Australian Trade Marks Law: The Madrid System

Madrid Update

The Madrid System, administered by the International Bureau of the World Intellectual Property Organisation (WIPO) comprises two treaties; the Madrid Agreement Concerning the International Registration of Marks (since 1892), and the Protocol Relating to the Madrid Agreement (in force as of 1 April 1996). The Protocol introduced a number of innovations in the Madrid System with the successful aim of expanding its geographical coverage. Providing more time and flexibility to examine applications, as well as collecting higher fees for each application, has meant that most new members are acceding to the Protocol rather than the Agreement. The countries and multi-country organisations belonging to the Madrid System constitute a diverse array of 81 trade mark jurisdictions, 57 of which belong to the Agreement, and 74 to the Protocol. Australia has been a member of the Protocol only since July 2001.

According to WIPO, 2006 was 'a very good year' for the international trade mark system with a record number of filings. The current trend for new member countries, for example Australia and USA, is a substanial increase in the number of applications being filed each successive year. 2007 looks set to follow suit.

The Basics

The Madrid System provides the means to file a single application, in one office, in one language, with a single fee, and secure trade mark protection in multiple countries.

Before an international applicaton may be filed an applicant must already have secured trade mark rights (registration in the case of the Agreement and an application will suffice for the Protocol) in its Country of Origin. These are referred to as the 'basis' of the international application. Once filed, WIPO conducts a formal examination of the international application and -- if all is in order -- forwards the relevant details to the Offices of each of the designated countries for substantive examination. These Offices have 12 or 18 months (depending on whether they are a member of the Agreement or Protocol respectively) to issue a provisional refusal. In the case of a successful national application, it is valid for 10 years from application. Should an adverse report issue, local counsel must be engaged and the application is dealt with in accordance with local practice.

In or Out

With numbers continuing to climb each year, and both developed and developing countries becoming members of the Madrid System, accessibility to international trade mark protection has clearly improved.

Notable countries that are not yet members of the Madrid System include Canada and New Zealand (and their absence has certainly posed a drawback to the 'Madrid route' for our Australian clients). However, at least with respect to New Zealand this situation is set to change with the New Zealand Trade Marks Office confirming accession by December 2008. By comparison, the process towards accession is moving slowly in Canada.

The Madrid System has been a popular topic in India this year with the Union Cabinet approving accession to the Protocol in February this year. The Cabinet also approved amendment of the 1999 Trademarks Act to initiate action for accession to the Protocol and to introduce the relevant Bill into Parliament. Similarly, Israel is set to accede this year.

Various sources over recent years have suggested membership by Brazil to the Protocol. However, long delays in registration of marks through the trade marks office of Brazil may pose a difficulty.

News of Taiwan, Hong Kong, Mexico, South Africa, Malaysia, Indonesia, Thailand, the Philippines, Pakistan and most of Latin America, all absent from either the Agreement or Protocol, is less imminent.

Advantages

The most significant advantage of filing through the Madrid System is the potential for cost savings. The cost will almost certainly be less than applying separately for registration in each country because both filing and renewal fees are handled as single fees by the 'home’ country Office. Provided prosecution of the trade mark proceeds without any objections in each of the countries designated, local agent fees can be avoided. Another very real cost saving relates to recordals of change of name, assignments and licences. These factors coupled with the administrative efficiency of filing a single application rather than co-ordinating separate national filings, means the total cost saving can be dramatic.

Apart from costs, there are other advantages to electing trade mark registration under the Madrid System. Firstly, protection is usually faster compared with the national route because of strict time limits set under the System. Second, designation of additional countries down the track to accomodate growing brand protection requirements is allowed. Expanded protection may also be relevant when new countries become members.

Moreover, an international online database places third parties on notice of a registrant’s claim of worldwide trade mark rights.

Disadvantages

Whilst the options available under the Madrid System are significant, other critical factors may be relevant when advising clients with respect to their international protection strategies.

The main disadvantage of the Madrid System is the strict reliance on the ‘basic’ application for a period of five (5) years, under Article 6 of both the Agreement and Protocol. In particular, if the ‘basic’ application does not succeed, or is removed or restricted in any way, the fate of the ‘international’ application will parallel that of the ‘basic’ one. The provision can be used to effect a root-and-branch attack on an unwanted application in the 'home' jurisdiction. The Madrid Protocol partly addresses this issue by giving applicants the opportunity to re-file national applications claiming the benefit of the original Protocol filing date, albeit costly.

Under the Madrid System designations cannot claim a broader range of goods and services than the 'basic' application but specifications can be narrowed. For owners of international applications having Australia as the Office of Origin we aim for ‘basic’ applications that are ‘durable’ and cast realistically broad for the goods/services sought to be protected. However, the situation is somewhat different for US originating applications because that Office is notorious for insisting on narrowly drafted specifications of goods and services. Different considerations would therefore apply.

Another factor that may be relevant is the limitation placed on assignment of an application that has been made under the Madrid System. An assignment of rights obtained under the Madrid System is limited only to businesses that are nationals of, or domiciled in, or have an effective or commercial establishment in other Madrid member countries.

Statistics

The WIPO Gazette of International Marks published a result of 36,471 international trade mark applications received in 2006, representing an 8.6% increase on the previous year.

For the fourteenth consecutive year Germany was the biggest user of the System accounting for 18% of all applications filed. However, unlike many other countries which showed a significant growth in filings compared to 2005, this was a less than 1% increase from previous figures for Germany. Australia was amongst the filer countries with the highest increase over 2005, accounting for a 29.1% increase and moving to 11th place.

Unsurprisingly, the recent boom in foreign trading has meant that China was the most designated country in 2006.

The Future

An international trade mark system is essential to an expanding global business market and the figures demonstrate a positive response to the changes introduced by the Protocol.

Over the coming years we are likely to see more countries, both developed and developing, joining the Protocol offering a wider scope for international protection. One concern that has been voiced is that of trade mark registers becoming cluttered with marks registered by foreign companies who do not use their trade marks but, still, limit the marks available to local applicants.

Any international trade mark system attempting to balance the interests of such varied jurisdictions will inevitably attract opponents and invite change. The Madrid System, particularly since updated by the Protocol, offers an efficient and cost effective centralised system that in many cases will suit international brand owners.