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In 1941, when it was predicted that England would get its neck wrung like a chicken, Winston Churchill famously dismissed that prophecy of doom: “Some chicken! Some neck!” Today, skeptics warn that the Madrid Protocol is only one of a number of more-or-less flawed schemes for getting international trademark protection. But looking at the Protocol as a dynamic addition to an already dynamic international system for protecting valuable brands, I can only think: “Some scheme!” All of the things that could go wrong using the Madrid Protocol might go wrong, and the chicken might get its neck wrung. But wouldn’t it be better to say, with Churchill, “Some neck!” and go about taking full advantage? Under what is called the Madrid system, trademark application practices are being harmonized worldwide. Instead of multiple applications in multiple countries, one application to one national trademark office can be sent, under the auspices of the World Intellectual Property Organization, to other national offices — although each country still makes its own decision on granting the trademark. The United States becomes a full player in the system this November. The Madrid Protocol is good for companies doing business internationally, and here is why: You can make a million with the Madrid Protocol. Some protocol! SAVE ON FILING FEES, GRANT FEES, ATTORNEY FEES, TRANSLATIONS AND NOTARIZATIONS There is only one good way to figure the raw savings in the cost of trademark filing under the Madrid Protocol: crunch the numbers. Like just about everything else related to the Protocol, this has been made easy through the use of electronic systems. Enter a simple set of data into the “Fee Calculator” provided on the Web site of WIPO ( www.wipo.int/madrid ), and you’ll see where the savings come. There are now 57 countries receiving applications under the Protocol. The WIPO filing fees for making one trademark application in all 57 countries under the Protocol, assuming a modest five classes of goods and services (my last filing was for 21 classes), come to a little more than $15,000. An additional fee charged by the U.S. Patent and Trademark Office (the PTO will provide its own fee calculator in due course) adds $500, making the total cost about $15,500. What does it cost for a U.S. company to file in 57 countries now? A reasonable estimate for a five-class application might be $1,800 per country — including government fees, foreign agent fees, and translation and notarization costs. This calculates out to $102,600. (In addition, some countries allow only one class per national application, so that five separate applications would have to be filed. Under the Protocol, those countries are required to accept multiple-class applications.) In this example, then, the savings from using the Madrid Protocol to file a trademark application for five classes in 57 countries would be about $87,000. (If the application were filed in only the 24 richest countries — and roughly biggest markets — the savings would still be more than $20,000.) At a modest two applications per year (a company with a global business can easily file tens, and sometimes hundreds, of applications per year), the total savings would exceed $1 million after six years. Not only that, but the Protocol does not allow a member country to charge an additional fee at the time the mark is granted, resulting in more savings. Because of the Protocol, there are other time-and-money benefits. Since only one application has to be filed rather than dozens, attorney fees will be lower, and the savings in in-house staff hours will be substantial. In extreme cases — for example, in countries where good local agents are hard to find — the Protocol can turn the task of filing a trademark application from difficult or even impossible to easy and reliable. And the 18-month time limit for refusal of the application by the receiving countries means that feedback will come quickly — in many cases, much more quickly than it does now. PAY LESS TO RECORD CHANGES IN AN INTERNATIONAL TRADEMARK PORTFOLIO One of the most common changes in corporate identity is a change of name or address. Whenever this happens, requests to update documents must be filed for all existing trademark registrations and pending trademark applications worldwide. Recording these changes is notoriously expensive, requiring a local agent, translation of all documents into the local language, (often) notarization by a high-priced local official, and conversion of currency into the local species with attendant charges — not to mention the time delays and attorney fees to coordinate everything. Consider just one common problem: The same trademark will have different registration numbers for each national registration. Some of these numbers will change every time the mark is renewed. And if a given number is not exactly right in a request to record changes, the request will be refused and the process will start all over. Under the Protocol, recording a change in ownership or a change in name and address for each trademark requires only one document, filed in one office, with one registration number, and one fee in one currency, to take effect in all Protocol countries. This may be the single, most-significant area of savings under the Madrid Protocol. One large European luxury goods company, after changing its name under a reorganization, budgeted nearly $1 million to make that change in all trademark files worldwide. Of that budget, a mere $20,000 went to countries within the Madrid system; the rest went to the countries not party to the system. USE ELECTRONIC FILING FOR 57 FOREIGN OFFICES What would you have said if I had told you that a new international system was being adopted, which will allow electronic filing in more than 50 countries worldwide (with more to come soon) in English, and that all fees can be paid electronically in one lump sum in U.S. dollars? To anyone familiar with the slow pace of international legal harmonization efforts, such a possibility would seem years in the future; most would doubt that it could ever be possible at all. Yet this system will be in place for U.S. trademark owners as of Nov. 2 of this year. In a remarkably forward-looking burst of creativity, the PTO has decided that all applications filed through it under the Madrid Protocol must utilize its user-friendly and already proven Web-based procedure, the Trademark Electronic Application System. All fees (including international fees) will be payable electronically to the PTO, and all information will be transmitted from the PTO to WIPO electronically for further transmittal (albeit not electronically) to the 57 national offices that are members of the Madrid Protocol. Those members include a good number of developing countries that are not likely to go online in their national trademark processing for some time to come. Indeed, a central electronic filing system for industrialized countries would be just as distant if not for the Protocol. This is simply progress that money can’t buy. ACQUIRE FOREIGN TRADEMARK PROTECTION ON THE CHEAP Billion-dollar companies like McDonald’s and Coca-Cola have large and sophisticated legal staffs dedicated to international trademark protection. Companies that sell on four continents have no choice but to protect their brands on four continents. But for many small and midsize enterprises, international trademark protection has been a pipe dream. However necessary it may be in this Internet age to protect brands internationally, the costs are just prohibitive. So competitors from around the globe are free to enter the cybermarket with few trademark barriers to hinder them. As a mechanism for helping smaller companies obtain foreign rights, the Madrid Protocol can be considered nothing less than astounding. The cost of protection in many countries simply will be the cost of filing the application. Once an international application has been filed, the clock starts ticking: If a designated national office does nothing within 18 months, protection will be automatic with no additional fees. Even if the designated office refuses protection for some of the goods or services requested, and the company does nothing to respond to that refusal, protection for the remaining goods and services will still be automatic. And there will be no post-registration fees for 10 years, at which point one renewal fee is due. (I did say “cheap,” not “free.”) Since it is the expense of responding to refusals that makes the costs of international trademark protection skyrocket, and since many countries will not issue refusals, a Madrid Protocol strategy can bring at least partial international protection within the means of many smaller companies that could not otherwise afford protection abroad. But what about the cost of trademark enforcement in foreign countries? Won’t that be beyond the means of most small and midsize enterprises? Certainly litigation is not cheap. But even where going to court is financially out of the question, a lot of infringement problems can be resolved cheaply. Many can be fixed by sending an effective cease-and-desist letter along with a current trademark registration. And, as the next section will show, merely having a registration may prevent problems that would otherwise occur. In short, a very minimalist strategy could garner smaller companies effective trademark protection in a number of foreign countries with a modest investment. The million to be made here might be the most satisfying million of all — profitably exploiting an active international market, while enjoying cost-effective trademark protection. USE INTERNATIONAL DATABASES TO WARN OFF INFRINGERS WORLDWIDE The best offense is a good defense. The best cure is prevention. Trite sayings, to be sure, but true nevertheless. The cheapest way to fight trademark infringement is to prevent it before it starts. And the best way to prevent trademark infringement is to announce to the world that you have rights and will enforce them. The Madrid Protocol databases, which are maintained by WIPO, are available either online or on CD to everyone. They are easy and cheap to access, and they are already being consulted even by businesses in non-Protocol countries. While much of the information in WIPO’s databases appears in French, all registrations under the Madrid Protocol are included in full in English as well. It will soon become commonplace in the United States to check these databases before adopting trademarks, and the rest of the world is likely to follow suit. That makes the databases an efficient and effective way of letting the world know about your trademark ownership. In essence, they offer worldwide advertising of your international rights. TURN STUMBLING BLOCKS INTO STEPPINGSTONES I: DESCRIPTION OF GOODS AND SERVICES Some of the criticisms of the Madrid Protocol are well-founded. One major stumbling block arises because trademark rights in the United States are based purely on use, whereas in many other countries, they are based on the administrative act of filing for trademark protection. The relevant goods and services in a U.S. trademark application must be described with particularity to reflect the actual goods and services that will be used in conjunction with the trademark. Unfortunately, since the list of goods and services in a Madrid Protocol application cannot be broader than the list in the U.S. registration, and foreign protection cannot be broader than the protection sought in the Protocol application, trademark owners may end up receiving narrower protection than they might have obtained by filing directly in the various countries. Rather than view this stumbling block as a reason to forgo the other advantages of the Madrid Protocol, let’s ask how it can be used as a steppingstone to effective international protection. One option exists for companies that have foreign subsidiaries in Protocol member countries. International registrations could be filed by those subsidiaries (as long as they qualify as “real and effective industrial or commercial establishments”) with the broader list of goods or services allowed in their home countries. Because of the liberal assignment rules under the Madrid Protocol, the international registration (along with all extensions of protection under the Protocol) could then be assigned back to the parent in the United States. In this way, the international registration could contain a broader scope, even if the U.S. rights themselves are more limited. For companies without foreign affiliates, there will necessarily be a trade-off between limiting the scope of foreign protection and the user-friendly renewal and recordal procedures under the Protocol. That trade-off should be evaluated on a case-by-case basis. The Protocol could be used, for example, in countries where the narrower scope would do little harm, while national or regional filings could be used to obtain the maximum scope of protection in countries where a broad range of products or services will be marketed. Thus the most effective strategy, at least for now, may be a hybrid international trademark portfolio, utilizing a combination of national filings, Madrid Protocol registrations, and applications for regional protection like the European Community Trade Mark. TURN STUMBLING BLOCKS INTO STEPPINGSTONES II: FIVE-YEAR DEPENDENCY A second stumbling block is the Madrid Protocol’s five-year dependency period, during which the international registration will be canceled or limited if the home application or registration is canceled or limited. Each international registration remains vulnerable in this way for five years from its registration date, no matter how well-established the underlying U.S. rights are. Many fear that the possibility — or promise — of a “central attack” (so-called because all rights will fail if an attack on the central registration is successful) gives foreign competitors an incentive to challenge even long-entrenched U.S. trademark rights. But a five-year dependency period is just that — five years. The half-empty cup is that international rights will be vulnerable to central attack for half a decade; the half-full cup is that international rights will become invulnerable to such attack after a mere five years. If a central attack is a major concern, one answer is to start the clock ticking as soon as possible — namely on Nov. 2, 2003 — by filing an international application designating only one country (and that country can even be deleted after the application is registered by WIPO). Subsequent designations can be added later — five years later, to be exact, when the international registration automatically becomes independent of the basic U.S. rights. An added benefit is that the number of Madrid Protocol members is likely to increase significantly in the meantime. U.S. trademark owners have waited almost 15 years for the United States to adopt and implement the Madrid Protocol. Filing now and waiting another five years to establish an independent (and therefore secure) international portfolio may not be that unreasonable. In fact, it may be one of the most cost-effective and forward-looking international strategies available. COMBINE THE PROTOCOL WITH THE EUROPEAN COMMUNITY TRADE MARK The most expensive, and therefore prohibitive, aspect of most international IP protection systems is the cost of translations. This is true especially in the European Union, which in April 2004 will go from 15 members and 11 official languages, to 25 members and 21 official languages. In an effort to keep down translation costs, the office administering the European Union’s Community Trade Mark has adopted a mere five working languages. But the cost savings of the Community Trade Mark’s five languages pale by comparison with the savings engendered by the single language of the Madrid Protocol. One of the main advantages of the Madrid Protocol over the old Madrid Agreement is that regional trademark systems can now join the system. The expectation is that the European Union will sign on by next year. And that could provide a most attractive filing option: designating the Community Trade Mark through the Madrid Protocol. MAKE WORLDWIDE SALES A SAFER CHOICE Doing business on the Internet means doing business globally, whether you intend to or not. Even if your company’s clientele is exclusively local, once your trademark is on the Web, it is accessible in every country of the world and may be vulnerable in places you never even considered finding customers. To avoid unintended liability for infringing the rights of other marks, nothing beats a strong portfolio of international rights. Then, when the first sales inquiry comes from Helsinki, Nairobi, or Ulan Bator, at least your IP is ready. DEVELOP A MILLION-DOLLAR MARKETING STRATEGY If you haven’t made your fortune using each of these ideas separately, consider using them together to construct a million-dollar strategy. Nothing can help build a market faster than trademark recognition, and building a global market requires global trademark recognition. An effective international strategy will prevent that worldwide reputation from being undermined by the use of similar marks by other companies. Even robust protection of trademark rights can only help build a business if it is combined with active use of the mark. The winning strategy is the one that puts your products and services — and your trademark — out before the world. If too much focus is placed on everything that could go wrong under the Madrid Protocol, valuable resources will be diverted from making sales and profits to avoiding a hypothetical list of Pauline’s perils that may, or indeed may not, happen. The Madrid Protocol may not be Churchill’s chicken, but it is certainly the most exciting thing to happen to trademarks in a very long time. Understand the pitfalls, but don’t lose sight of the business opportunity to be embraced and optimized. There is a million-dollar strategy for everyone. Albert Tramposch is counsel in the Alexandria, Va., office of Burns, Doane, Swecker & Mathis ( www.burnsdoane.com ) and co-director of the IP program at George Mason University School of Law. He also serves as an adviser to the World Intellectual Property Organization on international trademark registrations. From 1993 to 2001, Tramposch worked for WIPO in Geneva, most recently as director of industrial property law, and helped draft the common regulations for the Madrid Agreement and Protocol. He can be reached at [email protected] . If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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