President Bush Signs Madrid Protocol Implementation Act Into Law

The long-anticipated Madrid Protocol Implementation Act finally is the law of the land. President Bush signed the Act into law this week, buried within the Department of Justice Reauthorization Act. The Protocol is a treaty that provides an international system of registering trademarks, and is administered by the World Intellectual Property Organization (WIPO). United States trademark owners now will be able to take advantage of this cost-saving method of securing broad trademark protection around the world.

In the growing international economy, it is vital to protect important brands in countries where goods and services may be exported, manufactured under license or counterfeited. The accession by the United States to the Madrid Protocol will enable U.S.-based trademark owners to extend their protection to other countries will greater ease and less cost. In addition, the membership may help to stimulate foreign business investment by making it easy for others to seek intellectual property protection here.

The Madrid Protocol system of International Registrations does not supplant the current national trademark registration system or the registration requirements of its members. Rather, Madrid allows trademark owners to file a single application in their home country, called a "basic" registration, and then designate extension of the application or registration in some or all of member countries at a reduced fee. The national trademark office of each elected country has a 12-month examination period in which to issue an initial refusal, which may be extended up to 18 months (or longer if an opposition is filed). If the national trademark office does not act within this allotted time period, the International Registration will take effect in that country. International Registrations have the same force and effect as national registrations.

Our analysis of the legislation has identified four (4) major advantages to the Madrid Protocol:

Reduced Expense: The filing fee to WIPO’s International Bureau is 653 Swiss Francs (currently U.S. $450.00) for up to three classes (based upon the International Classification System of the Nice Agreement) of goods and services, 73 Swiss Francs (U.S. $50.00) for each additional class, and 73 Swiss Francs (U.S. $50.00) for each country designated in the application, except where the country has designated an individual fee. These reduced fees represent a significant cost savings when compared to the filing and issuance fees charged for national applications and registrations. Additionally, United States trademark owners now will be able to prosecute international applications through a single agent rather than engaging local agents in each country, unless an office action is received in a particular country.

One Renewal Fee: Registration of a mark under the Madrid Protocol results in one registration with a life of ten years and a single renewal date, no matter how many designated countries are selected. To renew the registration, one renewal fee of approximately U.S.$100 is paid to WIPO. This simplified renewal procedure will result in significant cost savings to the trademark owner in both renewal and attorneys’ fees previously associated with the monitoring and renewal of international trademarks.

Right of Expansion: An international registration has the significant advantage of allowing the registrant to designate additional countries after registration, upon the payment of the additional required fees. The registration in that country will have priority from the date of election only, and will expire ten years from the date of the original international registration.

No Translation Necessary: An application under the Madrid Protocol may be filed and prosecuted in English or French; thus, translations into the local language of the designated country will not be required. Owners will save time, money and potential problems that may arise with the translation of unique terms.

Trademark owners will need to be aware of some significant changes in the clearance and prosecution of trademark applications under the domestic registration system and abroad. First, when searching a potential trademark prior to use or registration in the United States, it will be necessary to search the international register for potential conflicting rights. Applicants also should keep in mind that although the initial filing and attorneys fees for international applications may be reduced substantially, the designated countries will examine the application individually according to their national laws. As a result, additional attorneys fees and local agent fees may be incurred in connection with responses to the rejection of an application, or opposition or cancellation actions. Finally, Madrid Protocol registrations may be assigned in their entirety or in part by designated country, but only to third parties domiciled or established in a country that is also a member of the Madrid Protocol.

There are two significant disadvantages of the international registration system to United States-based trademark owners. First, the United States Patent and Trademark Office ("USPTO") has strict requirements for narrow specificity in goods and services descriptions compared to many other countries. Therefore, international registrations based on United States applications and registrations likely will be much narrower than either the scope of international registrations based on other countries’ laws or registrations that could be obtained by filing applications directly with national trademark offices with a broader description. Trademark owners should undertake a cost-benefit analysis -- at least for their most important brands -- of whether the national filing system or the Madrid Protocol system is the most advantageous. Second, International Registrations are wholly dependent upon their basic application or registration for a five-year "central attack" period. Therefore, if the basic application or registration is canceled or refused, the action will extend automatically to the International Registration. For United States owners, this attack period essentially leaves all registrations open to attack until the basic registration has passed the five-year bar of incontestability. Thus, for marks that may be considered vulnerable in the United States based on its law but not elsewhere (i.e. by reason of descriptiveness), the national registration system may be preferable.

The USPTO has at least one year to prepare and implement the appropriate rules and procedures for operating under the Protocol from the time Congress passed the implementing legislation. We will continue to keep you updated as rules and procedures are proposed and adopted.