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As American companies increasingly market and sell their products on an international scale, effective international protection of their trademarks becomes of paramount importance. Americans seeking to register their marks outside of the United States must apply separately in each country or region [FOOTNOTE 1] where they are seeking protection. This process of filing multiple applications is expensive, time-consuming and complicated. Often, the burden of filing multiple applications causes businesses to forgo comprehensive worldwide protection of their marks. In an effort to address this issue, the United States is moving closer to joining the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks. [FOOTNOTE 2] The Madrid Protocol, as it is known, provides an international system for simultaneously applying for trademark protection in multiple countries. [FOOTNOTE 3] U.S. membership in the protocol would enable American businesses to apply for trademark registration in foreign countries by filing a single international application in English, and making a single payment at a single trademark office. Joining the Madrid Protocol would not require any substantive change to U.S. trademark law. Instead, it would require the creation of new procedural mechanisms to accommodate the processing of international applications. [FOOTNOTE 4] While leaving current domestic trademark registration practices unchanged, United States membership in the protocol would provide an additional means for registering marks internationally. REGISTRATION PROCEDURE The Madrid Protocol permits applications for international trademarks to be filed in English or French. [FOOTNOTE 5] Under the protocol, applicants apply for an international registration by filing an international application with their country’s local trademark office, called the office of origin. [FOOTNOTE 6] The international application must be based on one or more national applications and/or registrations that the applicant owns for the identical mark in the office of origin. [FOOTNOTE 7] These prior applications and registrations on which the international application relies are called basic applications and basic registrations. [FOOTNOTE 8] The basic application or registration limits the scope of the goods and services that an international application can claim. Although the goods and services covered by the international opposition may be narrower than those in the basic application or registration, they cannot be any broader. The international application must state at least one country in which the applicant wishes to receive an extension of protection. The office of origin examines each international application to confirm that it corresponds to the basic application or registration on which it is based, [FOOTNOTE 9] and the office then transmits it to the International Bureau of the World Intellectual Property Organization (WIPO), a specialized agency of the United Nations. The International Bureau records the international application in the International Register and publishes it in the WIPO Gazette of International Marks. [FOOTNOTE 10] Provided the International Bureau receives the international application within two months of the application’s filing date at the office of origin, the International Bureau gives the application the same registration date [FOOTNOTE 11] as assigned by the office of origin. [FOOTNOTE 12] For those international applications that it receives outside of the two-month window, the International Bureau uses the date on which it receives the international application as the registration date. [FOOTNOTE 13] Next, the International Bureau forwards the international application to the appropriate trademark office of each country that the applicant has designated for an extension of protection. [FOOTNOTE 14] The receiving trademark office then reviews the international application. The office can reject it on any grounds under which it could reject marks filed nationally. [FOOTNOTE 15] The national office has up to 18 months in which to reject the international registration. [FOOTNOTE 16] If, at the end of 18 months, the national office has neither rejected the mark nor informed the International Bureau that the mark is or may be subject to a formal public opposition, then the national office loses the right to reject it. Thus, despite the “international registration date” given by the International Bureau, protection (other than common-law rights) only becomes effective in a country after each country’s local trademark office has had an opportunity to examine it. International registrations convey the same rights as if the subject mark was registered directly with each designated country. [FOOTNOTE 17] ADVANTAGES OF THE PROTOCOL The most obvious advantage of the Madrid Protocol to U.S. trademark owners (and applicants) is that it will enable them to obtain international protection of marks without requiring them to file separate applications or to obtain local counsel in each country where they want to register their marks. This may make significant cost savings possible. A recent press release by the White House [FOOTNOTE 18] gives the example of a U.S. trademark owner wishing to register a mark in 10 different countries. Under the existing system, this would require 10 separate applications at a cost of at least $14,000. [FOOTNOTE 19] Under the Madrid Protocol, the total cost would be approximately $4,700, resulting in savings of approximately 67% in total fees. [FOOTNOTE 20] Second, under the protocol, a single filing and a single payment is all that is needed to process renewals and amendments to the international registration. This single-filing approach contrasts with the multiple filings necessary to renew or amend foreign registration on a country-by-country basis. A related benefit of this single filing is that it ameliorates the burden of dealing with multiple currencies and burdensome administrative requirements imposed in many countries. Third, the Madrid Protocol eliminates the burden of complying with the various administrative formalities, such as legalization. International applications are exempt from any national legalization requirements other than those of the office of origin. [FOOTNOTE 21] Fourth, the Madrid Protocol paves the way for U.S. applicants to obtain an extension of protection to a Community Trademark (CTM), a single trademark registration that provides trademark protection throughout the 15 countries of the European Community. Because the protocol permits intergovernmental organizations with regional trademark offices to join, it is possible that the European Commission will eventually ratify the protocol. [FOOTNOTE 22] Ratification of the protocol by the European Commission would also make it possible for Europeans to base an application for an international registration on a CTM application or registration. Fifth, the protocol’s requirement that countries receiving requests for extensions of protection respond within 18 months constitutes a much shorter period than some of these countries take to process trademark applications. This opens the possibility of trying to use the protocol as a way to “fast track” trademark applications in certain countries. AND DISADVANTAGES Before advising clients exclusively to use the Madrid Protocol for their international trademark filings, it is important for attorneys to note a few disadvantages and shortcomings of the protocol. The much-ballyhooed cost savings of the Madrid Protocol may not be quite as significant for U.S. applicants as purported by the White House study. Several factors contribute to this. For example, all payments to the International Bureau (which then remits funds to the various countries for extensions of protection) must be made in Swiss currency. If the U.S. dollar is not faring well, this could significantly increase costs for American applicants. Additionally, attorney fees in the United States are generally significantly higher than those in foreign countries. So, while applicants outside the United States can avoid relatively expensive attorney fees in the United States by using the Madrid Protocol, U.S. applicants using the Madrid Protocol may see relatively nominal savings in foreign attorney fees. Moreover, local trademark agents will still be needed to prosecute applications in jurisdictions where international applications encounter objections due to local examination practices. In addition, trademark assignments are still problematic under the Madrid Protocol. Its registration system is open only to nationals of countries belonging to the protocol, along with other people or legal entities located in such a country. [FOOTNOTE 23] The protocol does not permit international registrations registered under the protocol to be assigned to entities in countries that are not signatories to the protocol. This could significantly limit an international registrant’s ability to transfer intellectual property assets. For example, a U.S. company that owns a Madrid-based registration cannot assign it to a Canadian company because Canada is not a party to the Madrid Protocol. Additionally, the protocol does not require that marks be assigned along with their goodwill, as the United States and several other countries require. A result of this is that assignments without the associated goodwill may be valid in some countries and invalid in others. Applicants also need to be aware of a tactic called the “central attack.” International registrations are dependent on the basic application or registration for five years. [FOOTNOTE 24] If the basic application or registration is cancelled as a result of a challenge initiated within five years of the international registration date, the registration is cancelled in all countries in which protection was extended. Fortunately, the Madrid Protocol has two mechanisms to remedy this situation. First, after the five-year period, the international registration becomes independent of the basic registration or application. [FOOTNOTE 25] Second, the protocol permits international registrations cancelled (at the request of the office of origin) in the initial five-year period to be “transformed” into a series of national applications in the countries in which the registrant requested an extension of protection. [FOOTNOTE 26] These national applications retain the benefit of the original filing date of the international registration. [FOOTNOTE 27] Thus, an international registrant whose basic application or registration is refused or cancelled will not automatically forfeit all benefits of the international registration. Transformation, however, has its own problems. For example, it requires new application fees for each national application. This process would likely be very expensive. Further, to maintain the priority date of the original international registration, the transformed national applications must be filed within three months from the date on which the international registration was cancelled. [FOOTNOTE 28] Timely processing of the transformation may be an issue for less nimble trademark owners. In addition, some countries, such as the United States and Japan, continue to require additional statements and declarations (such as declarations of use) that are not governed by the protocol. Registrants who fail to file the appropriate documents with these trademark offices will find their international registration protection cancelled in these countries. Furthermore, because these declarations are not governed by the protocol, each trademark office can dictate the language to be used. Further, there are only 50 signatory countries to the Madrid Protocol. [FOOTNOTE 29] Notably absent from this list is Canada, as noted above, and much of Latin America. Thus, when deciding whether an international registration is appropriate, applicants should consider the list of countries where they want trademark protection. Finally, the ease with which the Madrid Protocol will permit trademark owners to register for international protection could result in a glut of deadwood — inactive registrations that do nothing but prohibit other legitimate users from registering and using a mark. In the United States at least, this problem may be partially remedied by the fact that the U.S. Patent and Trademark Office will review the requests it receives for extensions of protection as though they were applications for registration on the Principal Register. [FOOTNOTE 30] This should at least prevent the registration of marks that are merely descriptive and without secondary meaning. United States accession to the Madrid Protocol potentially offers U.S. businesses easier and less expensive access to international trademark registrations. In particular, the ability to file applications and to record renewals and changes in ownership through a single filing could yield savings in terms of both time and financial resources. The protocol does, however, have several shortcomings. It prohibits assigning international registrations to entities outside of its signatory countries, and it leaves applications vulnerable to a central attack for five years. Before deciding to file an international application under the Madrid Protocol, applicants should carefully examine their long-term trademark strategy to see if separate national trademark filings would better serve their purposes.

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