The advantages and pitfalls of creating an international trademark portfolio
Many clients turn to us requesting us to obtain ‘worldwide’ trademark protection for their mark. Their company is expanding internationally, they are launching a website or application that will be accessible from anywhere in the world, they are building an international franchise system and while there is no such thing as a ‘worldwide’ trademark, it is of course possible to develop an international trademark portfolio. In this case, you have to consider the costs involved, your purpose in seeking trademark protection and whether that purpose really requires your having protection in every single country in the world.
There are three ways to build an international trademark portfolio: you can file a European Union trademark application, you can file separate national trademark applications or you can file an international trademark application. The most effective approach in any given case essentially depends on the size of your purse, the urgency with which protection is required and the territories where you are looking to conduct business under your trademark in the medium- and long-term.
European Union trademark
The European Union trademark system provides unitary protection throughout the EU, which is valid in every member state and may be obtained by means of one central application. The official fees for a European Union trademark (EUTM) application are between €800 – €1,000 depending on the goods and services included in the application. Therefore, if your business plans cover more than two or three member states, filing an EUTM application could already prove financially more beneficial than filing trademark applications individually in any number of European countries.
Unitary protection does, however, mean that if your trademark protection runs into any kind of trouble, e.g. the trademark is cancelled, then the EUTM will lose its protection in every single member state. Similarly, if grounds for refusal exist at the time of application even in just one member state, for instance, if there is an earlier national trademark in one member state that is similar to the new sign, the European Union Intellectual Property Office (EUIPO) will reject your trademark application for the entirety of the EU.
Separate national trademark applications
If you want to expand your business to just a few countries outside the EU, the solution might be to file separate national trademark applications for each country. The downside of this approach is that most of the time it is more expensive to file separate applications than to file a united international trademark application, as you need to hire a local attorney to act before the national trademark office and most national applications may only be filed in the native language of the given country, hence the need for costly translations. In addition, separate national trademark applications cannot be handled centrally, so communication with national trademark offices and legal representatives, as well as the payment of fees, must be handled separately for each country, which is liable to impose an administrative burden on you, and require a great deal of time and effort.
One important advantage of filing separate national applications, however, is that the different applications are independent of each other and, as such, if one application procedure does not succeed or the trademark is cancelled in one country, protection will not be affected elsewhere.
Should your plans for international expansion relate to more than two or three countries outside the EU, filing an international trademark application may well be an easier and more cost-effective solution.
International trademark application
Each international trademark application must be based on an already existing trademark, i.e. a so-called basic mark. You must indicate the territories where you are looking to protect your trademark in the application – this can be a country, such as the US, or a territory, such as the EU. International trademark procedures are governed by the Madrid System and international trademark applications can only extend to countries or territories that are members of this System. The Madrid System currently has 110 members covering some 126 countries and accounting for more than 80% of world trade, in addition to which the majority of countries that are considered targets for international business expansion are members of the System. The exceptions to this are, for example, Argentina, Hong Kong, Dominican Republic, Iraq, Nigeria, Jordan or Saudi Arabia – if you are seeking protection in these countries, you will rather need to turn to their respective national trademark offices to apply for national trademark protection.
International trademark applications may be based on any trademark, including national or EU trademarks; however, it is crucial for you to have an actual connection to the country or territory where the basic mark is registered. For natural persons, this connection is determined by nationality or domicile, and for legal entities, they must have a registered seat or a real and effective industrial or commercial establishment in the country or territory where the basic mark is registered. This means that an American company cannot file an international trademark application based on an EU trademark if it does not have a seat or establishment in the EU.
A clear benefit of the international trademark system is that the application may be handled centrally for all the countries designated, with the application being filed in English and official fees only needing to be paid once. International trademark applications must be submitted to the World Intellectual Property Organization (WIPO) via the trademark office of the country of the basic mark, and, once a formal examination has been conducted, WIPO will forward the application to the trademark offices in the designated countries for a thorough and substantive examination – at this point, the international application ‘breaks down’ into several national applications. These national offices review the international applications in accordance with their domestic laws, just as if they were national trademark applications. The application of diverse national laws can lead to different criteria needing to be met in each country, potentially resulting in, for instance, an international trademark being accepted in the US but rejected in China.
The international trademark registration process can be handled from one country, also from Hungary, up until the mark is registered. Hiring a local attorney is only necessary in the event that an obstacle arises before the national trademark office, for instance, an office action or opposition.
It is important to point out that the geographical scope of an international trademark may be expanded at a later date by designating additional countries that are members of the Madrid System.
Some further points to bear in mind
As you can see, there are three main ways to build an international trademark portfolio, and all three have their benefits and drawbacks. As such, developing an international trademark strategy always requires careful consideration.
Once your trademark has been registered, you cannot just simply sit back; you are then obliged to actively use that trademark on the market. If a registered trademark is not being used in the territory where it is registered, anyone can request to have it cancelled. Therefore, it is recommended to apply for a trademark only in those countries where you actually wish to use your sign.
It is also very important to conduct a thorough and comprehensive trademark search before filing a trademark application; this cannot be replaced or avoided with a simple Google search. A properly conducted and evaluated trademark search detects earlier trademarks that, due to their identity or similarity with the trademark for which application is being made, may present an obstacle to your new trademark application. Even if you honestly believe that you came up with the idea for your brand name or had your logo uniquely designed, there is a relatively high chance that there will still be an earlier trademark that, from the point of view of trademark law, is similar to your sign. For instance, we only need to think of the European Union, where there are currently almost 1.5 million registered trademarks – if just one of these is considered similar to your sign, its owner can prevent you from registering your trademark. Investing in professional trademark search and risk assessment now may well save you many times more money and precious time incurred by possible proceedings further down the line.
