Globalization of markets is an increasing part of business reality. The World Wide Web provides something of a double-edged sword to the sellers in that the Internet is an uncharted frontier, and its growth often results in uncontrolled but much-needed foreign sales by allowing easy access to foreign distribution channels. With globalization comes international brand recognition, overseas infringement, and online counterfeits. As a consequence, local brand owners must balance the cost of obtaining and maintaining foreign trademark protection with anticipated sales in the jurisdiction. Small corporations are often deterred from filing foreign registrations unless they are assured by foreign distributors of a significant level of sales.

Unlike copyrights that attach to works upon their creation and are valid, irrespective of the market conditions around the world, trademarks are jurisdiction-specific and must be secured in each country. The first real international trademark system came into force in the U.S. in late 2003 and is called the Madrid Protocol, or simply “Madrid.” Madrid eliminates the need to pay and set up a worldwide net of local registrations in every country by providing the owner with an international trademark registration that may be enforced around the globe.

Under Madrid, a home country trademark is filed with the local trademark office and is then used as the basis for an international registration at the International Registry, located at the World Intellectual Property Organization (WIPO) in Geneva, Switzerland. The Madrid registration is not enforceable under WIPO, but serves as the template for any subsequent national designation to any of the Madrid countries.

Home Registration or Application -> Madrid Registration -> Foreign Designations

The Madrid database registry can be accessed at: www.wipo.int/ipdl/en/search/madrid/search-struct.jsp.

Madrid is the first international trademark system available in the U.S. Before the adoption or enactment of Madrid, trademark owners relied on networks of foreign associates operating under the supervision of a local counsel. Owners were forced to incur costs of redundant parallel foreign prosecutions in different countries. Translations of priority documents were often required, and renewals of marks were at different dates. Madrid simplifies the renewal process. A single fee is paid at WIPO every 10 years, and the international bureau dispatches a portion of that fee to each local office. No foreign associate fee is needed at renewal, so the savings can be substantial for simple marks.

In addition, the Madrid database places, under a single umbrella, links to each nationalized mark. Holding a registration under Madrid allows for easy access to a mark’s entire portfolio in a large number of countries. U.S. applicants file for Madrid at the U.S. Patent and Trademark Office. The application must claim as its “root” either a pending U.S. application or a U.S. registration. Foreign countries where the mark needs to be nationalized are designated at the time of filing, using a simple menu and the associated fee calculator. Other designations are always possible under Madrid.

Today, 78 states are members of Madrid, including Russia, the EU, parts of Africa, the Balkans, and most of Asia. The acceptance in the U.S. of Madrid coincides with an explosion in filings under this regime. In 2008, Madrid filings increased from 22,000 to 33,000. This year, the U.S. ranks third in number of new filings with 2,500 new applications. Last year, over 10,000 foreign Madrid registrations were extended to the U.S. This accounts for approximately one out of three foreign applications filed in the U.S.

The two largest commercial partners of the U.S., namely Canada and Mexico, are still absent from Madrid; they are expected to join before the end of the decade. In the meantime, Madrid protection is mostly available for Asia, Europe, and Australia. Under Madrid, the trademark law of individual countries remains unchanged, as does prosecution. Local counsel may still be required if problems are encountered during national phase prosecution. After all, many trademark offices offer little or no substantive prosecution. Madrid marks, once nationalized to these offices, may be obtained in the normal course of business.

Unlike the Patent Cooperation Treaty, where international applications are never registered and then elapse after a fixed period of time, Madrid registrations issue and never elapse. Applicants must respect the six-month priority rights afforded by the Paris Convention. But once priority has been lost, national designations can occur at any time simply by filing a request for designation. Once a Madrid is in place and infringement occurs in an unprotected country, your U.S. counsel can immediately apply for registration in the country of infringement. The same day, a ceaseand- desist action may be filed and include a warning that (i) an international Madrid registration is in place, (ii) a pending application has now been filed in the country of infringement, and (iii) some type of common law right or trade restriction rule may also protect against infringement. For small Internet-related infringement, such a notice may be a sufficient deterrent.

We must nevertheless avoid painting an unrealistic portrait of this system. While cost savings on an entire portfolio can reach upwards of 50 percent of the normal prosecution costs, there remain many limitations and obligations that stand as obstacles to the unwary. Under the old system, designations of goods and services could be customized for each country. Under Madrid, the full designation must be found in the Madrid registration, and by association, must also be found in the U.S. application or registration. If applicants wish to customize the designations for certain goods or services, they may do so for only a portion of these goods and services.

Absent the filing of several Madrid registrations, the designations of goods and services around the world must be closely monitored and coordinated to obtain an optimal result. Also, increased availability of goods in a single country requires the filing of a new Madrid application.

Under Madrid, if a local office takes more than 18 months to act, registration may be granted automatically.

Not all countries are member states of the Madrid Protocol. Trademark owners may need to file applications in non-Madrid countries that are equivalent to a Madrid application. Once a country joins Madrid, the merger of related applications and registrations is not automatic, but must be requested. Madrid registrations are also vulnerable to so-called “core attacks.” If the home application ultimately fails, the Madrid registration also fails, and foreign designations must then be localized.

The benefits of the Madrid Protocol are available only to U.S. citizens, U.S. corporate entities, and foreign entities with significant business contacts in the U.S. Because Canada and Mexico are not yet member states, problems may arise if, for instance, a U.S. corporation that owns a Madrid registration transfers its intellectual property portfolio to a Canadian purchaser. Foreign corporations domiciled in non-Madrid countries may not be able to benefit from the advantages of the Madrid Protocol. Finally, renewal of the Madrid automatically renews the entire portfolio of marks designated or associated with the Madrid. A single fee is paid every 10 years for the maintenance of a mark around the world!