Prioritizing International Trademark Protection: Where to Start?

There is no doubt that securing and maintaining foreign trademark registrations can be burdensome and expensive. But without such protection, you could find yourself shut out of a potential international market because another party has registered your mark first. Alternatively, you might have to pay that other party a large sum to purchase a mark you spent years to develop. Because of these potential consequences, the cost and effort of securing international trademark rights are usually money and time well spent.

In order to properly protect your assets, we recommend filing for trademark protection in each country where: (i) you are currently doing business or manufacturing products, or intend to; (ii) competitors are doing business or intend to do business; and (iii) counterfeiting and intellectual property theft is high.

For a majority of companies, this ideal plan will be too expensive and time-consuming. If this is your situation, you will need to prioritize your international trademark filings. Some factors to consider when prioritizing international filings include: (i) the significance of your business in a particular country; (ii) whether or not the expense of filing there can be absorbed in light of your current or projected sales volume; (iii) the filing system of the country—i.e., whether it is a “first to use” or a “first to file” country; and (iv) whether or not there is a need for defensive filing in order to prevent the use or ownership of your mark by a third party.  

The first two factors seem obvious. If you do significant business or if you manufacture in a specific country, protection in that country should be a priority. In contrast, it may not be cost-effective to file in a country unless you realistically believe that the loss of the mark would have a substantial impact on sales or other business relationships. If your sales in a particular country are so limited or insignificant that having to make a product name change in that country would not be a material concern, then filing for registration may not be justified initially, or at all. 

Although the third and fourth factors may not be as evident, they are certainly important to consider when prioritizing where to file. As with other laws, the laws establishing ownership in a trademark are country-specific. For example, some countries, including the United States, Australia, New Zealand and the United Arab Emirates, are first-to-use countries, which means registration is not required to establish ownership in a trademark; in fact, “common law” ownership rights arise from the actual use of a trademark in commerce. Thus, you automatically have some ownership right in a mark if you are the first to use it in commerce to identify particular goods or services, regardless of registration. However, in much of the rest of the world, including the European Union, China and Latin America, use is not a factor in ownership of a trademark and instead the first party to register the mark is the owner, even over prior users. Given the importance of registration in first-to-file countries, registration in those countries may take priority over first-to-use countries with similar significance to your business.

A first-to-file system also opens the door for trademark squatting and theft, particularly in certain high-risk countries such as China, Japan, South Korea, Russia, Taiwan and Turkey. Trademark squatting is the practice of registering other companies’ brand names as trademarks in bad faith prior to the registration by the owner who actually developed and used the mark. If the squatting is done in a first-to-file country, the squatter’s registration will block the true owner’s ability to register the mark, as well as their right to use the mark in that country. Consequently, defensive filings in countries where squatting is prevalent may be critical to the protection and use of your brand. Otherwise, you may be forced to pay off a squatter to secure your right to use a mark you spent substantial time and money developing, or – even worse – you could be forced to change your mark.

China is probably the most notorious high-risk first-to-file country. Although new laws in China have attempted to limit bad-faith registrations without legitimate intent to use the mark, the full effect of such laws is not clear at this point. Even though these laws may eventually help mitigate the extortionate effect of bad-faith registrations, there is no evidence that they will limit the blatant theft of U.S. brand names by Chinese companies. In some cases, these trademark thieves are even worse than trademark squatters because they are less likely to allow the U.S. owner to buy its mark back. 

Even famous marks are not exempt from theft in China. Like the U.S., China does recognize broader protection for well-known marks; however, well-known status is often difficult to obtain because evidence of the notoriety of a mark in other countries holds little value in the determination of status in China. In order to acquire well-known status, the trademark must be well-known in all or most of China, well-known prior to the thief’s bad-faith filing, and in use for three to five years before the bad-faith filing. Because of these limiting conditions, many marks that are famous in the U.S. can be freely registered and used in China by others before the U.S. brand expands into China. In fact, Apple recently lost ownership of its famous mark IPHONE in China for use in connection with handbags, mobile phone cases and other leather goods. The mark is now owned by a Chinese company, Xintong Tiandi, which first filed and secured registration of the mark in China in 2007. Despite what most would assume is the worldwide fame of Apple’s IPHONE mark, the Chinese court ruled that Apple could not prove that the mark was well-known in China before Xintong Tiandi’s trademark filing and thus awarded ownership of the mark to the first-to-file.

The bottom line is that if you are making, or intend to make, significant use of a mark in a foreign country, or if significant harm or inconvenience would result from your lack of ability to use a mark in a particular country, then you should file for trademark registration in that country as soon as possible to ensure your ability to use the mark and to prevent others from using, owning or stealing it. If protection in all countries of use or intended use is unrealistic, then you should prioritize your filings taking into account the factors discussed above. Please feel free to contact Robinson Bradshaw if you would like us to review your list of priority countries and provide a more detailed analysis of the requirements, costs and obstacles of filing in particular countries.