribute its programs outside the United States using titles in the local languages of the countries in which the programs are broadcast. The mark covered by the international registration would be in English. The producer's use of a mark in the local language only will not support a registration of the mark in English in most countries. In time, the registration may become vulnerable to cancellation for non-use. This is particularly troublesome in those countries, such as Japan or Korea, where trademark rights derive from registration, rather than from use. That is because, in such countries, it will not be possible to rely on common law remedies for infringement. Obviously, the television producer would be better served to file direct national filings in each country of interest in the appropriate local language.

Another, equally serious problem is that a registration for an English language mark may not be considered infringed by a third party's use of the same mark in a translated or transliterated form. This is most likely to be true in a country, such as Poland or China, where considerable segments of the local population are not familiar with English. Protection may depend on how closely the translated or transliterated form used by the infringer approximates English. Where the form is quite different—as it well might be in Mandarin, for example—the U.S. company might not obtain any useful trademark protection by proceeding under the Madrid Protocol.

Limitations Based on Non-U.S. Practice

The biggest lure of the Madrid Protocol to U.S. companies is hoped-for savings in the filing and application process. Securing international protection will be able to be done with a single filing with the U.S. Patent and Trademark Office, which is thereafter forwarded to the International Bureau, requesting extension of an international registration based on a U.S. application or registration to the desired member countries. In securing international protection for their marks under the Madrid Protocol, U.S. companies may be tempted, as a cost-savings measure, to forgo the input of local agents at each step in the registration process, preferring instead to limit the role of such agents to mere problem-solving.

When dealing either with marks or countries of secondary importance, cost saving may be the most important consideration. However, for a company's primary marks, or in its primary markets, it can be extremely dangerous to forgo the input of local agents, given the idiosyncrasies of foreign law and practice. Companies should be aware that they forgo the assistance of local counsel at their peril.

Reasons Why Limiting the Involvement of Local Agents May Be Disadvantageous

  • There are many reasons why it may be important for a U.S. company to keep its local agents fully involved in all phases of its international registration program, especially for its major marks in its primary markets (or in primary counterfeiting countries). A good local agent can (and, in the case of a direct national filing, is more likely to) provide the U.S. company with significant assistance.
  • The local agent can offer advice as to the suitability of a proposed mark prior to filing, both in terms of whether it would be considered too descriptive under local practice or have a problematic meaning locally.
  • The local agent can conduct a search and offer an opinion as to the availability of a proposed mark prior to filing.
  • The local agent can advise how best to identify the goods or services listed in the application to avoid objections based on local practice or the citation of third-party marks.
  • The local agent can monitor identical and similar marks filed by third parties.
  • The local agent can offer timely recommendations for complying with use and registered user requirements.
  • The local agent can examine packaging, labeling, etc., for compliance with local laws.

Discussed below are some of the other factors relating to international trademark law and practice of which a U.S. company must be fully apprised before deciding how broad a role local agents should play in its international registration program.

Filing and Other Application Requirements

The Regulations under the Madrid Protocol provide that a country may notify the International Bureau of its requirement for a signed declaration establishing the applicant's bona fide intention to use the mark. This provision was included in the regulations to permit the United States to adhere to the Protocol. Other than this provision, there is no other provision currently in the Regulations permitting notification of any other special filing requirements for any designated member country.

However, one must distinguish between special filing requirements (of which none other than the signed declaration establishing the applicant's bona fide intention to use the mark is permitted under the Regulations) and additional application requirements that may be imposed once the request for extension of protection is received in the trademark office of a given designated member country of the Madrid Protocol.

Since there is nothing in the Madrid Protocol or in the current Regulations that strictly prohibits them from doing so, it is theoretically possible for other countries to impose such requirements. Thus, for example, Japan still requires the submission of a Corporation Nationality Certificate, at the discretion of the Registrar, and Turkey still requires the submission of a Line of Business Affidavit. If Korea joins the Protocol, it too could require the submission of a notarized Certificate of Incorporation. If Mexico joins, registrants may be unaware of the benefits afforded to those who execute Declarations of Use, and therefore forego important benefits.

It is a simple matter to request an extension of protection based on an international registration. U.S. companies have hoped that this simplicity would result in substantial cost- and time-savings on international registration programs by eliminating the need to retain local agents in each country. In some countries, however local agents might still be needed as a matter of course. A U.S. company that requests its international registration be extended to the territory of such country might be refused until proper documentation is supplied or some other application requirement is fulfilled. While not fatal to the application, these technicalities, which will probably require the hiring of a local agent to respond to a refusal, will deprive the company of some, if not all, of the envisioned cost benefit of filing under the Madrid Protocol.

Maintenance Requirements

Under the Madrid Protocol, countries can still impose their own special requirements with respect to the maintenance of trademark registrations. Moreover, it is not certain that the differing trademark maintenance requirements will be eliminated, at least for the time being.

United States practice provides the perfect example of the type of maintenance requirements that, if not met, can result in the cancellation of a registration. In the U.S., a registrant must file a Section 8 Affidavit between the fifth and sixth years after the date of registration, and at the time of renewal, setting forth those goods or services from the registration for which the mark is in use in commerce. The affidavit must include a specimen or facsimile showing current use of the mark.

Additionally, under certain circumstances, beginning five years after the date of the registration, the registrant can also submit a Section 15 Affidavit if the mark has been in continuous use in commerce for five consecutive years. If accepted, this affidavit will render the mark incontestable. Non-U.S. Companies, unless they are aware of and calendar these dates, may find their registrations cancelled for failure to file a Section 8 Affidavit, or never obtain the benefits of incontestability.

The U.S. is not alone in having such maintenance requirements, which continue to exist since the implementation of the Madrid Protocol. An example of this is the declaration of (continuing) intent to use, which is still required for some registrations in Portugal.

Additionally, many countries impose the requirements that, if use of a mark is made entirely through a licensee, the license must be recorded in order for such use to inure to the benefit of the trademark owner. This is true not only in the so-called 'registered user' countries (such as Hong Kong and Malaysia), but also in a number of key piracy jurisdiction, where it is a common tactic among pirates to attempt to cancel the pirated registration for non-use. If Korea or Venezuela accede to the Protocol, for example, it would be important for registrants to be made aware of possible license recordal requirements.

Unless a U.S. company that has secured international trademark protection under the Madrid Protocol is aware of and monitors these maintenance requirements carefully—and further, unless the U.S. company keeps itself fully informed as to any changes in local law that may take place—the company may unwittingly lose valuable rights, or the registration itself.

Renewal Requirements

Like the United States, a number of other countries currently require proof of use or an affidavit of use to renew a registration. For instance, in Mexico—a country currently contemplating membership in the Protocol—an affidavit attesting to use is required for a registrant to renew its mark. Generally, the rationale behind these renewal requirements has been to remove deadwood from the Register.

Under Article 7(1) of the Madrid Protocol, an international registration, and any national extensions of protection in member countries of the Madrid Protocol, may be renewed for a period of ten years by the 'mere payment' of the appropriate fees. Though technically this provision means that proof of use may not be required by a member country of the Madrid Protocol as a condition for renewal of an extension of protection to its territory, as a practical matter, it is possible for countries to get around this provision by requiring additional documentation to maintain the registration. For this reason, the United States specifically amended its trademark law in contemplation of joining the Madrid Protocol to eliminate the requirement that the renewal application allege use of the mark, and it added the requirement that a renewal applicant file a Section 8 Affidavit of Continued Use in Commerce. Thus, the United States has simply 'repackaged' its renewal requirement to maintain the 'use' provision. It may not be the only country to do so.

Assignments

Furthermore, the Madrid Protocol imposes certain limitations on recordation of assignments of international registrations, and more importantly, the national laws impact on the legality of such assignments. Under the Protocol, the assignment of an international registration may be recorded in a single filing with a single fee. It is also possible to record an assignment of the registration with respect to only some of the member countries, or with respect to only some of the goods and services specified in the registration. But in every case, the new holder must be a person who (or entity that) would be entitled to file an application under the Madrid Protocol in the first instance (i.e., a national or a domiciliary of a contracting state or a company with a real and effective commercial establishment in a contracting state). While this restriction affects the recordation rather than validity of the assignment under the Protocol, it can still be a significant limitation for a purchaser who wants to record the assignment. Similarly, a U.S. company that desires to assign its trademarks for tax purposes may not be able to do so if the prospective assignee is located in a tax haven jurisdiction that is not a member of the Madrid Protocol.

As to the validity of an assignment of an extension of protection in a particular jurisdiction, national law governs. Thus, while it may be a simple matter to record an assignment against an international registration and thereby effect the recordal of the assignment in all the countries to which the protection of the international registration was extended, that does not ensure that in all such countries the assignment will be valid. For example, as assignment of an extension of protection to the United States would not be valid if it did not transfer the goodwill associated with the mark transferred.

There are also limitations inherent in the Madrid Protocol System itself, three of which may make the Protocol less attractive to a U.S. company than it might at first otherwise seem.

Central Attack

One of the most significant drawbacks that a U.S. company contemplating filing under the Madrid Protocol must face is what is known as 'central attack.' Under Article 6 of the Madrid Protocol, an international registration is dependent for five years from its date on the validity of the basic application or registration upon which it is based. If, for any reason, the basic application or registration is invalidated, whether completely or partially, the home country trademark office must notify the International Bureau. The Bureau, in turn, is obliged to cancel the international registration to the extent applicable and to notify the offices of those countries in which the international registration was extended. Each office will then cancel the extension of protection to the same extent.

While it is possible under the Madrid Protocol for the trademark owner to transform the canceled international registration into new national applications that enjoy the same priority as the international registration, it is expensive and time-consuming.

Central attack is particularly onerous in a common law country such as the United States. Unlike in some other countries where the first to register a mark has the exclusive right to use it, in the United States, a common law user may have superior rights, even to that of a registrant. Therefore, the specter of a successful central attack of an international registration based on a U.S. application or registration is greatly increased.

The Fee Regime and the Possible Illusion of Cost Savings under the Madrid Protocol

The great cost savings that some U.S. companies envision through utilization of the Madrid Protocol is probably illusory. That is because Article 8 of the Madrid Protocol gives each national office the opportunity to 'opt out' of the present system of supplementary and complimentary fees that exist under the Madrid Agreement, and instead charge an applicant for an international registration extended to its territory the same fee that it would have charged a national applicant that had filed directly in its territory.

While there may be savings where requests for extension of protection under the Madrid Protocol do not encounter objections on the national level, where they do, the assistance of local agents will still be necessary. In such cases, the cost savings of proceeding under the Protocol may be lost. As a practical matter, the trademark offices of many Asian countries search the register for marks that may be confusingly similar to the applied-for mark, making objections common in the Asian countries. Once there is an office action, however, cost savings may quickly evaporate.

Additionally, when an international registration is cancelled, the transformation of the international registration into direct national applications may be more costly and time-consuming than filing separate national applications in each country would have been in the first place. Thus, where a U.S. company knows or has good reason to suspect that its basic U.S. application or registration is vulnerable to a successful central attack, it should probably avoid filing under the Madrid Protocol.

The Inability to Amend the Form of a Mark

Unlike under U.S. practice, where the form of a mark as applied for or registered may be amended provided such amendment does not materially alter the form of the mark, under the Madrid Protocol, the form of the mark may not be amended. Thus, Article 7(2) of the Protocol provides 'Renewal may not bring about any change in the International Registration in its latest form.' This means that, if the form of the mark in the basic application or registration is changed during the prosecution of the application or within 5 years of the registration date, the international registration may be invalidated.

Madrid Protocol Is Not Linked with the Community Trademark System

Although the Madrid Protocol permits intergovernmental bodies to become members, the European Union is not currently a member of the Madrid Protocol. This may well change, but for now, an applicant seeking trademark protection in all 15 countries of the European Union would actually need to extend its international registration to each jurisdiction separately—possibly more expensive, and certainly more cumbersome, than filing a single Community Trade Mark ('CTM') application. Thus, a U.S. company that plans to expand into Europe might be better off filing for a CTM rather than filing for and extending an international registration. This will be an even more prudent strategy when a number of Eastern European countries join the European Union.

So long as the European Union is not a member of the Madrid Protocol, there are other disadvantages to filing in Europe through the Madrid Protocol as opposed to by means of a CTM: An international registration under the Madrid Protocol would require the registrant to fulfill use requirements in each country in which the mark is protected, while the use requirement for a CTM is fulfilled through the commercial use of the mark in any one member state. Moreover, a CTM application is not based on a home country application or registration, so there is no requirement to limit an applicant's specification of goods and services to reflect that of another application or registration.

CONCLUSION

Securing international trademark protection under the Madrid Protocol has many advantages, but it is not a panacea. A U.S. company is well advised to weigh the pros and cons of filing under the Madrid Protocol in each circumstance and country, before proceeding. The U.S. company must consider not only the limitations of U.S. practice that carry over into international filings under the Protocol, but also the inherent limitations of the Madrid Protocol itself. Most importantly, where the U.S. company decides to proceed under the Protocol, consideration should still be given to obtaining the guidance of a local trademark agent, so that unexpected pitfalls can be avoided.

© 2003 Cowan, Liebowitz & Latman, P.C.

NOTES

1  The author is a partner in the New York firm, Cowan, Liebowitz & Latman, P.C., and specializes in international trademark law. The author wishes to thank Lawrence Greene, an associate at Cowan, Liebowitz & Latman, P.C., for his generous contributions to this paper, and Barbara Cookson, a partner in the London based firm Nabarro Nathanson, for her insights into the Madrid Protocol from the U.K. perspective.

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