The Madrid Protocol

This development is related to increasing globalization in two ways. First, from a business standpoint, there is recognition of the worldwide value of trademarks, requiring protection worldwide. There is also a remarkable concession to the widespread use of English (and French) in international commerce. Whether in Beijing, Moscow or Paris, trademark applications may be filed in English. Second, this development is related to treaties requiring international harmonization in intellectual property protection, including the North American Free Trade Agreement (NAFTA), the General Agreement on Tariffs and Trade (GATT), Trade-Related Aspects of Intellectual Property Rights (TRIPS), and to the formation of the World Trade Organization (WTO). The WTO delegates intellectual property enforcement to WIPO, which also administers the Madrid Protocol.

Contrast with International Trademark Protection Today

Currently, trademark owners must register their marks country-by-country, which requires referral through U.S. international trademark counsel to foreign associates and translation and filing in the local language.

The cost varies from $1,000 to $3,000 per mark per country just for the filing (not including any follow up required).

The Madrid Protocol will cut those costs by about 50%, to about $500 to $1,500 per mark per country. These new registrations will not require translation or use of a foreign agent.

There are also currently some country group registrations possible: European Community (CTM) (15 countries); Andes Pact; Central American; and African

International trademark protection enhancement will differ from the present system available for U.S. companies:

• Incoming foreign fees will be reduced (but still required if there are PTO objections or oppositions);
• Outgoing foreign fees of foreign associates will be reduced (but still required if there are foreign trademark office objections or oppositions);
• Searching, clearance, and watching counseling will be more complex and costly, and it will require searching with WIPO and key foreign trademark offices;
• Balancing narrower goods and services recitals in the United States with broad ones permitted elsewhere will be required;
• Balancing the U.S. use requirement with other countries' will be required;
• Higher volume of inbound PTO activity, and necessity to process, and search, clear and watch, some applications in French.

Other Details About the Madrid Protocol

The Madrid system of international registration of marks is applicable among the countries that are party to the Madrid Agreement or the Madrid Protocol. The Madrid Agreement and Madrid Protocol are parallel but independent treaties, with different but overlapping membership. The United States will become a party to the Protocol only. The result is that there are three kinds of international applications: 1) an international application governed exclusively by the Agreement; 2) an international application governed exclusively by the Protocol; 3) an international application governed by both the Agreement and the Protocol.

An international application governed exclusively by the Agreement must be based on a registration of the mark in the country of origin and must be in French.

In contrast, U.S. companies' applications will be governed exclusively by the Protocol, and therefore:

• May be based on either a registration or an application for registration of the mark in the country of origin;
• May be in either English or French (the Office of Origin may, however, restrict the applicant's choice to one of these languages); and
• The applicant's country of origin is any country party to the Protocol in which he has a real and effective industrial or commercial establishment or domicile, or of which he is a national.

An application for international registration must be presented to the International Bureau through the Industrial Property Office (Patent Office) of the country of origin (referred to as the 'Office of Origin').

Action Steps for U.S. Trademark Owners

• Use foreign subsidiaries to reduce the cost of certain international filings now. U.S. companies that have foreign affiliates or offices in countries that are parties to the Madrid Protocol do not have to wait until November 2003. Take advantage of international registry filings now.
• Searches and watches should cover the International Registry now. Because of the growth of the WIPO International Registry of Madrid Protocol registrations, trademark owners should now consider a search (and ongoing watching services, described below) of the Registry. In the future there will be more potential for conflict between U.S. and non-U.S. marks because there will be more foreign marks protected in the United States and vice versa.

When available in 2003, begin using the International Registry for most foreign filings, where appropriate. However, while the costs are higher, there may be some situations in which a U.S. trademark owner might still prefer country-by-country registrations, including the following:

• Your international use will be confined to non-member countries. (eg Canada or Mexico, until they become members.)

• Your international use will be confined to Europe or other areas with multi-area registrations, which may lower costs to comparable levels. (There are pros and cons of the European CTM versus the International Registry.)
• Your U.S. registration (country of origin) is in danger of being refused, opposed, or canceled, or needs to be amended, or has a description of goods or services that is exceedingly narrow. Many Madrid Protocol countries permit a broader description of goods than in the United States.
• Your designated country registration is likely to encounter substantial refusal or opposition, based on a search or other information. Any cost savings could be reduced in this situation.

Discuss your particular situation with your trademark attorney to determine whether an international registration or country-by-country registration is advisable

Gary R. Duvall specializes in franchise, licensing and trademarks for Dorsey & Whitney LLP. He is a member of this newsletter's editorial board.

The Madrid Protocol has established a relatively new international trademark registry in Geneva, Switzerland, managed by the World Intellectual Property Organization (WIPO). Trademark applications can be filed in one office in one language for protection in many countries, rather than in the individual trademark offices and various languages of the desired countries. There are currently approximately 60 member countries that accept these applications.

The United States has agreed to join, and U.S. companies can actually file by about the first week in November 2003. (The House and Senate passed the accession to the Madrid Protocol in October 2002.) The next step is the promulgation of rules by the U.S. Patent and Trademark Office (PTO), which could occur at any time. At last, the United States will join 60 countries, including all of the major economies of the world except Canada, Mexico and Brazil in a streamlined international trademark registration. Once the United States joins, these and other countries are expected to eventually join.

Franchisors who operate on an international scale will find that the Madrid Protocol potentially provides them with greater protection of their valuable trademarks. The Protocol also streamlines the trademark application process and reduces fees. It is a proverbial 'win-win' that helps accelerate franchising globally to the benefit of franchisors, franchisees, and customers.

This development is related to increasing globalization in two ways. First, from a business standpoint, there is recognition of the worldwide value of trademarks, requiring protection worldwide. There is also a remarkable concession to the widespread use of English (and French) in international commerce. Whether in Beijing, Moscow or Paris, trademark applications may be filed in English. Second, this development is related to treaties requiring international harmonization in intellectual property protection, including the North American Free Trade Agreement (NAFTA), the General Agreement on Tariffs and Trade (GATT), Trade-Related Aspects of Intellectual Property Rights (TRIPS), and to the formation of the World Trade Organization (WTO). The WTO delegates intellectual property enforcement to WIPO, which also administers the Madrid Protocol.

Contrast with International Trademark Protection Today

Currently, trademark owners must register their marks country-by-country, which requires referral through U.S. international trademark counsel to foreign associates and translation and filing in the local language.

The cost varies from $1,000 to $3,000 per mark per country just for the filing (not including any follow up required).

The Madrid Protocol will cut those costs by about 50%, to about $500 to $1,500 per mark per country. These new registrations will not require translation or use of a foreign agent.

There are also currently some country group registrations possible: European Community (CTM) (15 countries); Andes Pact; Central American; and African

International trademark protection enhancement will differ from the present system available for U.S. companies:

• Incoming foreign fees will be reduced (but still required if there are PTO objections or oppositions);
• Outgoing foreign fees of foreign associates will be reduced (but still required if there are foreign trademark office objections or oppositions);
• Searching, clearance, and watching counseling will be more complex and costly, and it will require searching with WIPO and key foreign trademark offices;
• Balancing narrower goods and services recitals in the United States with broad ones permitted elsewhere will be required;
• Balancing the U.S. use requirement with other countries' will be required;
• Higher volume of inbound PTO activity, and necessity to process, and search, clear and watch, some applications in French.

Other Details About the Madrid Protocol

The Madrid system of international registration of marks is applicable among the countries that are party to the Madrid Agreement or the Madrid Protocol. The Madrid Agreement and Madrid Protocol are parallel but independent treaties, with different but overlapping membership. The United States will become a party to the Protocol only. The result is that there are three kinds of international applications: 1) an international application governed exclusively by the Agreement; 2) an international application governed exclusively by the Protocol; 3) an international application governed by both the Agreement and the Protocol.

An international application governed exclusively by the Agreement must be based on a registration of the mark in the country of origin and must be in French.

In contrast, U.S. companies' applications will be governed exclusively by the Protocol, and therefore:

• May be based on either a registration or an application for registration of the mark in the country of origin;
• May be in either English or French (the Office of Origin may, however, restrict the applicant's choice to one of these languages); and
• The applicant's country of origin is any country party to the Protocol in which he has a real and effective industrial or commercial establishment or domicile, or of which he is a national.

An application for international registration must be presented to the International Bureau through the Industrial Property Office (Patent Office) of the country of origin (referred to as the 'Office of Origin').

Action Steps for U.S. Trademark Owners

• Use foreign subsidiaries to reduce the cost of certain international filings now. U.S. companies that have foreign affiliates or offices in countries that are parties to the Madrid Protocol do not have to wait until November 2003. Take advantage of international registry filings now.
• Searches and watches should cover the International Registry now. Because of the growth of the WIPO International Registry of Madrid Protocol registrations, trademark owners should now consider a search (and ongoing watching services, described below) of the Registry. In the future there will be more potential for conflict between U.S. and non-U.S. marks because there will be more foreign marks protected in the United States and vice versa.

When available in 2003, begin using the International Registry for most foreign filings, where appropriate. However, while the costs are higher, there may be some situations in which a U.S. trademark owner might still prefer country-by-country registrations, including the following:

• Your international use will be confined to non-member countries. (eg Canada or Mexico, until they become members.)

• Your international use will be confined to Europe or other areas with multi-area registrations, which may lower costs to comparable levels. (There are pros and cons of the European CTM versus the International Registry.)
• Your U.S. registration (country of origin) is in danger of being refused, opposed, or canceled, or needs to be amended, or has a description of goods or services that is exceedingly narrow. Many Madrid Protocol countries permit a broader description of goods than in the United States.
• Your designated country registration is likely to encounter substantial refusal or opposition, based on a search or other information. Any cost savings could be reduced in this situation.

Discuss your particular situation with your trademark attorney to determine whether an international registration or country-by-country registration is advisable

Gary R. Duvall specializes in franchise, licensing and trademarks for Dorsey & Whitney LLP. He is a member of this newsletter's editorial board.