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The United States – Three Years on by Jason M

The United States – Three Years on by Jason M

K THE PROTOCOL – AN INDUSTRY VIEW The – three years on By Jason M. Vogel of Kilpatrick Stockton

he United States joined the Madrid Union are , , most of Latin Protocol on 2 November 2003. America, , South , TAlthough adoption by U.S. Taiwan, Hong Kong, , the owners of this multinational trademark , , , , registration system was perhaps a bit slow and Pakistan, although there are efforts initially, the U.S. now represents the third underway in many of these countries to join. largest user of the system, with over 2800 The process of filing for an International international applications filed in 2005, or 8.5% Registration (“IR”) under this system can be of the total of 33,565 applications filed that tricky. As an initial matter, the Madrid year.1 This article, will explain the nuts and system is only available to individuals or bolts of how the system works, and provide legal entities that are nationals of, are some practice pointers for deciding when to domiciled in, or have a real and effective use the system and how to avoid common commercial or industrial establishment in, a pitfalls that are endemic to the system. country that is a member of the Madrid The “Madrid Protocol Relating to the Union. Such country in which the Madrid Agreement Concerning the international applicant qualifies for International Registration of Marks,” was participation in the is adopted in June 1989 as an outgrowth of an referred to as the applicant’s “Country of 1891 trademark treaty entitled the “Madrid Origin.” For U.S. companies, the Country of Agreement Concerning the International Origin will typically be the United States. Registration of Marks”. Both the Madrid Before filing an application for an IR, the Protocol and Madrid Agreement, as the two applicant must already own one or more treaties are commonly called, remain in effect trademark registrations (under the Protocol, on a complementary, side-by-side basis.2 The registrations or applications) in its Country countries and multi-country organizations of Origin for the mark and goods or services belonging to one or the other, or both, of for which international registration is these treaties are referred to as the Madrid sought. These applications or registrations Union. At present, the Madrid Union are referred to as the “basis” for the IR. Once includes 79 trademark jurisdictions, 56 of a “basic” registration or application is which belong to the Madrid Agreement, and secured, the applicant files an international 70 of which belong to the Madrid Protocol.3 application with the trademark office in its AUTHOR The United States is a member of the Madrid Country of Origin, which is designated as Jason Vogel is Counsel in Kilpatrick Protocol only, not the Madrid Agreement. the “Office of Origin”. In the international Stockton’s application, the applicant may request Practice Group in the New York office. How the Madrid System works protection in as few, or as many, of the His practice is focused on Essentially, the Madrid Agreement and countries as are desired that are members of international trademark portfolio and Protocol establish a centralised one-stop the same treaty (the Agreement or Protocol) conflict management. His experience shop for trademark filing in the countries as the Country of Origin. In other words, includes counseling for complex and multi-country trademark systems that international applications originating in a multijurisdictional trademark conflicts, are signatories of the treaties. The Madrid Madrid Protocol-only country, such as the clearance, prosecution, enforcement system is administered by the International United States, may only be extended to other and licensing for leading companies in Bureau of the World Intellectual Property countries in the Madrid Protocol. Conversely, the , financial services, Organization (“WIPO”), a branch of the applications originating in a Madrid apparel, pharmaceutical and food and restaurant services industries. . The members of the Madrid Agreement-only country, such as , may Union include practically all of the countries only be extended to other countries in the of as well as the Madrid Agreement. Meanwhile, itself; the Pacific Rim countries of , international applications originating in , , , and countries belonging to both treaties, such as ; all of the former Soviet Republics; , may be extended to the entire 79 and a number of African and Middle Eastern jurisdictions of the Madrid Union. countries. Notably absent from the Madrid The Office of Origin examines the

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international application to certify that the objections or oppositions are notified to WIPO portfolio of national trademark registrations for formalities for international filing are met, within this timeframe, the extension will be a single mark in 69 countries could cost including that the owner of the basic deemed granted, and the owner of the IR will US$30,000 to $40,000 or more. application or registration is the same as the have secured the same degree of protection When these factors are coupled with the owner of the international application, and given to holders of national registrations in administrative efficiency of filing a single that the goods and services covered by the that country. If, on the other hand, an objection application rather than having to coordinate international application are not broader or opposition is notified to WIPO within this the filing of 69 national applications, the total than those covered under the basic period, the extension will remain pending until cost savings for a filing program can be very application or registration. If everything is in such matters are resolved by the applicant in dramatic indeed. order, the Office of Origin transmits the accordance with local practice. international application to WIPO, which Disadvantages of the Madrid System conducts further examination to ensure that Advantages of the Madrid System a) Dependency and Central Attack its filing requirements are met and that the The Madrid Protocol consolidates and There are several potentially significant goods and services are classified correctly. streamlines the registration process because disadvantages of the Madrid System, Also, in the case of an application governed protection in multiple countries can be however. Perhaps the largest disadvantage by the Protocol, WIPO translates the obtained merely by filing one application, in arises from the “dependency rule”. Under application into the three official languages - one language, with one fee payment, in one Article 6 of both the Madrid Agreement and English, French and Spanish (all Madrid currency. Unlike national applications filed in Protocol, an IR remains dependent on the Agreement applications must be filed in many countries, there are no translation or basic application or registration for the first French). In the event that WIPO determines documentary legalization requirements. The five years following registration of the IR, that there are any defects in the international resulting IR has a single ten-year term, such that any limitation or invalidation of the application, it will communicate a Notice of resulting in a single renewal deadline, and basic application or registration during this Irregularity to the applicant, which must be may be renewed with a single renewal period will result in the equivalent limitation resolved within two months through application. Assignments, mergers, changes of or invalidation of the IR. This rule can have amendments or arguments submitted by the name, licenses and other transactions affecting serious consequences under the Madrid applicant via the Office of Origin. the IR may be centrally recorded with WIPO Agreement, because an invalidation of the Once the formalities examination is rather than country-by-country recordal as is basic registration will result in the complete, WIPO publishes the resulting IR in required for standard national registrations. unrecoverable invalidation of the entire IR, the WIPO Gazette of International Marks, issues Additionally, IRs may be easily expanded at including all national extensions. The harsh a Certificate of Registration to the holder of any time following registration to include impact of this rule has been tempered the mark and communicates the registration to additional countries through the filing of a somewhat under the Madrid Protocol the trademark offices of the designated “Subsequent Designation” with WIPO. because, in the event of invalidation of the extension countries. The term “International Perhaps the most significant advantage of basic registration, the holder of an IR Registration” is something of a misnomer in the Madrid System, however, is the cost governed by the Protocol is given the right that the issuance of the IR does not, in itself, savings, which result in part because it is to “transform” the national extensions into create any enforceable trademark rights in the unnecessary to utilise local agents in the regular national applications without a loss extension countries. Instead, upon receipt of extension countries provided that no objection of priority. However, transformation of an IR notification from WIPO of the IR, each or opposition arises in the extension of the IR. can be very expensive in that it entails designated country’s trademark office then Additionally, in many countries, the filing fee payment of a new national application fee in begins a national examination process as if the for the extension of an IR may be significantly each extension country, thus eliminating the IR were a standard national application filed lower than the corresponding application fees financial advantage of having filed the directly with the local trademark office. Only for national applications in such countries. International Registration in the first place. once the IR passes through this examination Indeed, the filing fee for an IR based upon a As a result of this dependency rule, IRs are process, does it become an enforceable U.S. registration covering a word mark in one vulnerable to “central attack”, a strategy that registration in the extension country. class extended to the 69 other members of the can be employed by third parties to invalidate The Madrid Agreement and Protocol Madrid Protocol presently costs 16,216 Swiss an entire IR, including all the extensions. establish a strict timeline for the examination of Francs, or about US$13,200,4 whereas Essentially, central attack consists of an IRs in that the local trademark offices must comparable national or regional filings could opposition or cancellation action filed against issue any objections to the extension of the IR cost as much as US$80,000 to $90,000 or more. the basic registration within the first five within twelve months (or, in some Protocol Comparable cost savings are realized when years of the IR. If such action results in the countries including the United States and the renewing IRs. The most dramatic cost savings, invalidation of the basic registration, all of the European Union, eighteen months). Under the however, are realized in the filing of rights associated with the IR will be Protocol, this period may be extended even assignments, name changes and similar extinguished. One particularly effective further if, within the initial period for objection, transactions, since both processes are handled central attack strategy can be the filing of a the local trademark office notifies WIPO of the centrally with WIPO instead of individually in non-use cancellation action against the basic possibility of a refusal based on an opposition. each national or regional trademark office. registration during the often short window of In such case, the offices are allowed an Indeed, the present fee to record an assignment time between the expiration of the grace additional seven months from the date the of an IR is 177 Swiss Francs (about US$150), period for use in the basic registration and the opposition period begins to notify WIPO of regardless of the number of countries covered. In expiration of the dependency period. For that an opposition has been filed. If no comparison, recording an assignment against a example, let’s say that an IR issued on 1 April

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2002 based upon a Spanish registration that jurisdictions, the broad class heading language trademark owners, seem to frequently extend issued on 1 March 2002. This is a common established under the Nice Agreement6 may protection to the U.S. for the full range of scenario because, in countries that are be used, and there is no requirement of a bona goods without realizing that doing so makes members of the Madrid Agreement like , fide intent to use as a precondition to filing. the statement of bona fide intention to use on trademark holders must await registration of Since the goods and services in a Madrid the MM18 Form false. Generally, the a mark before filing an international application can be no broader than the goods applicant’s bona fide intent to use will not be application. Thus, there is frequently a gap of and services of the corresponding basic questioned by the U.S. Trademark Office several weeks to several months between the application or registration, U.S. filers during examination. However, there is a recent registration date of the basic registration and generally cannot cover as broad a range of line of Trademark Office decisions that the registration date of the corresponding IR. goods or services in their Madrid applications suggest that false declarations of use can create Throughout most of Europe, the grace period as can their international competitors, whose a lingering post-registration vulnerability that for use is five years – the same duration as the home countries do not have such restrictions could be exploited by adversaries seeking to dependency period for the IR. Accordingly, if on trademark filing. By contrast, if U.S. invalidate the registration. There is an open the basic Spanish registration in the above trademark owners file internationally using question as to whether these decisions apply in example has not been put to use by 1 March national applications, their goods and services the context of bona fide intent to use 2007, it will become vulnerable to non-use descriptions are not limited by the coverage of statements in Madrid extensions. However, cancellation. Meanwhile, if such a non-use their U.S. application or registration, and may given the uncertainty, the best practice is to cancellation action is filed before 1 April 2007, be as broad as local practice will allow. limit extensions to the U.S. to only those and ultimately results in the cancellation of Some U.S. companies seek to avoid the narrow goods and services for which the applicant the basic Spanish registration, then, like a specifications problem by filing international legitimately can claim a bona fide intention to house of cards, the entire IR will fall. applications based on an application or use the mark in the U.S. The dependency rule can be especially registration from a Madrid country other than problematic for U.S. trademark owners due to the U.S. This may be possible if the company can c) When to use the Madrid System certain particularities of U.S. trademark either a) claim that it has a real and effective Despite the disadvantages discussed above, practice. For example, U.S. applications are commercial or industrial establishment in the the significant cost savings offered by the subject to rigorous examination standards, both foreign country; or b) file in the name of a Madrid System are, clearly, very attractive to in terms of the inherent distinctiveness of the subsidiary organised in the foreign country. many trademark owners. Suppose you are trademark and possible conflicts with earlier While either of these strategies can be effective counseling a U.S. client that is interested in marks. Additionally, the chance of conflict with ways to avoid the problem, care is required broadening its international protection for prior marks may be greater in the U.S. than in because both strategies have potential pitfalls a two marks. The first mark is the client’s other countries due to the relatively strong U.S. company asserting that it has a real and house mark, which has been used for many protection accorded to common law effective commercial establishment in another years in the U.S. and is protected by a number unregistered marks (which may be undisclosed country might inadvertently subject itself to of existing registrations covering a broad by clearance efforts). Additionally, trademark taxes in that country it would otherwise avoid; range of goods and services, several of which applications in the U.S. cannot proceed to and filing in the name of a foreign subsidiary can have become legally incontestable. Moreover, registration until the mark has been put into divide the ownership of the company’s the client is using the first mark on the full use, and can only cover goods and services for international portfolio, which can be range of registered goods and services. The which the mark actually has been put to use. As administratively complicated and result in second mark is a newly-adopted mark for a result of the dependency rule, any of these weaker rights overall. If one of these strategies is which the client only has a pending intent-to- potential roadblocks to registration in the U.S. employed, it probably would be best to select a use based application covering a relatively application are amplified in seriousness when Protocol-only country (such as the U.K.) to narrow range of goods and services, for an IR based on such U.S. application hangs in preserve the right of transformation in the event which use has not yet begun and is still in the the balance. Thus, U.S. applications can be a of central attack or other problems in the basic planning stages. Additionally, pre-filing particularly unstable basis for IR filing. application or registration. clearance efforts disclosed several potentially The bona fide intent to use requirement of conflicting prior marks. Given these b)Complications arising from identifications of U.S. practice also impacts non-U.S. trademark circumstances, the client might well decide goods and services and bona fide intention owners seeking to extend IRs into the U.S. All that Madrid filing would be appropriate for to use standards in the United States international applications designating the U.S. the first mark because its U.S. registrations There are further potential disadvantages for must be accompanied by a signed WIPO Form are both broad and relatively secure and, U.S. filers arising from particularities of U.S. MM18.7 This form requires the applicant to therefore, would make a strong basis for an trademark practice. The goods and services declare its bona fide intention to use the mark IR. On the other hand, the client might be which may be covered under a U.S. application in the U.S. for all the goods and services. better off obtaining international protection are limited by two rules. First, identifications Because there is no intent to use requirement for the second mark by filing standard of goods and services must generally be stated in most countries, many non-U.S. trademark national applications in the desired countries, in narrow terms; in many cases, the goods owners routinely register covering since its corresponding U.S. applications are must be limited to their specific field or a wide range of goods for which they may have narrow and relatively insecure in that they function.5 Second, U.S. applications may only no intention to use the mark. A classic might encounter a number of obstacles (e.g., cover goods or services on which the mark is example is a computer software manufacturer official objections, objections from third in actual use or for which the applicant has a that files applications covering entire Class 9, parties, or abandonment or limitation due to bona fide intention to use the mark in the U.S. including “fire-extinguishing apparatus”. failure to put the marks into use), which could By contrast, in most other trademark When filing Madrid applications, such imperil a dependent IR.

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Practice Points preliminary refusals may be received by IR WIPO to ensure that Preliminary Refusals The Safeguard Clause – Which Treaty Controls? filers with little or, in some cases, no time to are timely sent to the correct address for the It can sometimes be difficult to determine which respond. This problem is largely created by representative of record for the IR. treaty – the Agreement or Protocol – governs a the fact that preliminary refusals must first be given IR. This is a consequential determination communicated from the extension country to Conclusion for several reasons, perhaps most importantly, WIPO in by postal mail. WIPO The Madrid system provides trademark because the right of transformation discussed then issues a Notice of Preliminary Refusal, owners with an efficient and cost-effective above is only available under the Protocol. If the which is transmitted from Switzerland to the centralised trademark filing and registration underlying Country of Origin for the IR is a holder of the IR, again by postal mail. As a system covering a number of important member of only one of the two treaties, the result of the delays inherent in international trademark jurisdictions. The benefits of this answer is simple – that treaty to which the mail, it may take four to six weeks or longer system will continue to expand as more Country of Origin belongs governs the IR. from the date of issuance of the preliminary countries join the Madrid Union. Clearly, However, when the Country of Origin is a refusal for the holder to receive notice of such there are risks and potential disadvantages member of both treaties, as is the case with refusal. Meanwhile, some extension countries associated with the system arising from many countries of the Madrid Union, one must provide for a response term of only six weeks dependency and differences in trademark examine the treaty membership of the extension to two months. Consequently, it is not practice from country to country. Also, countries. For extensions to countries that are uncommon to receive notice of such refusals glitches remain in the system that impact members of only the Agreement, the Agreement with inadequate time to respond. Additionally, upon its ease of use. The bottom line is that, will govern. For extensions to countries that are it is often difficult to discern the response while perhaps it is not suited for all members of only the Protocol, the Protocol will deadline from the Notice of Preliminary circumstances, the Madrid System clearly is a govern. For extensions to countries that are Refusal and therefore such notices may not useful tool in the trademark practitioner’s members of both treaties, under the “Safeguard receive the urgent attention they require. tool belt. K Clause”,8 the Agreement trumps the Protocol One strategy that the author has employed to and controls such extensions. address this problem is to appoint local counsel Notes To illustrate these rules, an IR that is based in in advance in problematic countries to monitor the U.S. (a Protocol-only country) is governed by the status of pending IR extensions and provide 1 See WIPO Press Release 466 “WIPO the Protocol with respect to all extensions. early notification of any preliminary refusals. Registers 900,000th Mark under the Similarly, an IR based in Egypt (an Agreement- However, this strategy can undercut one of the International Trademark System, Oct. 27, only country) is governed by the Agreement principal cost savings of Madrid System, the 2006 (available at with respect to all extensions. However, for a ability to avoid the expense of local counsel. It http://www.wipo.int/edocs/prdocs/en/2006/wi country such as France (a member of both may be possible to negotiate with local counsel po_pr_2006_466.html) treaties) one must examine the extensions to an arrangement under which they will monitor 2 The full text of the treaties, along with the determine which treaty controls. So, for example, the status of the extensions of IRs in their relevant regulations and other materials, say there is an IR based in France with country without charge, with the understanding may be found at extensions to , Benelux, , that they will have the opportunity to handle http://www.wipo.int/madrid/en/legal_texts/. and the . The extension the matter should any refusals issue. 3 A list of the Members of the Madrid Union is to San Marino will clearly be governed by the However, this solution is not optimal and, in available at Agreement because that country is a member of the author’s view, the following measures could http://www.wipo.int/treaties/en/documents/pdf only the Agreement. The extensions to Sweden be taken by WIPO to alleviate this problem, /madrid_marks.pdf. and the United Kingdom will be governed by the although, admittedly, some of these steps 4 The schedule of fees for IR filing is available at Protocol since these two countries are members might require amendment to the Protocol: http://www.wipo.int/madrid/en/fees/sched.htm. of only the Protocol. The extensions to Benelux • A requirement that member countries provide Also, since the fee structure is very complicated, and Germany, however, which are members of a minimum term, perhaps three months, for the WIPO provides a useful fee calculator at both treaties, will be governed by the Agreement, IR holder to respond to preliminary refusals. http://www.wipo.int/madrid/feecalc/FirstStep. since under the Safeguard Clause, the Agreement • A requirement that member countries 5 For example, “computer software for trumps the Protocol in such circumstances. clearly indicate the response deadline on any database management in the Consequently, under this hypothetical scenario, a preliminary refusals. industry”; “pharmaceutical preparations for central attack directed against the underlying • A requirement that member countries treating diabetes; or “a series books in the French registration during the dependency communicate preliminary refusals and other field of home repair”. period would result in the irrevocable notices to WIPO electronically to avoid the 6 The full title of this treaty is the Nice cancellation of the extensions to San Marino, delays inherent in international mail. Agreement Concerning the International Benelux and Germany, while the extensions to • Provision for electronic communication of Classification of Goods and Services for the Sweden and the United Kingdom could be preliminary refusals and other notices by Purposes of the Registration of Marks. salvaged by transformation. WIPO to the IR filer. 7 This form and all other Madrid forms are • An online file retrieval system operated by available on the WIPO website at Preliminary Refusal Deadline Surprises WIPO on which IR holders can monitor the http://www.wipo.int/madrid/en/forms/. An issue that seems to arise with great status of IRs and download any notices received 8 This rule is established by Article 9sexies of frequency in preliminary refusal practice is by WIPO from the extension countries. the Madrid Protocol entitled “Safeguard of that, for some countries, notably China, • Increased quality control measures by the Madrid () Agreement”.

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