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Foreign trademark protection: filing through Madrid

We are all looking for ways to save our clients money. One way global companies might save money is to file foreign trademark applications through the Madrid system, rather than filing separately in each country.

The risks of using Madrid should be carefully calculated since its benefits often depend on where a company is filing from, and U.S. companies tend to face greater risk.

The system is comprised of two treaties: the Madrid Protocol and the Madrid Agreement. Member countries may be a party to one or both treaties.

The U.S. has been a party to the Madrid Protocol since 2003.

The system is administered by the International Bureau of the World Intellectual Property Organization.

Under Madrid, an individual or entity who resides or has a place of business in a Madrid member country (known as a “contracting party”) may file a single application in that country’s trademark office (the “office of origin”) designating other member countries for trademark protection. In that way, broad international coverage can originate from a single filing.

The bureau communicates directly with the office of origin and the designated countries.

While the office of origin and the bureau review international applications for formalities, the designated countries’ offices review the applications substantively and may refuse registration on any ground available in that jurisdiction.

The application is also subject to opposition consistent with national trademark law in each designated country.

An attorney filing a Madrid application can file directly in all designated countries and thereby potentially save a significant amount in foreign attorneys’ fees.

If the filing attorney chooses not to use the Madrid system, foreign trademark applications must be filed separately in each country where the trademark is used, requiring the retention of separate counsel, paying separate fees, and maintaining separate registrations in each jurisdiction.

By contrast, using the Madrid system, not only can many countries be covered by one application, but additional countries can be designated at a later date. Because the individual foreign registrations are tied to one master registration, subsequent changes to the registration (e.g., change of the owner’s address) as well as renewals and assignments can be completed in a single filing.

Unlike a national application, if the national office does not mail a refusal to the IB within a specified period (typically 18 months, and longer in the case of a potential opposition), the mark is protected by default.

Pre-filing advice

Despite the allure of simplicity and cost savings, counsel should be wary of Madrid’s pitfalls, since inherent drawbacks and administrative kinks remain.

As an initial matter, the notion of a single application only works if all countries are contracting members, yet many important markets, such as Canada, Mexico, Brazil, Taiwan, India, South Africa and New Zealand are not members. Applicants interested in filing in non-member countries will inevitably have to file separate national applications in these countries.

While a Madrid application can theoretically be handled solely by the filing attorney, this is only true in practice for straightforward applications. If an office action issues (a typical and expected occurrence in certain countries), the applicant will ultimately have to retain local counsel.

Local counsel’s pre-filing advice on issues such as goods and services descriptions and use requirements can be useful in light of each jurisdiction’s unique practices, and an applicant using the Madrid system often goes without this advice.

Dependence filing problems

Perhaps one of the most problematic issues inherent in the Madrid system is its dependence on the base application or registration which is filed with the office of origin.

If that application or registration dies during the first five years of the Madrid filing, the Madrid registration also dies. Third parties can launch a “central attack” on the base application or registration to potentially extinguish the trademark owner’s rights in all designated jurisdictions.

If the Madrid registration is cancelled due to failure of the base application or registration, the Madrid Protocol allows the owner to “transform” the Madrid designations into national applications without losing priority. This process can be time-consuming and expensive, as the application will likely be subject to a second round of examination, and the owner incurs duplicative official fees.

The transformed applications must also be filed in connection with a description that is at least as narrow as the Madrid application, leaving the applicant with the worst of both worlds. It no longer owns a unitary Madrid registration and its applications are subject to otherwise unnecessary goods and services restrictions.

Although transformation is not necessary in most cases, the risk that the base application may die in the first five years should be carefully considered before filing through Madrid.

A Madrid application may not be broader than the base application or registration. This can be particularly disadvantageous to a U.S. applicant, as the USPTO often refuses broad descriptions that other countries routinely accept.

Further, even an initially broad description will be narrowed if the base application is narrowed. For this reason, if multiple countries qualify as an “office of origin,” it is in the applicant’s best interest to carefully determine which country’s trademark office is best suited as the home of the base application.

The marks in the base and Madrid applications must also be identical. Thus, trademark owners who intend to use different or slight variations of their marks abroad may find the Madrid system less useful. Further, it is not permissible to amend a mark or to add classes in a Madrid registration.

Practical complications

In addition to its inherent limitations, administration of the Madrid system has also created practical complications.

Important notifications have mysteriously been sent directly to the trademark owner rather than counsel in some cases, creating the risk of missed deadlines.

Further, while the IB’s initial review of the application is meant to simplify the process, receiving “Notices of Irregularity” from the IB is equivalent to responding to an office action before the application is even sent to the designated countries.

Even if a mark is granted protection through Madrid, a foreign office need not send a registration certificate, which can be unsettling.

A trademark owner seeking to assert rights against a third party may need to base its assertion of rights on the mere calculation of a default deadline.

While WIPO’s online database typically indicates the mark’s status, records are not consistently complete or up to date. WIPO clearly views the implicit grant of protection as an advantage of Madrid, but the lack of definitiveness in this context could be viewed otherwise.

Notwithstanding these shortcomings, there may be instances where filing through Madrid is worthwhile. Jurisdictions lacking a rigorous approval process are good candidates for Madrid applications since there is a good chance protection will be granted without an initial refusal.

Similarly, some national offices give greater deference to the office of origin’s examination. Further, some countries, such as China, give priority examination to Madrid applications.

The Madrid system can also be a lifesaver around the Paris Convention deadline.

The convention grants a six-month window in which to file and benefit from the home application filing date, but often, a decision to file foreign is made at the 11th hour.

Given the time differences between the home and foreign trademark offices, it may be nearly impossible to retain counsel in time to meet the deadline. In these circumstances, a Madrid application may be filed where the time difference would have thwarted a national filing.

Applicants that anticipate using the same mark globally for a long time may benefit from the one-renewal portion of the Madrid system.

On the other hand, many applicants change their marks frequently due to short product cycles and therefore never take advantage of the renewal benefits.

Another attractive feature may be the consolidated assignment feature, especially to companies anticipating trademark transfers. But an international registration must be owned by a single entity, making it infeasible to split up the ownership of the trademark among different entities in different jurisdictions.

Also problematic is that the assignee must be from a jurisdiction that is a contracting member. If the assignee is a Canadian company, for example, the assignment of the Madrid registration would not be effective.

WIPO is aware of the issues plaguing the Madrid system. Preliminary steps have been taken to explore the major problems, particularly the impact of the five-year dependency period.

In 2010, the USPTO sought public comment on the issue and inquired about eliminating the requirement that the Madrid application be based on a particular application or registration. This change would eliminate many of the issues that deter applicants from filing through Madrid, but it is unclear whether or when it will happen.

Many of the problems inherent highlight that Madrid’s one-size-fits-all approach ignores the fundamental reality that trademark rights are territorial in scope. The intention that it be used in mass foreign filings, where one size is least likely to fit all, can render it a particularly unwieldy foreign filing process.

The Madrid system has a role to play under appropriate circumstances, however, and companies should expect their trademark counsel to utilize it to a trademark owner’s strategic benefit.

Kimberly J. Seluga is an associate in the litigation, trademark and copyright practice groups at Sunstein, Kann, Murphy & Timbers in Boston. She can be contacted at kseluga@sunsteinlaw.com.

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