New Jersey Law Journal: Considerations for Obtaining Foreign Trademark Registrations in a Global Economy

A trademark is a name, logo, slogan or design that distinguishes the source of a company’s goods or services from those of others. In the U.S., trademark rights are created through use of a mark and perfected through obtaining a Federal Registration with the United States Patent and Trademark Office (USPTO). Many U.S. brand owners do not realize that their valuable trademark rights stop at the U.S. border. In order to be protected outside of the U.S., trademark rights must be obtained separately across territories. Further, eligibility for trademark registration as well as the standard for trademark infringement differs in every country. Accordingly, companies that have potential for growth outside of the U.S. need to proactively plan for and obtain trademark protection in foreign territories relevant to their specific industries. Below we discuss important differences that brand owners and their counsel should consider when seeking trademark protection within the U.S. and abroad, filing timelines to be aware of, and provide key takeaways and pitfalls to avoid.

First-to-Use v. First-to-File Territories and Establishing Priority

The United States (along with Canada, Australia and a few other countries) is a “first-to-use” territory. This means that trademark rights begin and belong to the first entity that uses a specific trademark in interstate commerce. Merely coining a brand name or incorporating one’s business under a tradename does not sufficiently satisfy the use in commerce requirement – the trademark must actually be used in connection with the promotion or sale of goods and/or rendering of services in order to qualify as trademark usage.

Being the first to obtain trademark rights in a certain territory is known as having “priority”. In the U.S., a senior user can assert priority rights to object to a junior user’s Registration (for up to five years from the date of that Registration) of an identical or a confusingly similar mark even if the senior user never obtains a Federal Trademark Registration. While a Federal Trademark Registration confers many benefits, including a presumption of trademark validity and the possibility for a trademark to become incontestable, the ability to rely on common law (use-based) trademark rights offers substantial protection to even an unregistered trademark owner.

Finally, in the U.S., a trademark must actually be used in commerce to be eligible for a Federal Registration. However, in order to secure an earlier priority date, one can file an “intent-to-use” based trademark application prior to ever using the proposed trademark so long as the applicant has a bona fide intent to eventually use it. The filing date of an intent-to-use based application creates a constructive first use date and therefore establishes trademark priority. Accordingly, an applicant may rely on its intent-to-use based application filing-date to stop later users from registering an identical or confusingly similar mark even if the applicant has not yet used the trademark in U.S. commerce or has not yet been granted a Registration.

In contrast, the majority of territories, including China, Japan, and the E.U., are “first-to-file” territories. As the name suggests, in first-to-file territories, the party that files for a trademark first is considered to have priority in that country and can obtain a Registration, often, without even using the trademark. Such Registrations are often enforceable against parties who are already using the same or confusingly similar mark in those countries. Moreover, the first filer can rely on its Registration to sue a party that has already been using the same or a confusingly similar mark for trademark infringement. In some first-to-file countries, there are exceptions where the fame or the substantial goodwill of the unregistered mark, or a tort claim such as “passing off”, provide some limited safeguards and can be used against first-filers. However, in most instances, the first filer will be in a position to stop a prior user of an unregistered trademark from 1) obtaining a Registration, and worse yet, 2) continuing to use the mark in that territory. Note that in first-to-file territories, Registration owners are eventually subject to use requirements after a certain number of years. If not used, the trademark could be invalidated on the basis of non-use.

Not surprisingly, due to the ease of obtaining a Registration in many first-to-file territories, trademark “squatting” is a substantial problem for brand owners. Squatters can monitor successful brands in the U.S. (and elsewhere) and obtain trademark Registrations in foreign countries before the valid trademark owner has a chance to file in those countries. The trademark squatter can then enjoy the full rights of a valid trademark owner until the squatter is subject to use requirements (typically from three to five years depending on the country). By way of example, squatting is problematic in China because the courts and trademark office take a fairly strict approach with respect to filing-based priority. This can have a disastrous effect on a company, as it could lose out on years of valuable sales in one of the largest global economies. Note that squatters are often willing to assign trademark Registrations to the rightful owner, however that often comes at a hefty price.

While establishing priority in foreign territories is therefore extremely important, it can also be quite expensive and cost prohibitive for many new brand owners. Fortunately, the U.S. is a signatory to the Paris Convention—an international intellectual property treaty. Pursuant to the Paris Convention, a U.S. trademark owner can file for its trademark in other member countries and claim priority back to the original U.S. filing date, so long as the foreign application is filed within six months of the initial U.S. filing date. As most countries are signatories to the Paris Convention, this is a valuable tool that can help new U.S. trademark owners spread out the substantial expense associated with foreign filings while still being in a position to jump ahead of and assert priority against those who file in such foreign territories for the same or confusingly similar marks during this six-month priority window.

International Registrations v. National Registrations

Owners of U.S trademarks can obtain protection in foreign territories in two ways. One way is to file for an International Registration pursuant to the Madrid Protocol (another international trademark treaty) and designate protection in countries that are members of the Madrid Protocol. The other way is to file applications for National Registrations with the individual Trademark Offices of the countries of interest.

The benefit of filing for an International Registration is that the process is streamlined and the costs can be significantly lower than filing for National Registrations in individual countries. The registrant can renew the International Registration and record changes to the International Registration (i.e. owner or address changes) centrally through a single filing with the International Bureau instead of having to do so separately in each designated country (which can be time consuming and expensive).

There are also potential downsides to filing for an International Registration. The biggest one is that the validity of the International Registration in every designated territory is contingent upon the underlying U.S. application maturing into a Registration and remaining valid for five years. If the underlying application is cancelled for any reason, the rights in the foreign territories will be lost as well. Accordingly, in situations where the underlying U.S. application has a reasonable chance of ultimately being denied, it would make sense to file applications for National Registrations in foreign countries in order to avoid the dependency requirement. However, unlike the streamlined International Registration filing process, which may be handled through the USPTO by a U.S. attorney, applications for National Registrations must be filed directly with the individual trademark offices in each country or territory where protection is sought. This requires engaging foreign attorneys to file the applications which can add substantial expense.

Takeaways and Pitfalls to Avoid

1. Consider global issues and account for potential growth when choosing a trademark. Among other things, brand owners should consider: 1) what their biggest potential markets are, even if there is no current plan to sell abroad, 2) whether the goods will be sold online and if they will be shipped abroad, 3) in what countries are the goods most likely to be knocked-off, and 4) where the goods are being manufactured.

2. Once a mark is chosen, conduct a U.S. trademark clearance search to ensure that 1) the trademark is eligible for registration, and 2) that the proposed trademark does not conflict with any third party trademark rights.

3. Conduct foreign trademark searches in order to make sure that you will not be blocked from expanding into or selling in foreign countries of interest.

4. Do not delay in filing a U.S. application, as there are numerous benefits to obtaining a Federal Trademark Registration and filing early. Importantly, filing an intent-to-use based application will give you a constructive first-use date and establish filing based priority in the U.S.

5. File in foreign territories within six months of filing in the U.S. in order to claim priority back to the U.S. application filing date.

6. File the right type of application in foreign territories (International Registration vs. National Registration) depending upon the circumstances.

7. Work with an experienced trademark attorney that understands the global trademark landscape and works with a network of reliable trademark attorneys in foreign countries.

Reprinted with permission from the September 10, 2020 issue of the New Jersey Law Journal. © 2020. ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.