Intellectual Property Attorneys


The New Patent Law in New Zealand

Branding And Minimizing The Risk Of Trademark Squatting In Foreign Markets

13 years ago

by Steven J Hultquist, Principal and Founder, Hultquist IP

Under various international treaties/agreements, trademark applications can be filed in foreign countries that are members of such international arrangements, within six months of the filing date of the U.S. trademark application, claiming the priority of such U.S. filing date.

Such priority-based filing means that the foreign trademark application relates back in time to the U.S. filing date.  In countries where trademark rights are allocated on a first-to-file basis, this can be a substantial advantage.

Further, it avoids issues with so-called "trademark squatters," parties who scrutinize databases of U.S. trademark filings and then file a foreign application for the same trademark, with a view to "offering" the foreign trademark application to the U.S. applicant when the U.S. applicant enters that foreign market without having filed a priority-claiming trademark application in that foreign country.

Such "offers" may entail extraordinary cost to the U.S. applicant, and if the trademark squatter is not "bought out," the result may be litigation by the squatter to stop the use of the trademark on the product being commercialized by the U.S. applicant, which may force the U.S. applicant to rebrand the product for a specific foreign market, which likewise can be a costly exercise.

Minimizing the risk of trademark squatting therefore requires one to plan effectively so that priority-claiming foreign trademarks are filed within the six months priority period from the U.S. trademark application filing date, so that potential squatters do not view the on-line records of the U.S. Patent and Trademark Office and wait out the six months priority period with their own preemptive filing for trademark registration.

In some countries, trademark rights are created by use, as opposed to a first-to-file system.

The trademark association INTA in 2005 surveyed countries in which trademark use was a requirement for registration or renewal of registration.

As reported by that survey, the only countries with any requirement of use for either or both of registration or renewal were Argentina, Canada, Indonesia, Mexico, Philippines and the United States.  In Argentina, Indonesia and Mexico, use is not required in the first instance for registration, but is required for renewal of a previously granted trademark registration. 

Thus, the only countries requiring use as a condition of registration in the first instance are Canada, Philippines and the United States (note: in the U.S., foreign-origin priority trademark applications can be relied on to obtain registration of a trademark without use in United States interstate commerce, as an exception to the foregoing rule).

In all other countries, no use requirement exists.  It is simply a race to the Trademark Office.

Thus, the risk in delaying trademark registration is that trademark squatters may register the trademark that is being promoted and used on products, in countries where markets will potentially be pursued by the true owner, and then offer to sell the registration at prohibitive cost in that market. Trademark squatters actively scrutinize USPTO trademark databases to identify prospective brands and products for such purpose.

Therefore, it is best to avoid making any statements in marketing efforts, promotional brochures, website information releases, etc., referring to future global commercialization efforts involving a product identified by trademark brand name, particularly where a U.S. trademark application has not been filed, or if filed, has already passed the six months priority period without filing in the target countries. 

In like manner, statements of future marketing and sales efforts in specific countries ("we anticipate introduction of the product in the European and Asian markets in Q3, 2014…") is simply asking for trouble where trademark rights have not been presently or prospectively secured, and the brand name is being touted.

The bottom line is that brand identity is essential component of the strategic marketing and commercialization plan, and should be rigorously considered, so that you know where the product will go commercial, and when, so that the brand rights can be timely secured.

Since there is no use requirement outside of Canada, the Philippines and the United States to secure registrations in the first instance, there is no impediment to gaining registrations for future commercialization activities. Aince registrations last for 5 to 20 years, and in most countries can be renewed indefinitely, the focus should be on planning effectively and filing in a timely and strategic fashion for trademark registration, so that the risk of trademark squatting is minimized and preferably avoided.

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