The Madrid System Turns 30: The Pros and Cons of Using the Madrid Protocol in the United States and for U.S. Based Companies

For trademark owners who embrace the system, and, in particular, small, emerging companies, the Madrid System can be a one-stop shop where a home country application is filed and then extended to each foreign jurisdiction of interest, all managed through one central repository: WIPO. One fee is paid, and unless the foreign applications are refused or require additional amendments, no additional legal counsel in the foreign jurisdictions are required to be hired. Moreover, all of the international registration renewals, attorney correspondence information, assignments and other documents pertaining to the international registration (and the extended countries) can — and must — be filed through WIPO to effectuate any changes pertaining to the international registration. The one exception is that the international registration may not be assigned to a company that is located in a country that is not a member of the Madrid System. With the number of members currently, and with the addition of Brazil and Canada, this is becoming less and less of a concern.

Speed of Examination

In order to participate in the Madrid Protocol, member countries must agree to examine the applications within either 12 or 18 months. Brazil, for instance (according to its Intellectual Property Office), has reduced its backlog of trademarks to be able to join the Madrid Protocol, cutting its backlog of trademark applications from 358,776 at the end of 2017 to 189,155 by the end of 2018. The timeline between filing and the technical examination of trademarks was reduced from 48 months (applications with opposition) and 24 months (applications with no opposition) to 13 and 12 months, respectively. It hopes to further reduce that timeline to eight and four months respectively by 2021. Given the speed of examination of Madrid applications, this can be an advantage — especially for trademark owners keen on securing registrations to bring Uniform Domain Name Disputes or to otherwise enforce their marks.

Reasonable Fees

Many trademark owners cite lower costs as one of the primary benefits and advantages of using the Madrid System. However, if the foreign applications are refused in the extended jurisdiction, then the cost savings might be erased, as local counsel will need to be hired and ultimately, the local application may need to be refiled and/or it may have been cheaper to have filed a national application in the first instance.

Limitations of the Madrid System

Central Attack

For all users of the Madrid System, it's important to note that if you choose to use the Madrid Protocol for your international registration, and if your home country registration is abandoned or otherwise cancelled within the first five years of registration, then all the foreign applications and registrations under the Madrid Protocol will similarly be cancelled. This concept is known as central attack. It is possible to convert the local marks, but at considerable expense. Two preventative measures spring to mind: 1) it is critically important to undertake a full availability search in your home country to try to mitigate any risk of a substantive rejection and/or cancellation action; and 2) before embarking on an international strategy through the Madrid System, be sure your plans in your home country, especially if that country requires continued use, will not change for at least five years.

Limitation to File In Asian Characters

For all users of the Madrid System, another limitation of the system is the inability to take advantage of filing your mark in Chinese, Japanese or Korean characters which is how most word marks are best protected throughout SE Asia. Filing in Arabic characters is not necessarily the best strategy for protecting a brand, even one from a Western country, and utilizing local counsel to best translate your word mark into Chinese, Japanese, or Korean characters to avoid any unintended meanings is always a best practice. Of course, the trademark owner may always file an additional application to cover these special filings, but if the budget is tight, then the Madrid System may not be the best strategy if you are doing business in China, Japan and/or Korea. (These countries are named in particular, as they are among the three largest in the Madrid System that have special characters. However, Thailand and Vietnam are also members of the Madrid System, but Taiwan, Hong Kong and Macao are not members.)

Inability to Take Advantage of Broader Identification

For U.S.-based companies who rely upon the Madrid System to expand internationally, it's important to note that using the Madrid System may not be in the trademark owner's best interest, as the identification of goods and services are more narrow in the U.S. than they likely will be in any other country in which the trademark owner is seeking protection. Since the international registration will be based on the home country application, in this case the U.S., the trademark owner could be giving up a scope of protection it does not need to when extending protection overseas. In the EU for example, the trademark owner can take advantage of a broader description of goods and services allowing for greater trademark protection and enforcement strategies. And in a number of countries, filing for the class heading is still allowed. While it is best to discuss with local counsel whether that may be a best strategy for your client, relying on the narrow identification in the U.S. will prevent you from broadening your identification.

Limitations Imposed By the U.S. System on Madrid Applicants

There are a number of limitations that the U.S. Trademark Rules of Practice impose on applications that come through the Madrid System that are not imposed on U.S. nationally filed applications or those that are filed based on a foreign registration. Before you initiate a Madrid application in your home country, and choose to extend into the United States, you may wish to consider these carefully to ensure you secure the protection you desire.

Inability to Amend to the Supplemental Register

In the United States, if your application receives a "merely descriptiveness" refusal of registration and the trademark owner files an Amendment to Allege Use, the mark may be amended to a secondary register called the Supplemental Register. Applications through the Madrid Protocol are not eligible to be amended to the Supplemental Register according to TMEP 1904.02(a), even if the trademark owner can prove the requisite use in the United States. As a result, if you are not successful in circumventing the descriptiveness refusal of registration, the application will be refused registration by the USPTO and you will either not have protection for your mark in the U.S. or you will have to refile under Section 1(a).

Inability to Change Class Numbers or Add Classes

In the United States, the specificity with which goods and services must be described is very particular and more narrow than in other jurisdictions. As a result, and merely as an example, what may be properly classified into Class 41 in your home country, may in fact be properly classified into Class 42 in the U.S. If the application were filed based on Section 1 or Section 44, such changes would be allowed. But, as a Madrid Protocol application, you may not move goods or services between classes, even if the class is already a part of your application, nor may you add any additional classes to your application, even if you are willing to pay for the additional class, as outlined in TMEP 1904.02(b).

Inability to Modify Marks

Like many jurisdictions, the United States does not allow marks to be modified after filing. Hong Kong is one of the only jurisdictions I know of that allows marks to be substantively modified. However the United States does allow for non-material modifications to marks, and while a "non-material modification" is always a question of fact (see, TMEP 807.14), generally the addition of punctuation is considered a non-material alteration (there are others). For marks filed under the Madrid Protocol, alterations of any kind are not permitted, as outlined in TMEP 807.13(b). Therefore, if upon renewal the mark has been altered in a non-material way, the registration will not be able to be renewed in the U.S., and a new application will have to be filed and the priority date will be lost.

Analysis

The Madrid System can be a smart choice if your identification of goods and services is brief and uncomplicated, as it will likely not present any issues when extended into other jurisdictions. However, for most trademark owners, who have a more detailed and complicated identification of goods and services, the Madrid System may not be the best option when considering the above limitations. For these reasons, it's important to carefully consider your international filing strategy and discuss it in advance with foreign counsel to realize the greatest efficiencies when executing your global trademark portfolio strategy.

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Stacey C. Kalamaras is the founding partner of Kalamaras Law Office LLC. She has extensive intellectual property experience with a particular focus on trademark prosecution and enforcement. She has protected some the world's largest brands in more than 150 countries. She can be reached at [email protected].