Trademark protection is a critical task for companies manufacturing and distributing products overseas. While many large multinationals have armies of lawyers policing their intellectual property rights (IPR), small- and medium-sized businesses that are expanding overseas often need help figuring out the best and most cost-effective way to protect their trademarks, patents and copyrights. What perhaps surprises my clients most about international trademark protection is that the process requires continuous management on their part.
First, assuming limited budgets, they must decide which trademarks to prioritize for protection. Then, and more important, effective trademark protection requires actively monitoring local markets to identify possible infringement, then working with local law enforcement agencies and judiciaries to ensure that infringers desist or face prosecution.
Looking at the process of identifying which trademarks should be protected, most companies’ international portfolios are built upon national ones, that is, trademarks that are protected in the company’s home country.
However, building an international trademark portfolio will almost invariably require more than replicating the portfolio in the home country in other jurisdictions. For example, when I was working in China, I managed the local trademark portfolio for a well-known UK brand. This China portfolio was much larger than the company’s UK portfolio, in part because back then there were no multi-class applications in China, so a single UK registration could translate into a dozen Chinese ones.
Meanwhile, the almost complete lack of protection for unregistered trademarks in China changed the calculus when it came to minor marks, such as old logos and advertising slogans. For obvious reasons, logos and slogans not currently in use are less attractive to counterfeiters, considerably reducing the likelihood that any fakes would be made, and enforcement required as a consequence. If an infringement did take place in the UK, my client could rely on common law rights to protect their trademarks. However, in China, a registration would be required to protect the trademark. The cost-benefit analysis worked in favor of registering these minor marks in China, but not in the UK (or the U.S. for that matter).
A similar situation occurred with Chinese-language marks. Only around one percent of UK residents would be likely to recognize the client’s name in Chinese, while in China it is likely at least 50 million people would. For some companies, it is trademark protection that drives their branding for a foreign market. Even if a company would rather stick to its original name in Latin characters, market considerations may make it prudent to come up with a name in Chinese (or Thai, or Marathi). Businesspeople with experience in Asia will know that very few foreign companies translate their brand names into Japanese (Japanese have a special syllabary that helps them with the pronunciation of foreign words), while in China, nearly every brand name is translated into Chinese (and finding the right translation is big business).
Once a company has decided which of its trademarks it wants to protect in a particular overseas market(s), the next step is registration. This process is highly variable by product and by jurisdiction, and can be a source of frustration. Some companies can take advantage of an international treaty called the Madrid Protocol, which allows trademark owners to apply for an “International Registration” and designate, in a single application, from one to 121 countries that have also joined the Madrid Protocol. Madrid Protocol members conduct more than 80% of the world’s trade.
As a general rule, if you’re filing in three or more countries, it is usually cheaper to file via the Madrid Protocol (which in any event is not applicable in some countries). But if you’re filing in (only) one or two countries initially, it will almost always be cheaper to file directly in those one or two countries. Plus, it’s important to remember that an International Registration application designating a specific country will ultimately be approved (or denied) by the authorities in that country. If your international expansion is targeting only one or two countries, it makes sense to get professional analysis geared to give your application the best chance of success in your target markets.
Some companies assume that there is no “management” required after registration. However, there is plenty of work to be done.
First, use requirements vary from country to country. As companies allocate limited resources, legal counsel on these requirements is critical. For example, the need to use a trademark in Country A may help determine whether or not to expand further there or in Country B.
Second, companies must actively protect their trademarks. While working in Hong Kong, I would regularly visit the street markets where counterfeits were sold. It was interesting to see how blatantly some brands’ fakes were on display, while others were hard to spot. It was clear that infringers knew where they could expect enforcement and where they were safe.
Third, while some companies think registering their trademarks is the end of the story, in fact it is only the beginning. Most law enforcement agencies are wary of undertaking action against counterfeiters without firm assurances that the brand will support them in obtaining a conviction. In some countries, information must essentially be spoon-fed to law enforcement before any action is taken. All of this requires work on the part of companies, either directly or via trade associations.
Fourth, companies that license their trademarks must monitor those trademarks’ use to ensure compliance with both relevant trademark laws and contractual provisions.
Finally, portfolios must be audited on a regular basis, to identify gaps and compliance with all legal requirements. Items to check include coverage of all relevant classes, expiration dates, compliance with use requirements, and inclusion of new terms used to describe the brand in local markets.
Yes, all this may sound like quite a lot of work, but you expected that when you expanded your business to international markets, right?