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Trademark Pitfalls and Solutions for Expansion Overseas By Gregor A. Hensrude, Shareholder For many small and medium-sized businesses, the next step in their evolution is to take their products or services to an international audience. While this decision can provide a spectacular opportunity for growth, especially if one is in the consumer-goods industry, expanding into other countries presents many challenges, not the least of which is protection of your company's intellectual property. This article focuses on what is quite possibly the most important intellectual property you own - your trade name. Even if you have already registered your trademark with the United States Patent and Trademark Office, that step will provide you very little protection in foreign countries. Trademarks and trademark registrations are handled by each individual country (with a notable exception discussed below). This is further complicated by the fact that trademark rights in many countries are determined on the "first to file" system, meaning that even if you use the mark in a country for years, if another party innocently files for the same trademark before you do, they may be granted the exclusive rights to use that mark in the country. A discussion of the problems that arise when someone not-so-innocently files for your mark in another country before you would require another article, but is also an important consideration. So what to do? Of course, that depends wholly on what you are trying to accomplish, and particularly how fast you want to grow. If you are growing country-by-country, you might decide to file for trademarks in each country at or before the time you begin doing business in each country. This can be expensive over time, as each time you will probably need to retain a lawyer in the foreign country, but as an annual expense will be acceptable to many businesses. But the up-front expenses are less than the alternative, and this approach allows the company to focus on each target country in substantial detail. Another option, and one that is especially appealing if your international roll-out is going to be significant (e.g., all of the European Union countries in a short amount of time) is to piggy-back on your current United States-registered trademark through a system known as the "Madrid Protocol." The Madrid Protocol allows a registrant with a current or pending trademark registration to apply for the same registration in approximately 70 other countries with one simple application. If you file it simultaneously with your US application, or within six months of registration, your mark will obtain priority from the US date of registration. The fees for filing a Madrid Protocol application are quite high (around $15,000 in costs only, if you file for one class of goods, in all participating countries), but can be reduced significantly by not filing in every country. But if you do want to register your company's mark worldwide, the price for doing so is substantially less in attorneys' fees and costs than it would cost to file in 70 individual countries. The Madrid Protocol solution is a great way to get "bang for the buck," but it will not fit every business' goals. In addition to the up-front costs, it only covers countries who have signed off on the protocol, and while many of the developed and developing nations United States businesses want to target are included, there are some notable omissions. International growth can be a very exciting time, and a very profitable one, but careful planning is required to make sure that you do not cause your company more problems than are absolutely necessary. Protecting your trademark is a key ingredient in that analysis. Gregor A. Hensrude counsels business clients on a wide variety of concerns, including intellectual property protection at home and abroad, and has seen an increase in clients looking for international solutions for their businesses of late. Mr. Hensrude is a member of the intellectual property sections of the California State Bar and the American Bar Association. To learn more about Mr. Hensrude, click here.
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Gregor A. Hensrude, Esq.
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