International Trademarks

In the United States, registering your trademark allows you to own its exclusive rights. Likewise, trademarking internationally allows you to market, distribute, and sell your products without restriction. Without the protection that registering your trademark internationally offers, you may find other companies using your trademarks-and entitled to use them-thus locking you out of markets and unable to take advantage of the opportunity to expand and increase profits.

The difference between trademarking in the United States and trademarking in civil-law countries like Germany, Japan, Korea, and Chile is that these countries do not require you to use the trademark you register to obtain or maintain ownership, or the use requirement is minimal.

Here in the U.S., the legal system is based on common law.The main difference between civil law and common law in regards to trademarking is that in common-law countries, the right to exclusive use of a trademark is derived from the use of a mark. In civil-law countries, actual use of the mark is secondary-there the right to exclusive use of a mark is derived from simply registering the mark.

Thus, in these civil-law countries (i.e., most all of the countries that were not at some point part of the British Commonwealth), the first to register is the owner of the mark.

It is incredibly easy to register trademarks in civil-law countries. At first glance this might seem beneficial, but the easier it is to register, the greater the chance that someone else has registered your mark.

In order to limit the potential for international trademark problems, you should first identify what countries you currently or soon will market and sell your products to. For instance, most skateboard companies sell to Canada, Western Europe, Japan, and Australia. Once you have targeted the countries with appropriate market potential, the first and most important step in registering your mark is a thorough trademark search. Either a trademark attorney here in the U.S. or a trademark attorney in the respective country will be able to do a search for you. The purpose of the search is to find same or similar trademarks that would block your application’s approval. Because trademark similarities can create consumer confusion, in most cases an application to register a trademark that is the same or similar to an existing registered mark is denied.

If no conflicting marks are found in a thorough search, you may proceed to apply for registration. Because there is not a central global-trademark register, it is required that you perform a separate search and fill out a separate application for each country. The only exception to this rule is the European Union. If you are planning to, or already are doing business with three or more countries in the European Union, it is advisable to consider filing an EU trademark application.

In most cases, a company that wants to register its trademark in a foreign country should have few problems, provided that you have reputable contacts in each of the countries you wish to register in.

However, in their desire to expand internationally, some companies find that in one or more countries someone else has already registered their trademark. If this is the case, it usually falls into one of three scenarios.

The first is that another company simply has the same or similar trademark and is registered to sell the same type of goods. In this case, there is little one can do but consider altering the trademark specifically for the countries where registering with your regular trademark would be denied.

The second scenario generally exists only in civil-law countries: A distributor, for example, could have registered your mark in hopes that this would persuade you to give them exclusive distribution rights to your line(s). Owning the rights to your trademark in its country, the distributor can stop you from importing product. They hold the key to your entrance into that maarket, and there is usually little you can do except negotiate.

The third scenario, also a by-product of the civil-law system, involves a person whose only objective in registering your mark is to extort money from you in exchange for the ownership rights to your trademark. Again, this person can stop you from importing product into the country in which they have registered your mark. In most cases, negotiation is your only reasonable option. In some instances, with enough resources, it is possible to fight and reclaim your trademark through that country’s court system. However satisfying this method may sound, it rarely turns out to be cost-effective.

Unfortunately, trademark speculation is common practice-so common, in fact, that a professor at a prominent business school boasts that he watches for up-and-coming companies in the U.S., and registers their trademarks in foreign countries. Then he waits for the company to come to him to buy the rights to their trademark in foreign markets.

The markup for trademark speculators can be staggering. In fact, a few years ago a major skate-shoe company was going to sell in Chile until it was discovered that a speculator had registered their trademark in the mid 80s and had an unchallengeable right to its exclusive use. The Chilean speculator offered to sell his rights to the mark for several-million dollars. However, market conditions didn’t justify the expenditure. So understandably, the company declined the offer and took Chile off of their sales map.

The best way to avoid finding yourself in a similar position is to be proactive. Make registering your mark in the applicable international markets a priority. Obviously, most companies will have to balance the cost with their need. Registering a trademark internationally can cost anywhere from 500 dollars in New Zealand to several thousand dollars in the EU, and each registration is only valid for that country (or economic union).

This is an issue that requires one to be ahead of the curve, because if you are already selling in one of these civil-law countries, it may be too late. Distributing and selling products under an unregistered trademark in a civil-law country can be an invitation for these types of problems.

Another reason a company should consider trademarking internationally is that it provides you recourse against counterfeit products that have the propensity to show up in countries where U.S. products are at a premium.

For companies that produce goods abroad, owning your trademark in the country in which you manufacture can be an asset in combating counterfeit goods. This makes it easier to go to that country’s law-enforcement agencies and have them seize the counterfeit goods and/or stop production altogether. In theory and in practice, the more control you have over your trademark, the greater chance you have of stopping the production and sale of counterfeit goods.

Now, before you start to panic that your future international market may be disappearing as you read this, or that there are production lines pumping out counterfeit products with your label on them, have a search done in the countries you wish to register. Trademark searches can also be fairly pricey, up to 1,000 dollars in Japan, for example. But once you have a clear picture of what obstacles, if any, lie in front of you, you can then make an educated decision as to where you should register your mark, and when to make that investment.

In addition to attorneys specializing in international trademark law, a great source for information regarding international trademarking is the International Trademark Association (INTA) in New York City: (212) 768-9887; www.inta.org.

Erica Tibbetts contributed to this article. Matthew Miller is an attorney-at-law in Solana Beach, California. He can be reached at: (619) 259-6969.

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