By Dennis Prahl, Esq.
2.1 The Madrid Agreement
2.2 The Protocol Relating to the Madrid Agreement
On November 2, 2003, the United States entered a new era of international trademark protection by joining the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (“the Protocol”). Although the United States trademark registration system dates back to 1881, and the origins of the Protocol date back almost as far to 1891, the United States avoided involvement with the Protocol and its forerunner, the Madrid Agreement Concerning the International Registration of Marks (“Madrid Agreement”), for 112 years.
As anyone who has faced cross-border trademark issues knows, trademark rights are territorial, namely, a trademark right acquired in one jurisdiction usually gives no rights to the trademark in other jurisdictions. As a result, trademark owners with multinational interests must seek separate protection of their trademarks in each jurisdiction of interest. Many countries have attempted to ameliorate the difficulty in obtaining trademark protection across borders by creating multiple-jurisdiction protection treaties, such as the Benelux system, the European Community Trademark and the Organisation Africaine de la Propriété Intellectuelle (O.A.P.I.) system, which established single trademark registration systems that provide protection in all member states.
Rather than create a unified register, the Madrid Agreement and the Protocol enable trademark owners from member states to forego filing separate trademark applications in each country in favor of filing a single application that can then be extended to each member state.
In today’s global economy, the protection of trademarks is of utmost importance to any enterprise wishing to gain a market share among global consumers. The opening of foreign markets has produced a far broader range of potential marketplaces than ever previously thought. The Protocol has brought many changes, as well as challenges, to US Trademark owners.
2. THE MADRID SYSTEM
The Madrid System is administered by the World Intellectual Property Organization (WIPO) located in Geneva, Switzerland, which is referred to as the International Bureau and is in charge of processing international registrations and receiving all documents relating to the Madrid System. The System enables a person or legal entity that is from a member country and that has a trademark application or registration in that member country to file an international trademark application before the International Bureau at the WIPO. The international application process begins when the trademark holder files its international registration application with its national trademark office. The office sends the request to the International Bureau, which issues an international registration, publishes the particulars and forwards the request to the trademark office of each member country designated by the applicant. Protection is automatically granted in each designated country, unless, within a period of time an objection is issued by that country’s trademark office. Objections are then addressed under local laws and procedures.
Two treaties make up The Madrid System: the Madrid Agreement Concerning the International Registration of Marks and the Protocol Relating to the Madrid Agreement. Although the United States joined only the Protocol, it is essential to have an understanding of both the Madrid Agreement and the Protocol in order to comprehend the Madrid System fully.
2.1 THE MADRID AGREEMENT
The Madrid Agreement was the first of the two treaties that make up the Madrid System. France, Switzerland, Tunisia, Spain, and Belgium signed the Agreement in 1891 under Article 19 of the Paris Convention for the Protection of Industrial Property (“Paris Convention”) of 1883 with the idea of developing an international registration system that would grant protection to trademarks among its members.
Although member states are allowed to retain their independent, and diverse, national trademark laws, the Agreement establishes a uniform set of rules for the filing and protection of an international registration in all of the member countries. It covers issues regarding the filing of the trademark and its effects, the official language of filing, the duration and renewal of protection, changes to the registration, as well as the possibility for invalidation of an international trademark registration.
Under the Agreement, nationals of contracting parties that have a trademark registration in the Country of Origin may apply for an international trademark registration before the International Bureau. The Country of Origin is the place where the applicant has a real and effective industrial or commercial establishment, the country where he has his domicile, or the country of which he is a national.
The application for an international registration must be based on a registered trademark (“home registration”); it may not be based on a pending trademark application. It is possible to base an international registration on two or more home registrations. The application is filed through the Office of Origin, which is the trademark office of the applicant’s Country of Origin.
The specification of goods and services covered by the international registration cannot be broader than the specification of goods and services of the home registration(s), although the former may be narrower than the latter. The protection cannot exceed the goods or services specified in the basic registration(s). The application for an international registration must be filed in French and must designate all the member countries in which the applicant wishes to register his trademark.
The Agreement provides that all communications between the member state Trademark Offices and the International Bureau must be in French. This places a burden on Offices of countries that are not French-speaking or bilingual as all notifications and other communications between such Offices and the International Bureau must be translated.
The International Bureau examines the application and, provided that all the formal requirements are met, the mark is recorded in the International Register and a certificate is sent to the applicant. The international registration is then published in the WIPO Gazette and the Trademark Offices of the member states designated by the international registration are notified that the international registration is to be extended to their country. These national designations are governed by the same provisions as national applications in the designated countries, insofar as examination and third party objections are concerned.
Upon receipt of notification of the designation of the international registration to their country, the Trademark Offices of the Contracting Parties have a period of 12 months to notify the International Bureau of any refusal, objection or opposition by third parties to the protection of the international registration in that country. Any notification sent by the designated Offices after this time limit will not be considered and the trademark will be considered as registered in that country, with the same rights as any other national trademark registration. The 12-month deadline established by the Agreement is considered too short for many countries who have rigorous and long examination periods or lack of an infrastructure to carry on an examination within that period of time.
Once the applicant receives the notification of refusal, objection or opposition, he must engage a local representative to continue prosecution of the matter before the local trademark office. The local laws govern the procedures before the Offices of the member states; the Agreement does not contain provisions regarding such procedures.
If the extension of the international registration is not refused by the designated offices, the Offices must grant protection of the registration for a period of 20 years, renewable for subsequent periods of 20 years. In practice, however, protection fees are paid for ten-year periods. Such international registrations have the same effects as national trademark registrations under the national laws.
The Agreement provides for a system of fixed fees, according to which the applicant for an international registration must pay a basic fee for the international registration, a modest supplementary class fee for each class beyond the first three, and a modest complementary fee for each designated country. Often the complementary fees that are paid to the national offices are insufficient to cover the offices’ costs of examination and proceedings. However, in the trademark owner’s favor, the complementary fees are sometimes less than the local official fees for filing national applications directly with the local Trademark Office.
Under the Agreement, the existence of the international registration remains dependent on the existence of the basic registration during the first five years from the date of the international registration. As a result, if the basic trademark registration is rejected, cancelled, withdrawn or in any other way ceases to exist during this period of time, or as a result of an action commenced within the five-year dependency period, the international registration, and all of its national extensions, are likewise considered revoked. The same applies where the basic registration is only partially affected: the international registration and all of its extensions will be likewise affected. Once the five-year period has ended, the international registration becomes independent of the basic registration and its extensions may only be challenged in accordance with the individual national laws in the countries to which it has been extended. This dependency is absolute and is not affected by any change of ownership in the basic registration or international registration. The ability of third parties to initiate this kind of invalidation by attacking only the basic registration is known as “central attack” and the effects of losing an entire trademark portfolio overnight can be devastating for the trademark holder.
The great advantage to the owner of an international registration is that the owner may assign, change and renew the international registration and all of its national extensions through one filing with the International Bureau, rather than having to file directly with local Trademark Offices through local agents.
Even though many European countries were longstanding members of the Agreement, the fact that countries such as the United States, United Kingdom, Japan and other major commercial countries were not parties limited the territorial scope of protection that the Agreement could provide. Non-member countries perceived five major difficulties with the Agreement: 1) the severity of central attack; 2) the requirement for a home registration; 3) the severe time limits on national examination of international registration designations; 4) the inadequacy of the fee system to cover basic costs; and 5) the burdensome requirement to use French as the only official language. The Agreement has been revised several times but the revisions were never able to address the key issues that thwarted its universal acceptance. An attempt at a rival treaty, the Trademark Registration Treaty signed in 1973, also failed to achieve widespread popularity.
However, during the 1980’s as the idea of a European Community Trademark was evolving, the WIPO felt pressure to develop a system that would be more attractive to nonmember countries of the Madrid Agreement, especially to the European Community countries that were not yet party to the Agreement and were not likely to become so. Therefore, the WIPO undertook the task of drafting a new treaty that would make the Agreement more attractive to nonmembers. The Committee of Experts drafted two protocols, but only a single protocol was eventually adopted, which introduced modifications to the Agreement to entice nonmember countries into membership.
2.2 THE PROTOCOL RELATING TO THE MADRID AGREEMENT
On June 27, 1989, during the Diplomatic Conference held in Madrid, the “Protocol relating to the Madrid Agreement Concerning the International Registration of Marks” was signed. The Protocol entered into force on December 1, 1995 and became operational on April 1, 1996, coincidentally the same date that the European Community Trademark system officially became operational.
The Protocol covers the same subjects as the Agreement, but introduced important changes that address the defects in the Agreement perceived by nonmember countries. Since one goal of the Protocol was to make the Madrid System more attractive to commercially important countries, the United States participated in the process not only as an observer but also as an advisor. With this participation, the eventual accession of the United States to the Madrid System was seen as only a matter of time.
One of the most noteworthy changes introduced by the Protocol was the ability to base an international registration on either a home registration or a home application. This was seen as a great boon for trademark owners from countries with lengthy examination and opposition procedures, such as the United Kingdom, the United States and Japan. A Protocol applicant does not need a granted registration in order to obtain an international registration and extend it to the member countries.
In order to alleviate the examination time constraints of the Agreement, the Protocol provides that the national examination period for an extension of an international registration remains 12 months, but each country may opt to extend the period for up to 18 months, with an additional seven months in the event that a refusal is based on an opposition that is commenced before the 18-month period expires. A significant number of countries have already opted for the longer period.
English, along with French, became official languages of the Protocol and Spanish was later added. The applicant may choose the language of the application, unless the Office of Origin declares otherwise. It was hoped that this might lessen the burden on countries where French is not a customary language.
The system of fees was also modified by the Protocol. Rather than being bound by the nominal complementary fee discussed above under the Agreement, the member countries of the Protocol may elect to charge an individual fee that is more in keeping with its local fee structure.
The dependence of the international registration on the basic application(s) or registration(s) was also eased under the Protocol. Under the Protocol, the international registration still remains dependent on the basic application or registration during the first five years from the date of the international registration, so that if the basic trademark application or registration is refused by the Office of Origin, is cancelled, renounced, revoked, invalidated or has lapsed, either in whole or in part, during this period of time, or subsequently as a result of an action commenced during this time, the international registration and all of its extensions will likewise be affected. However, the Protocol introduced the concept of “transformation,” whereby the trademark owner may, within three months of the date of cancellation of the international registration, file national applications directly with the local Trademark Offices to replace the cancelled extensions, or portions thereof, and claim the benefit of the original priority date of the international registration.
Thus, even though the effects of “central attack” remain the same, the collateral damage can be mitigated as the trademark owner has the ability to retain the priority date established by the international registration. This is especially important in many countries where priority is determined by the date of filing, and not by the date of first use, and in cases where a trademark owner is involved in enforcement proceedings based on the national extension of an international registration.
Under the Protocol the period of protection has been reduced from 20 years, under the Agreement, to 10 years from registration, renewable for additional 10-year periods.
The Madrid Agreement and the Protocol are separate treaties that cover the same subject matter and that can, and do, have overlapping membership. The relationship between both of the treaties is defined by article 9sexies of the Protocol, which is known as the Safeguard Clause. Under article 9sexies members of the Madrid System are classified into three groups: i) members of the Agreement, ii) members of the Protocol and iii) members of the Agreement and the Protocol. If the Office of Origin and the designated countries are members of both treaties, the international registration is to be governed by the Agreement. If the Office of Origin and the designated countries are members of the Protocol only, the international registration will be governed by the Protocol. However, if the Office of Origin is a member of the Agreement, and designated countries include Protocol-only members as well as Agreement members, then the international registration will be governed by both the Protocol and the Agreement, depending upon which country is designated. Trademark owners whose countries are not party to both treaties may not extend their international registrations to countries not party to the same treaty. For example, a trademark owner from the United Kingdom, which is party only to the Protocol, may not extend its international registration to Egypt, which is party only to the Agreement.
The WIPO has expended much time and effort trying to lobby as many countries as possible to adhere to the Madrid System in order for it to become a true international registration system.
The Protocol was also ratified by the European Union, so that it is possible for the European Community Trademark Office to be designated in an application for an international registration and, likewise, for a European Community Trademark application or registration to serve as the basis for an international registration.
3. THE PROCESS FOR UNITED STATES TRADEMARK OWNERS USING THE MADRID PROTOCOL
Prior to accession to the Protocol, US trademark owners seeking to protect their marks abroad had to file separate applications in each country. The process could be time-consuming and expensive, constituting barriers to small- or medium-sized businesses, which were forced to forego protection of their trademarks and settle for limited protection in only a few “commercially important” countries.
Under the Protocol, the owner of a trademark application pending before, or a trademark registration granted by, the United States Patent and Trademark Office (“USPTO”) may file with the USPTO an application for an international registration, provided that the owner is a national of the United States, is domiciled in the United States or has a real and effective industrial or commercial establishment in the United States.
The application must specify to which countries the applicant wishes to extend the international registration and must contain other relevant information regarding the scope of protection desired and the basis for the application. The USPTO will then forward the application to the International Bureau, which will a) examine the application to ensure that formalities are met, b) issue an international registration and a corresponding certificate, c) publish the particulars of the international registration in the WIPO Gazette and d) forward the international registration information to all the designated countries where protection is sought.
Once the international registration is published in the WIPO Gazette, many of the designated member states that have opposition procedures calculate the national opposition deadline from the WIPO Gazette publication, although there are those that calculate the opposition deadline from the date on which the international registration particulars are republished in the national gazette.
The trademark offices of the designated countries then have a period of either 12 or 18 months, depending upon which period they have elected, in which to examine the international registration and notify the International Bureau whether any objections have arisen, either ex officio or by third parties. The International Bureau then notifies the owner of the international registration, or its representative, of such objections. The International Bureau does not intervene in any form regarding refusal of protection issues. If the owner of the international registration wishes to pursue protection of the international registration in a country where an objection has been raised, he must enlist a local agent or counsel to pursue further proceedings before the relevant national authority.
Notwithstanding the benefits of the Protocol, there are some concerns regarding the international registration and United States trademark registration processes that must be considered when filing an international application based on an application pending before, or registration granted by, the United States Patent and Trademark Office.
4. THE PERILS TO US TRADEMARK OWNERS
Despite the many advantages that the Protocol provides to US trademark owners, the road through Madrid is not without peril. Two peculiarities in United States Trademark Law, when compared with the trademark laws of other countries, are particularly disadvantageous to US trademark owners when using the Madrid Protocol: 1) the restrictive approach of the USPTO to specifications of goods and services and 2) the requirement of use to obtain registration.
In almost all countries outside of the United States, trademark registrations may be obtained for extremely broad specifications of goods and services and may be acquired without any actual use of the mark. Although in most cases such broad rights eventually become the subject of user requirements, most of these user requirements do not take effect until after the five-year international registration dependency period discussed above expires.
As a result of the narrow specifications of goods and services that must be used when registering US trademarks, corresponding international registrations obtained on the basis of such US trademarks are likewise limited in their protection. This proves extremely disadvantageous in those jurisdictions where issues of confusion with third party marks are decided on very narrow theories of what is considered confusingly similar. For example, a manufacturer of hiking boots in the United States who obtains a US trademark registration for hiking boots and obtains an international registration based on such US registration, may not be able to use the extension of that international registration against a conflicting mark for items of clothing in some countries because they adopt a very narrow interpretation of what constitutes similar goods. Therefore, US trademark owners must enlist trademark counsel that is aware of such idiosyncrasies in foreign trademark practice in determining whether they can best protect their mark by filing a broad national application or obtaining and extending a narrow international registration.
Likewise, the US user requirement is a double-edged sword to US trademark owners. In order for US trademark owners to achieve registration, they must use their marks in commerce in respect of the specified goods or services. If they obtain an international registration based upon a US application, and do not end up satisfying the user requirement in part or in whole, the application will not issue to registration, or will issue in respect of only some goods and services and not others that were originally specified. The international registration, and all of its extensions, on which such application is based will likewise be affected under the dependency provisions.
This situation will also prevent US trademark owners from using the Protocol to obtain protection for marks, or variations of marks, that they may not wish to use in the United States but may wish to use in other Protocol member countries.
On the other hand, the Madrid Protocol Implementation Act (MPIA) in the United States did not modify the US use affidavit requirements, but replicated sections 8 and 15 of the Lanham Act with sections 71 and 73 of the MPIA with respect to international registrations designating the US. Failure by the non-US owners of US international registration extensions to file the requisite affidavits will cause the cancellation of the trademark by the US Patent and Trademark Office. Likewise, if a US trademark owner is unable to satisfy such requirements with respect to its own US trademark registration on which its international registration is based, and the international registration is still in the dependency period, the international registration and all of its extensions will be cancelled.
US trademark owners must also be aware that their marks that may be considered registrable in the United States may not be considered registrable in other Madrid member countries under their national inherent registrability practices. The inability to amend the form of the mark in an international registration requires that US trademark owners obtain solid advice in advance of attempting use of the Protocol for borderline marks. Moreover, US marks on the Supplemental Register may not serve as a basis for an international registration.
Even though the Protocol enables US trademark owners to “file” for trademark protection simultaneously in several jurisdictions, local trademark laws and practices still govern the treatment of the national designations of the international registrations. Any problems that arise in the form of Official Actions or inter partes objections must be addressed in proceedings before the designated trademark offices. These proceedings are governed by the local trademark practice rules and require local representation. This also creates the potential for problems. The terms to respond to Official Actions in some countries are very short and necessitate that local counsel be available almost immediately upon receipt of notification of an Official Action or opposition. Should conflicts of interest issues arise with preferred local counsel, alternate counsel must be immediately available. Without a solid network of counsel, the delay caused in responding to the local Trademark Offices can be fatal.
Trademark owners must also be aware, or be made aware by their counsel, that there is a level of inconsistent treatment with respect to international registration extensions under national laws. In their haste to become members of the global trading club, many lesser developed countries have deposited their instruments of ratification to the Madrid Protocol without actually revising their national laws and procedures to accommodate the Protocol. As a result, the legal effect and enforceability of extensions of international registrations to such countries remains highly questionable. Accordingly, the Protocol may not be the best mechanism by which to obtain trademark protection in such countries.
Other countries in acceding to the Protocol have declared that they will not accept designations of International registrations with an effective registration date that precedes their own adherence to the Protocol.
The Madrid member states also include certain countries with which the United States does not have ideal diplomatic relations or which engage in practices that could lead trademark owners to violate US law. US trademark owners who attempt to extend their International registration to member states that are the subject of US embargo procedures, for example, could find themselves in violation of US law. Similarly, US trademark owners who attempt to comply with requests that would violate the US antiboycott laws with respect to the Arab Boycott of Israel may unwittingly find themselves in violation of US law and subject to criminal and administrative penalties.
Assignment and licensing agreements also raise important issues that deserve special attention as they may affect the US trademark owners’ rights when utilizing the Protocol. Although it is possible to record an assignment of an international registration and its extensions, either in whole or in part, it is important to note that the validity of such assignments with respect to international registration national extensions is still governed by local law. In particular, issues of assignment with goodwill, payment of transfer taxes, etc., must all be satisfied under the relevant local laws and failure to do may render the assignment ineffective in such jurisdictions.
In addition, international registrations may only be assigned to parties who are eligible to obtain international registrations, namely, parties who are nationals of, are domiciled in, or who have a real and effective commercial and industrial establishment in a country that is a member state of the Madrid Agreement and Protocol. This raises two important issues in assigning international registrations. International registrations and their extensions may not be assigned to parties who have no standing to obtain an international registration. For example, if the US joins the Protocol, but Canada does not, and a US trademark owner wishes to sell its mark, that is protected by an international registration, to a Canadian party, the Canadian party would not be able to take an assignment of the international registration. This creates innumerable problems in structuring such transactions and severely diminishes the value of the portfolio being sold.
In addition, US trademark owners wishing to take an assignment of an international registration and its national extensions may only do so to the extent that the international registration has been extended to another party to the Protocol. For example, a party from the United States, which would be a party only to the Protocol, taking an assignment of an international registration that had been extended to France (Agreement and Protocol country) and Algeria (Agreement only), could only own the French extension, not the Egyptian extension. As a result, great care must be taken when structuring trademark asset transfers where international registrations are involved and careful thought should be given to whether the advantages in obtaining international registrations outweigh the potential complications involved in transferring them.
In April, 2002, the Common Regulations governing the Madrid System were amended to provide that license agreements could be recorded by the International Bureau against international registrations. Previously, it was not possible for the International Bureau to record such agreements, which could only be recorded at the national level. Unlike the United States, numerous countries require that trademark license agreements be recorded in order to be effective. Notwithstanding this development, a significant number of countries have declared that a license agreement recorded by the International Bureau against an international registration will have no effect in their jurisdiction and trademark owners seeking to satisfy license recordal requirements must be aware of such inconsistent treatment.
The Madrid System has undergone significant changes in recent years and it is anticipated that more will come. Membership continues to increase every year. There are also proposals on the table that could greatly affect the functioning of the system in an overall effort to move toward a single agreement, rather than the current combination of the Agreement and the Protocol.
US trademark owners have a very useful tool in seeking protection for their trademarks in other countries at a fraction of the cost and time as before. However, the Protocol is not a perfect instrument, and is certainly not a panacea to the complex problems raised by protecting trademarks on a global basis. More than ever before, US trademark owners require expert counsel in the area of international trademark law to ascertain the maximum benefits that international registration can offer, while simultaneously determining how to overcome or prevent pitfalls that may arise in using the Madrid System.