Foreign Trademarks

Madrid Protocol: New System Cuts Costs in International Trademark Protection

On November 2, 2003, the United States signed onto one of the most important international trademark treaties in decades. This treaty, called the Madrid Protocol, offers significant economic benefits to businesses seeking overseas trademark protection. The treaty enables U.S. trademark owners to file a single international application with the U.S. Patent and Trademark Office (USPTO) that will provide trademark protection in 80 countries as of October 15, 2009, including many of the major U.S. trading partners in Europe, the former Soviet Union, Asia and the Pacific Rim.

The Madrid Protocol offers a kind of one stop shopping with attractive benefits, including reduced paperwork, less bureaucratic hassles, and significant reductions in the time and cost needed for multiple international trademark registrations. Small to mid-sized companies that previously may not have been able to afford international trademark protection will especially benefit from the Protocol's reduced costs and streamlined procedures.

However, there are potential pitfalls to the new treaty that owners need to weigh when planning for trademark registration.

How is the new treaty better than existing procedures? Unlike filing in individual foreign countries, or even the European Union Trade Mark (formerly "Community Trade Mark") centralized registration system in which one registration takes the place of national registrations in all European Union member countries, the Protocol offers a centralized filing procedure for acquiring and maintaining separate national trademark registrations in each designated Protocol member country. When the process is complete, the applicant will own a bundle of foreign trademark rights, all bearing the same International Registration number.

These new procedures should significantly reduce costs for international trademark protection. Although each Protocol member country can charge its normal application fee, there will be no need for local attorneys or agents, powers of attorney, or legalizations. Furthermore, there will be no need for translation: everything can be filed in English. Simple application forms and centralized maintenance filings will cut administration time. Owners familiar with international registration will be happy to learn that where examination took years in some countries, the Protocol limits examination to eighteen months.

What does this mean in dollars and cents? Foreign trademark applications typically run $1,500-$4,000 to file per country. Using the Madrid system, a company applying in 12 countries could save over $15,000 in initial filing costs alone. Additional costs would also be saved during the application process. Further, renewals, assignments, and name changes would be simplified. Instead of paying to file the paperwork in each country, only one set of papers will have to be filed for International Registrations in the USPTO.

What are the limitations and potential dangers in the new treaty? The Madrid Protocol allows for International Registration based upon a home application or registration. In other words, a U.S. company may use a U.S. trademark application or registration as the basis for seeking an International Registration in Madrid Protocol countries. The benefit here is that the international registration process is streamlined. The danger lies in the fact that the fate of the registration process is tied to the fate of a single home registration for a period of five years from the date of issuance of the International Registration. If the home application is abandoned or is canceled for any reason, the International Registration will also be abandoned or canceled, in its entirety. A procedure does exist, however, for preserving rights by transferring the International Registration into separate national applications, but it must be timely executed. It is therefore important to monitor the international application process carefully, or work with an agent who will monitor the process for you. Making one mistake or missing a single deadline or requirement could result in the loss of trademark rights in numerous countries.

There are other aspects of the treaty that could translate into major pitfalls for some U.S. companies. For instance, an International Registration has to list the same identification of goods or services found in the home application or registration. Since the U.S. Trademark Office requires more specific identifications than foreign countries such as China, an International Registration would offer narrower protection in China than that offered by way of a separate or independent Chinese trademark registration. To circumvent this potential problem, a trademark owner seeking trademark protection in China could consider filing a home application in China (as opposed to the U.S.), gearing the application to China's broad application categories. Alternatively, the owner could leave China out of the International Registration and file a separate trademark application in China.

The Madrid Protocol is like virtually any new international law or business agreement: it has both potential advantages and potential limitations. Both need to be carefully weighed, in each circumstance and in each country where trademark protection is desired. Because the Madrid Protocol is new to the U.S., the benefits and pitfalls are, to a degree, hypothetical. There are neither success stories nor horror stories to educate and guide U.S. applicants as they consider their options under this treaty. Trademark owners should proceed with caution to reap the maximum benefits.

For those who decide to file an International Registration under the Madrid Protocol, there are five basic steps to follow:
  1. Applicant will file a national trademark application for the purpose of establishing a home or basic application;
  2. The applicant will then file an international trademark application in the USPTO claiming priority from the home application along with a request designating those Madrid Protocol countries in which protection is being sought;
  3. The USPTO will submit the international application to the World Intellectual Property Organization (WIPO) in Geneva, Switzerland;
  4. WIPO will provide each designated member country with information regarding the international application and each country will then determine whether all local registration requirements are met by the subject application; and
  5. If all registration requirements are met in each designated country, or if the application is withdrawn from any country that has rejected it, WIPO will issue an International Registration and the mark will be published in the International Gazette. The International Registration will be effective for renewable ten-year terms.