The trademark laws of the United States provide businesses with significant advantages in protecting their brands, even without perfecting those rights with the state or federal governments. This is because the United States trademark law confers trademark rights based on use in commerce, meaning in many situations unregistered rights can be used as effectively as registered rights to prevent infringement of a brand. Therefore while registering your trademark rights in the United States does confer additional and important rights, the lack of registration is not fatal, or potentially fatal, to your trademark rights. This is not always the case in foreign countries.
The grant of trademark rights based on use is not the international norm. The majority of foreign countries confer trademark rights based on the first entity to file a trademark application with the government (known as “first to file” countries). While this system has advantages in terms of quickly and clearly identifying the “owner” of a trademark, it can have significant consequences for brand owners that expand into foreign countries without first securing their brand within those countries. Notably, a company that has been using a trademark in a “first to file” country without registration may be liable for infringement if another entity subsequently files for the trademark in question—in such a case the advantage goes to the owner of the registered rights, not the first user. Brand owners should secure rights in countries in which they are doing significant business or sourcing product to ensure that they can continue to do so.
There is no single trademark registration that provides worldwide protection. Making matters more complicated is that trademark rights are territorial with no uniform international registration system. (International treaties—notably the Madrid Protocol—can help with filing in each jurisdiction, but the treaties themselves do not confer any actual rights within each jurisdiction). As a result, except for a handful of trading blocs such as the European Union, a brand owner seeking to protect its rights in a specific country must file a separate application within that specific country. This means that brand owners often face difficult choices about which countries to seek protection in based on budgetary and operational considerations.
Have a five year plan. In many cases, individuals hoping to gain an advantage over a brand owner can be more aggressive at seeking trademark rights than the brand owner itself. Frequently these individuals, or “squatters”, will file for trademark protection on successful brands in foreign countries even before the company has any intention to expand to that specific country. This means that it is important to keep your long term expansion and sourcing plans in mind, and take preemptive action to secure rights in countries in which you may wish to do business in the future. The alternative is potentially paying a squatter many times the cost it otherwise would have taken to secure the rights.
Understanding that foreign countries have different rules surrounding brand protection allows companies to plan for the future and ensure that they can use their brand as they expand.
Matthew Moersfelder represents companies in branding and trademark strategy. He has broad experience in counseling clients from start-ups to long established companies in fields ranging from retail to distribution to production. Matthew can be reached at firstname.lastname@example.org or directly at 206.757.8014.