PLG partners Julia Anne Matheson and Janet Satterthwaite recently authored an article for World Trademark Review (WTR) titled, “Why Madrid may not be your best strategy in the US.”
Think Before You File: Common Disadvantages of Madrid Protocol Filings in the U.S.
Our foreign clients, notably in the EU, love to use the IR system for extensions of protection in foreign jurisdictions . Why? Because:
(1) it saves a bit of money when filing;
(2) it supposedly saves money when it comes time to renew; and
(3) it is very cost effective if you have to record an assignment of a mark protected in many countries.
We get it.
But, extending an IR into the U.S. may not be the best choice for your company or client. The savings are likely to be much less than you think, and the incompatibility of the IR system and the U.S. system are likely to generate far more headaches than benefits.
Problems common to all U.S. applications based on foreign rights:
While the U.S. requires a showing of use in commerce for U.S. applicants, the U.S. has agreed, by treaties (the Madrid Protocol and Paris Convention) to register marks for non-U.S. applicants based only on an IR or foreign registration. This common filing basis is really not compatible, however, with U.S. law and practice, which is heavily grounded in common-law rights based on use, and consumer protection.
Some problems arising from this discrepancy apply to applications filed under Madrid as well as under the Paris Convention:
- While you have a registration for which you do not have to show use for 6 years, you are still vulnerable to cancellation after three years for nonuse;
- You can oppose applications, but you cannot use the registration to sue anyone for infringement if you have no use of the mark in U.S. commerce (because no consumer is likely to be confused);
- You are vulnerable for cancellation based on lack of bona fide intent to use the mark in commerce on that huge list of goods and services in your foreign application or registration, many of which goods and services fall well outside your client’s actual business plans. Lack of such bona fide intent renders your application vulnerable to opposition, and any registration vulnerable to cancellation; and
- Your identification of goods and services is not strategically written for U.S. practice.
Problems Peculiar to Madrid
But, Madrid filing in the U.S. adds even more headaches. In addition to the well-known disadvantages of Madrid globally, such as central attack, and the difficulty assigning IR’s to countries not located in a member state, there are several additional drawbacks under U.S. practice:
- You will end up having to pay for U.S. counsel: The majority of Madrid applications extended to the U.S., particularly those listing many goods and services, will draw an office action, to which only U.S. counsel can respond. So you will still end up having to retain U.S. counsel to file a power of attorney, set up your application on their docket, and respond, at a cost similar to what they would have charged to file an application in the first place. This effectively cancels out the up-front savings at filing.
- Maintenance is different: You have to separately docket and pay for maintenance filings. Madrid does not completely simplify the process of mark maintenance or renewal in the U.S., where registrants are required to file evidence of continued use of their mark within 5-6 years after registration, and again every ten years after that. So while you may save something on renewals, you will still have to pay U.S. counsel to file declarations of use. And since U.S. declaration of use are docketed separately from the IR renewal deadlines (because they run from when the mark registers in the U.S., not the IR) there is a high risk of confusing your EU-based docketing staff.
- Change of Ownership Presents Special Problems:
- It takes a long time for WIPO to update changes in title, so you may run up against a deadline where the “owner” has to sign a declaration under oath, which is often required in U.S. practice, but the “owner” is not yet listed as the applicant or registrant in the USPTO database (because WIPO has not reported this to the USPTO).
- If the name of the owner has not been updated in the USPTO database, you may need to file in the name of the new owner, which will draw an office action due to inconsistency with the USPTO records. Sorting that out adds more costs.
- With a national application, on the other hand, you can record the change of ownership right away, and the cost to record an assignment in the U.S. is only $40 for the first registration or application and $25 for any additional. So you do not save much in the U.S. by using the IR to avoid national assignment recordation fees.
- No Supplemental Register. If the USPTO believes that a mark is merely descriptive but is capable of becoming distinctive through use, you can amend your national U.S. application to the Supplemental Register once you have shown use of the mark in commerce. A registration on the Supplemental Register is beneficial for multiple reasons – (1) you can use the R symbol; (2) you are easily found when someone searches the USPTO database; (3) your mark will be cited against similar later-filed applications; (4) you have the option of filing again on the Principal Register once you can demonstrate five year of substantially exclusive use. Supplemental registration is not available for a Madrid application, so if the USPTO finds the mark descriptive, you are out of luck.
- No Dividing Applications: Unlike domestic applications, where goods and services can be divided into separate applications for a variety of reasons, such as if you anticipate an opposition on some goods but not others, or you already have use on some goods, not others, division is not available to Madrid applications.
- You may have to delete some goods or services: The USPTO sometimes disagrees with WIPO on classification. Because goods/services cannot be transferred between classes, Madrid applicants are frequently forced to delete goods/services that could have been moved to a different class in a national application.
- Docketing is confusing: When you get a U.S. office action, the response is due from the date that WIPO sends you the letter, not when the office action issues; and see above re confusing docketing of deadlines for declarations of use for maintenance.
- No Inclusion of a First Use Date. If you file a national application in the U.S. when you already have use of the mark , you can base it on your foreign registration and your intent to use, or actual use, in the U.S., and can identify a first use date prior to the date you filed your IR application. Anyone searching can see that your common-law rights pre-date your filing priority date. This option is not possible with a Madrid. People are likely to assume that you chose to file under Madrid because you are not using the mark in commerce. That (maybe incorrect) assumption can complicate enforcement.
- No Modification or Modernization of the Mark: the U.S. allows modification of marks during the application and post-registration, as long as the change is not material (e.g., the addition or deletion of punctuation, changes stemming from logo modernization, but this is not permitted in an IR. If you have a logo slightly modified from the original filed design, you may not be able to file an acceptable specimen of use that exactly matches the drawing of the mark as registered, nor can you update your registration to reflect how your mark is used now, which is awkward when trying to sue for infringement.
Our Trademark lawyers, Janet Satterthwaite, Julia Anne Matheson, and Todd Bontemps, can guide you and your clients on all of these issues in a strategic and cost sensitive way that supports your clients and practice.
