Indirect Harmonization

On the other side of the world, the Madrid System is already thriving. It has been well received in Asian countries, with almost a quarter of all trademark registration applications coming from Asia in 2019—almost double the number of a decade earlier.

Kowit Somwaiya, Managing Partner of LawPlus (Thailand), noted that “accession to the Protocol is part of the indirect harmonization of trademark laws and practices among the Association of Southeast Asian Nations (ASEAN) member states.”

Thailand agreed to join as part of its commitment to the 2009–2015 ASEAN Economic Community Roadmap and the ASEAN Intellectual Property Rights Action Plan 2016–2025.

All members of ASEAN have joined the Protocol aside from Myanmar, which has plans to join the Madrid Protocol in the next one to two years, according to Moe Moe Thwe, Deputy Director General of the Myanmar IP Department.

There are some strategies to seamlessly implement the System.

Constance Lee, Principal Trade Mark Examiner at the Intellectual Property Office of Singapore (IPOS), added: “For countries looking to accede to the Madrid Protocol, we would advise them to work closely with WIPO which has developed useful resources such as the Accession Kit that provides a detailed account of the features of the Madrid System and the steps required to prepare for accession.”

Mr. Asgarali also recommends that any countries that wish to join the Madrid Protocol should consider accession to the Singapore Treaty on the Law of Trade Marks as it will “facilitate modernization of processes.” Trinidad and Tobago joined the Singapore Treaty in October last year.

“This brought Trinidad and Tobago within the fold of international global standards for modern trademark legislation inclusive of the registration of nontraditional marks (scent, sound, and taste) and provides for the electronic filing of trademarks applications,” he said.

It’s not all smooth sailing. According to Mr. Somwaiya, there was a lack of local support at the early stage of the accession efforts in Thailand, mainly driven by a fear that the System would “disrupt the established local trademark registration system and the status quo of brand representation by local trademark attorneys.”

Thailand underwent numerous public hearings and public consultations, focus group discussions, education, and communication activities about the Protocol and System as well as the enactment of the laws and regulations to implement the System.

But local attorneys’ fears of a notable reduction in national trademark filings appears well-founded. In Thailand, the number of local applications decreased during the first 18 months of the implementation (from the first half of 2017 to the end of 2018), said Mr. Somwaiya. In 2016, there were 38,784 local applications. This number dropped to 26,514 in 2017 before rising slowly to 28,138 in 2018. Applications returned to a lower rate (26,698) in 2019.

However, since the beginning of 2019, the number of international registrations (IRs) with Thailand designated as a country for protection has increased significantly. Last year, designations increased by 13.2 percent year-on-year to 7,784 designations. A lot of companies in Thailand have also started to file IR applications using the Trademark Office of Thailand as the office of origin, noted Mr. Somwaiya.

National Matters

It’s much the same in Latin America. Since Mexico entered Madrid, the filing of trademarks by national firms has been significantly reduced, and a large number of the applications owned by foreign companies are being filed through WIPO rather than nationally, noted Eryck Castillo, Partner at Uhthoff, Gómez Vega & Uhthoff (Mexico).

Roberta Arantes, Partner at Daniel Law (Brazil), believes that the System will stimulate a change in the legal profession. “Lawyers that wish to survive these changes and stay ahead of the curve will need to engage in other activities that require more strategic thinking and planning to support brand owners. Litigation may also increase,” she suggested.

Also expecting some adjustments in the profession, Luiza Duarte Pereira, Partner at Murta Goyanes (Brazil), noted while there may be a reduction in local filings from foreign clients (who may choose to adopt the Protocol directly), she expects an increase of work involving office actions, oppositions and nullity proceedings, which will have to be done by local attorneys.

And in Trinidad and Tobago, Mr. Asgarali is confident that the System “may facilitate the ease of doing business and will complement but never substitute the existing great work done by law firms” in the country.

Globally, the System may not be overly popular with in-country applicants. For example, foreign applicants filed more than 10,715 applications designating Mexico in 2019, but Mexican companies using Madrid to protect their trademarks amounted to only 113 applications (with 560 designations) last year.

There’s also a potential language barrier: English, French, and Spanish are the three working languages of the System, which creates a hurdle for small companies across the world that don’t operate in these languages.

It may not be the most economical path for small and medium-sized enterprises (SMEs) in Mexico either. Mr. Castillo said that Mexican enterprises are mostly interested in protecting their marks in the United States, Canada, Central America, and South America and, for the last two, a lack of participating countries makes it cheaper to file nationally.

However, Mr. Balloussier believes that in the future, a large proportion of Madrid users may be Brazilian SMEs or individual entrepreneurs, as the high percentage (43%) of applicants filing a single application indicates.

“In the Brazilian context, this trend is particularly relevant because, according to data from Sebrae (Brazil), 99 percent of companies registered in Brazil are micro and small companies, and they account for more than 57 percent of the total number of jobs in the country. The Madrid Protocol drastically reduces the costs for these users to obtain protection of their trademark rights abroad and greatly facilitates this goal,” he noted.

For David Muls, Senior Director, Madrid Registry, at WIPO, a company’s size should not correlate to use of the System.

“Enterprises of all sizes rely on trademarks to communicate their brand values in the marketplace,” he said. “The Madrid System supports SMEs in expanding their businesses across borders while helping them build up a valuable IP asset. This can be of extra importance to smaller businesses that may own comparatively few tangible assets.”

Despite what seem to be surface problems, Madrid offers a multitude of benefits, not least of which is the aspiration of a fully harmonized system and cost-effective registration.

“By joining the Protocol, Brazil demonstrates the will to modernize its economy and to encourage national companies to invest abroad,” said Ms. Pereira.

A Little Encouragement

Convincing law firms that the perceived “dangers” of the System can be circumvented by new strategies and bringing awareness of the System’s benefits to local companies, is perhaps easier said than done.

Each country has its own challenges, but it’s possible to learn from those that have gone before.

By focusing on developing an IP ecosystem that caters to its customers’ needs, Singapore has witnessed “steady growth” in the number of applications filed under the Madrid Protocol, with an increase from 18,450 classes in 2014 to 28,099 in 2019, according to IPOS.

“We actively encourage the use of the Madrid Protocol for international applications from Singapore. That option is conveniently offered through IP2SG, a one-stop online platform for IP registration we have launched and through which we have seen much success,” Ms. Lee said.

India, which deposited its instrument of accession in 2013, is another example. In that country an understanding of the System and its benefits was lacking.

“Marketing Campaign in India for International Registration of Trade Marks,” a report released in 2016 by WIPO and India’s Department of Industrial Policy and Promotion, concluded that while more than two-thirds of companies surveyed in India were aware of the System, there was an “information asymmetry” in relation to the benefits of trademarks in general and the Madrid System in particular.

As late adherents to modern IP rights laws, Indian companies approached the idea of trademark registration with cynicism, according to AN Damodaran, Professor at the Indian Institute of Management Bangalore (India), an author of the report.

“Indian laws in the pre-World Trade Organization era didn’t require companies to register their trademarks. Even after registration fever arrived in the preceding 15 years, new Indian companies (including startups) were unsure about the real, strategic advantages that registered trademarks offered to them in terms of enhanced market access,” he said.

At the time of India’s accession, the Madrid System was far from the minds of many companies in the country.

“Big Indian companies such as Reliance and Tata went for the direct filing route in overseas markets where they were present, as the benefits were obvious to them,” Mr. Damodaran noted. “But for a whole range of companies in the technology sector, this was not the case.”

According to the report, more than one-third of the 30 respondents had applied for trademarks internationally, but less than a quarter had made use of the Madrid route.

Non-awareness of procedure, costs, and a lack of interest in overseas operations were cited by respondents as the reasons for indifference to the System. The authors recommended that a campaign for the Madrid System should be integrated into the “Make in India” program, a national branding initiative.

This hasn’t happened, but despite this, since India joined the System in 2013, applications originating from the region have risen sharply to 460 applications in 2019, up 43.3 percent from the year before. Mr. Damodaran attributes this to awareness campaigns and, to a lesser degree, filing clinics.

Campaigns such as Make in India are “grand generic promotion strategies unleashed by India to promote India’s industrial capabilities in the global arena,” he said. “Insert the virtues of Madrid Protocol registrations into these generic campaigns, and you will see dramatic results.”