As we regularly stress on these pages, trademarks (and other intellectual property) are often a brand’s most valuable assets. It therefore follows that international trademark protection should be a key priority for brands engaged in international business.
Globalization and Trademark Realities
In this age of increasing globalization, where phones and ATM cards from your home country work seamlessly as you travel, it might be reasonable to assume that trademark protections also follow you. That, however, is not the case: A U.S. trademark registration is no good the moment you step outside U.S. borders. The same holds true for pretty much every country.
The Dangers of Not Registering Trademarks Internationally
There are instances where doing business in a foreign country without a trademark registration might not pose great risks. Highly developed economies usually have robust IP protections, and there may not be much room for counterfeiting to thrive, even in the case of brands whose trademarks aren’t registered. In some countries, however, doing business without a registered trademark can be fatal.
In countries like China, doing business without registering your trademarks is an invitation to disaster. For one, counterfeiters will be able to copy your products unfettered. In addition, counterfeiters and other bad actors could register your trademark (a practice known as trademark squatting) depriving you of your rights and possibly moving to curtail your legitimate activities.
A Trademark Squatting Incident
I often retell a particular war story because it illustrates the risk so well. While working in Hong Kong, I was approached by a European brand that had not been diligent about its international trademark protection. It discovered — way too late in the game — that someone in some remote Heilongjiang village has registered their trademark. The client was aghast when they learned the squatter wanted $200,000 to transfer the mark. But here’s the rub: Ownership of the trademark was an absolute must for our client’s business plans. They had no choice but to pay up, and pay up they did.
Part of our client’s dismay stemmed from their disbelief at the lack of remedies. Surely, there must be some law against such extortion, no? Unfortunately, the squatter’s actions were legal. As opposed to the United States, where first use of the mark is what really counts, in China great weight is given to who files the trademark application first.
Since that time, China is cracking down a bit more on trademark squatting and similar practices, so depending on the circumstances there might be some legal avenues to seek redress. But that’s not always the case, and my client was far from the only foreign brand to be shaken down this way.
The Myth of “Too Small to Notice”
You might be thinking, my brand is not big enough to be on the radar of squatters: why should I worry about international trademark protection? Well, let me be clear: No brand is too small to avoid attention. There are folks in China (and elsewhere) who constantly monitor U.S. trademark filings. Often, after I file a U.S. trademark application, I’ll get a “friendly” email from a China trademark attorney, asking if I want to file an application in China. Other actors go straight for registration of the trademark in China, hoping for an eventual payday. And they’ll do this even when the U.S. trademark applicant is a small business. Squat first, ask questions later. There is obviously money to be made from this or it would not be so prevalant.
Strategies for Small Businesses
Small businesses in particular need to be proactive and strategic about international trademark protection. Your resources are limited, so picking your battles is key. Here are some tips:
- Prioritize filings in your top export markets and in the countries where you manufacture. Losing rights in these countries can severely impact your business.
- Monitor your brand for infringement threats or suspicious activity overseas using watching services. Early detection helps minimize damages.
- If you can’t register in every country, consider defensive registrations of misspellings/variations of your mark to block squatters.
- If you can’t register in every country right away, constantly be thinking about where you should be registering next. For instance, if your sales in Spain are low right now, maybe you can get away without registering a trademark for your brand there just yet. But you should be sure to apply for a Spain trademark before you launch your big marketing campaign there.
- Work with a trademark attorney experienced in international trademark law to navigate differences across countries.
- Leverage resources like the Madrid System to extend protection to multiple countries through a single application.
- Enforce your rights by reporting violations to authorities and conducting takedown actions. Don’t allow infringements to go unchecked.
Global Trademark Systems
For brands seeking broad international trademark protection, however, there is some good news. Brands doing business in multiple European Union countries can apply for EU-wide trademarks. Meanwhile, the Madrid System allows applicants from member states (including the United States) to apply for protection in up to 130 countries. Fees increase depending on the number of designated countries, but if you apply in more than a handful of countries, it will be more cost-effective than separate applications at the national level. But see China Trademarks: Register via Madrid or in China?
Just as there is often work to be done after filing a registration in the United States (or any other country), Madrid applications often run into issues in one or more of the designated countries. And, as mentioned, fees do go up with the number of countries designated. This is all to say that brands must still be judicious about where they apply.
International Trademark Protection
When advising clients on international trademark protection, our international trademark attorneys usually start by figuring out where our client’s greatest activity is taking place, especially in terms of sales. Rampant counterfeiting in a particular country might not be a big deal for the brand. And of course, it’s critical to consider where manufacturing is taking place. Shenanigans by squatters in China may not matter much to a brand that is not interested in the Chinese market and doesn’t source from China. But if it does source from China, the last thing it wants is a squatter blocking exports (which they can do).
Most brands don’t have the deep pockets to file applications in every country in the world where it is doing or might do business. As a result, international trademark protection almost invariably requires identifying the countries that present the greatest risks and prioritizing protections there.
The prospect of securing protection overseas (especially when it involves several countries) may seem daunting, it’s usually not difficult to identify the most urgent steps, and prioritize the relatively less urgent steps accordingly.