Trademarks are among the most valuable assets owned by companies that focus on individual consumers — from breweries to start-up app developers. Trademarks protect brands and can be found in the form of words (COCA COLA), symbols (Nike’s swoosh), and slogans (SHAVE TIME. SHAVE MONEY owned by Dollar Shave Club). However, many smaller U.S. companies do not fully appreciate the need to protect their ability to expand their use of their brands into international markets.
This article provides an introduction to the benefits and pitfalls of international trademark protection, with a brief discussion of recent developments in China and Canada.
Many U.S. companies understand the need to register their important trademarks with the U.S. Patent and Trademark Office (USPTO). Registration in the USPTO is not essential, but provides valuable benefits to the trademark owner, such as presumptions of ownership, validity, nationwide priority as of the filing date, and availability of enhanced damages. Under U.S. law, U.S. citizens and U.S. companies can obtain federal trademark registrations only if they have sold their products or services under the trademark. The USPTO requires U.S. trademark applicants to submit evidence of their use of their trademark as well as a signed affidavit regarding their use of the trademark.
By contrast, the vast majority of foreign countries allow companies and individuals to obtain national trademark registrations simply by filing a trademark application with the national trademark office. Generally, if no third party owns a related mark for related products or services, and if no third party brings an opposition action to block the application, the national trademark office will grant the trademark registration to the applicant — even if the applicant has never used the trademark and has not demonstrated any intent to use the trademark. And unlike patent applications, trademark applications are relatively inexpensive. Thus, outside the U.S., there is far greater power accorded to individuals and companies who seek to profit from registering other companies’ trademarks, known as trolls and squatters.
U.S. companies who are selling their products or services abroad, who plan to do so at some point, or who simply wish to do so in order to make them more attractive to investors or potential acquirers, often face a challenge. Their trademark applications can be blocked by national trademark offices or by foreign companies that own related marks. To help avoid this possible stumbling block, U.S. companies should give consideration to foreign trademark applications early — ideally at the time they adopt and first launch their U.S. brands.
Two recent developments highlight the increased challenges faced by U.S. companies.
First, China has witnessed an explosion in trademark filings. In 2016, there were 3.6 million trademark applications filed in China. That number increased to 5.7 million trademark applications in 2017. And in 2018, there were almost 7.4 million trademark applications filed in China. Included in these 7.4 million applications are a significant number of applications filed by applicants who do not plan to use the trademark for some or any of the products or services covered by the registration. Anecdotally, I find China to be one of the more difficult countries in which to obtain a trademark registration, largely because the Chinese trademark office readily finds conflicting third-party trademarks that trigger a refusal of my client’s application.
Second, Canada has dramatically changed its trademark laws, effective June 17, 2019. Among the changes, Canadian trademark applicants will no longer need to use their marks in Canada as a precondition to obtaining a Canadian trademark registration. Canadian commentators predict that trolls and squatters will search the U.S. trademark database for brands that are unprotected in the U.S., and then will file trademark applications for these unprotected brands. One Canadian trademark lawyer told me that he expects a “gold rush” of new trademark filings in Canada. There is some evidence that this wave of new filings is underway already.
But a U.S. trademark applicant is not defenseless.
For example, in China, Canada, the EU and other jurisdictions that do not require use before obtaining the registration, these trademark registrations have a shelf life, at least potentially. For example, if the owner of the trademark registration fails to use the mark for a period of years (three years in China, five years in the EU, and three years in Canada), in certain circumstances, brand owners can bring legal proceedings to block a third party application or cancel a registration based on prior use, but this can be uncertain, expensive, and time consuming.
All trademark owners should regularly review their trademark portfolios and consider filing foreign applications. Protection outside the U.S. can be obtained by filing foreign applications directly with the national trademark offices of foreign countries, or through an international trademark application filed directly with the USPTO and administered through the World Intellectual Property Organization. The strategic options available to U.S. companies seeking foreign trademark protection are beyond the scope of this article. But all companies should remain mindful that their U.S. trademark registrations are valuable here in the U.S. but provide virtually no protection once these companies leave home.
Peter Kunin is the Managing Director at Downs Rachlin Martin PLLC. His practice focuses on trademarks, software and technology licensing, and copyrights.
Reprinted with permission from the New Hampshire Bar Association. Originally printed in the New Hampshire Bar News on June 19, 2019. www.nhbar.org/publications