By Information and Promotion Division, Sector of Trademarks, Industrial Designs and Geographical Indications
Exporters often realize the importance of registering their trademarks abroad once it is too late, that is, once they are faced with counterfeiters or once they are accused of infringing the rights of others. The risks of doing so are high and the consequences may be extremely costly for a company’s entire business and export strategy.
The main function of a trademark is that of allowing a consumer to distinguish between similar products and services. Trademarks provide information about a product and about the origin of a product that may not be visible at first sight. When a consumer is satisfied with a given product it is in everybody’s (the consumer’s and the producer’s) best interest that the former may be able to identify it in order to purchase it again in the future. Trademark protection therefore enables successful exports to be easily identifiable aiding to the formation of loyal customers in foreign markets based on their trust in the products bearing certain trademarks.
Registering a trademark in foreign markets gives a company the exclusive right to commercialize its products in those markets. This not only provides a solid basis to stop counterfeiters but also ensures that the exporting company enjoys exclusivity over what may be one of its most valuable business assets. Registering a trademark abroad also provides the opportunity to license the trademark to others (often in conjunction with other IP rights) or may be the basis for a company’s franchising or merchandising strategy.
The International Registration of Marks
The international route of registration of marks refers to the Madrid system of international registration of marks, which is governed by two treaties: the Madrid Agreement Concerning the International Registration of Marks, which dates from 1891 and the Protocol Relating to the Madrid Agreement, which came into operation in 1996. The system, administered by the World Intellectual Property Organization (WIPO), provides the opportunity of ensuring the protection of marks in several countries by filing one single international application. It does not substitute national trademark rights and provides a legal bridge between the national and global market place, by facilitating the protection of foreign trademarks within the member country and of national trademarks abroad.
The objectives of the system are two-fold: first, to simplify the procedures with a view to protecting a mark with much lower costs and formalities; second, to facilitate the subsequent management of that protection, since an international registration is equivalent to a bundle of national registrations. There is only one registration to renew, and changes such as a change in ownership or in the name or address of the holder, can be recorded in the International Register through a single simple procedural step. As such, this global protection system, by providing cheaper and simpler procedures, makes the possibility of protecting trademarks in a large number of countries a reality for many enterprises, especially small and medium-sized enterprises, which otherwise would have never been able to afford protecting their marks internationally. In turn the system contributes to fairer competition and economic development, both at a national level and regionally and globally, which is also in the interests of SMEs.
At the end of 2003, some 412,000 international registrations were in force, which is equivalent to 4.9 million national registrations. During that year, more than 21,800 registrations were effected, containing 262,000 designations, an average of 12 designations per registration. Compared to previous years and despite a slight decrease in the number of new registrations, the total number of transactions under the Madrid system continued to increase for the sixth consecutive year.
The trend towards growing membership and interest in the Madrid system is continuing. In 2003, seven countries joined the system, bringing the overall number of member States to 76. The United States of America joined the Madrid Protocol on November 2, 2003. Albania, Cyprus, Iran (Islamic Republic of) and the Republic of Korea also acceded to this treaty that year, while Croatia, Namibia and Syria did so in January, April and May 2004, respectively.
The European Community announced its intention to accede to the Madrid Protocol following the adoption in 2003 by the Madrid Union Assembly of amendments to the Madrid Regulations in order to allow for the establishment of a link between the Community Trademarks and the Madrid Protocol. In the same year the Assembly of the Madrid Union also adopted Spanish as a working language of the Madrid Protocol, making the system more attractive, especially for Latin American countries, that are at present largely outside the system. Trademark holders are allowed to file international applications under the Protocol in Spanish as of April 1, 2004. These recent events and in particular the sharp expansion of the geographical coverage of the Madrid system are significantly increasing its usefulness and attractiveness, especially for SMEs.
It should be noted that for a trademark owner in a country, which is not a party to the International System, the only way to obtain protection abroad is to apply separately for registration in each of the countries concerned. This traditional method has become extremely cumbersome, time consuming and costly because it entails getting involved with different legal requirements (one can estimate that there are 200 jurisdictions throughout the world for registration of trademarks) and languages of the respective countries, paying fees in different currencies and engaging a local lawyer. All these formalities have also a cost, which goes well beyond the fees charged by the Offices. Agent fees, fees for the issuance of supporting documents, for their certified translations, etc. should also be taken into account. Moreover, obtaining a portfolio of national registrations is not the end of the process. If the company changes its name or address, or if there is a change of ownership of the mark, this should be recorded in each of the respective countries, involving once again different legal procedures, languages and fees. A large enterprise generally has resources for these purposes while for an SME, it will simply mean that trademark protection abroad is out of reach.
Using the Madrid system, SMEs can obtain protection of their marks in all member States (except the country of origin) with fewer formalities and far less expenditure: the applicant needs only to file a single international application, in one language, with one set of fees payable in one currency, resulting in a single international registration with only one renewal date to monitor. No supporting documents, translation or legalization of signature are required.
It goes without saying that reduced costs can enhance profits for SMEs and lead to considerable savings, which can encourage them to seek broader protection of their trademarks abroad, thereby facilitating and fostering the marketing of their branded products in foreign countries. In fact SMEs can perhaps benefit the most from advantages afforded by the Madrid system. It is not by chance that the 412,000 international trademarks registrations in force at the end of 2003 belonged to some 134,000 different owners; and that over 100,000 such owners are enterprises holding one or two international registrations.
This shows that the Madrid system offers an attractive route for SMEs to protect their marks. As to WIPO, its strategy on that matter has a clear and overreaching objective: to render every assistance to SMEs in all sectors to enhance their competitiveness and to ensure their penetration of foreign markets through a wider and more effective use the Madrid system.
For further information, please contact: intreg@wipo.int