Free trade
got you worried? Even though the economy seems to be
bouncing back, economists say it's a jobless recovery.
We've lost manufacturing jobs, some to foreign countries,
some to increases in efficiencies and improvements to
technology.
Here's
some good news: The trade barriers to obtaining international
trademarks are shrinking. The end result is lower legal
fees, always a welcome sight.
Beginning
this month, U.S. companies can take advantage of an
international agreement known as the Madrid Protocol
to obtain trademark registrations in many foreign countries.
A single trademark application is filed in the U.S.,
with extensions to those countries of interest. Using
the Madrid Protocol saves fees in both procuring and
maintaining registrations.
Many
companies don't even bother with foreign trademark registrations,
believing that their overseas sales don't justify the
legal expense. But, with the Madrid Protocol and its
streamlined registration process, the notion that international
trademark protection is too expensive deserves a second
look for those companies with international sales.
To
understand what the Madrid Protocol does, consider how
things worked before. Each country has its own system
of trademark registration. A U.S. trademark registration
is only good in the U.S. and its territories. Likewise,
a Canadian or Australian registration is only good in
those respective countries. Historically, these registration
systems have varied form country to country. As the
global economy encourages free trade, these registration
systems have slowly been coming closer and closer to
one another, a phenomenon known a harmonization.
Under
the old scheme, registering a trademark in another country
means hiring a lawyer in that country as a local representative.
The local lawyer files the application and carries it
through the local trademark office. In many countries,
the process of hiring a local lawyer turns out to be
formal; a written power of attorney is needed. The power
of attorney then has to be “legalized” meaning that
a notary public attests to the signature of the company
president, the Secretary of State attests to the notary
public and a representative of the foreign country,
in a consulate, attests to the Secretary of State. Got
it? Even if you don't, the point is that the process
is expensive. Many European countries have foregone
the legalization thing, but Latin American countries
still use it.
Once
the registration is obtained, it then has to be periodically
maintained, using the local lawyer.
What
the Madrid Protocol does is allow for companies to eliminate
the middleman, the local lawyer, in both procuring and
maintaining registrations in foreign countries. A U.S.
company can now file directly in foreign countries,
resulting in lower fees.
Named
after the city where the diplomatic conference to negotiate
the treaty was held, the Madrid Protocol is based on
a hundred-year-old system of international cooperation.
Where the earlier system reduced the barriers somewhat,
the newer system brings them down even further. A truly
barrier-less registration system would allow a single
registration to be valid throughout the entire globe.
Don't hold your breath on that one though because countries
are reluctant to give up all of their sovereignty rights
in trademarks.
No
system is perfect and this one certainly has some hiccups.
For example, the foreign registrations are exactly tied
to the corresponding U.S. registration. If the trademark
is in English, this works well for Canada, Australia
and much of Europe, but may lack marketing pizzazz in
countries like Japan or China. Some English words take
on an offensive meaning when used in a different culture.
Furthermore, not all countries are members of the Madrid
Protocol. Canada is a big hole. Its trademark registration
system requires a big change to meet the standard required
in the protocol. Latin American countries are missing
as well, although a push is being made to have them
join. Europe, in its quest to match the U.S. with a
relatively common market, has instituted a Community
Trademark, which amounts to a single registration for
many European countries. A Community Trademark, with
its advantages, is not available under the Madrid Protocol.
And in cases where the registration process encounters
difficulty with a local Trademark Office, a local lawyer
will still be needed.
Nevertheless,
the Madrid Protocol provides a low cost tool to obtain
foreign registrations in countries where a company has
marginal sales, but growth potential. This helps because
a tactic in foreign countries is for locals to leverage
a difference in trademark registration systems. In this
country, the trademark has to be used before the registration
is used. In many countries however, the trademark can
be registered without use; the owner has three years
after registration to use the trademark. What locals
do is register a trademark owned by a US company, but
not yet registered in a particular foreign country.
The illicit registration is then held for ransom. Akin
to early cybersquatters who would try to own internet
URL's like mcdonalds.com, it's perfectly legal.
With
free trade, there are winners and losers. With the Madrid
Protocol, the winners will be companies wanting inexpensive
registrations in foreign countries. The losers will
be… well I recently met with a European lawyer who argued
that the Madrid Protocol was bad. In this case, bad
can only mean good.
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