Madrid System Vs. National Filing: The Good, The Bad and The Ugly
In 1891, 130 years ago, the Madrid agreement concluded an attempt by WIPO to provide trademark owners the possibility, platform, and legislation to register a trademark in several countries by simply filing one application directly with their own national or regional trademark office. Almost 100 years later the Madrid Protocol was concluded in 1989 to build what is known now known as “Madrid System.”
112 members joined the Protocol while 55 members joined the agreement. This enabled trademark owners to register trademarks in 128 countries, as mentioned, in one application. Out of 198 countries around the world, the 128 countries covered by the Madrid System account 80% of global trade. It is a matter of time until the rest of the countries join.
The system is a “dream come true” to brand owners; unfortunately, we cannot say the same for trademark agents. History shows that national trademark filings drop 50% in the first year for any country joining the Madrid System -- leaving trademark agents with much less work to do. Agents who would typically handle filing, publication, registration, renewal, assignments, recordals, searches, and other tasks for all national applicants, will have to plan their resources and operations based on the fact that those tasks will be handled totally by WIPO and National Trademark Offices, after a county joins the Madrid System.
One application, one fee for filing, publication, and registration along with one power of attorney to obtain protection in 128 countries. The same holds true for renewals, assignments and recordals. Using the Madrid System is just smart investment of a client’s finite resources. When it comes to cost, the cost savings in filing an International Registration (IR) is massive; avoiding local agents’ fees, notarization and legalization fees, extra documents requirements, translation of documents, and other fees and costs. This is particularly evident in the fact that WIPO charges one fixed fee which is minimal, and the WIPO system is tax free, resulting in another 5-15% saving over filing national applications by waiving VAT in every country.
What’s more, there is no need to go through the exhausting, tedious and time-consuming mission of notarizing and legalizing powers of attorney, let alone other documents required by different countries such as certificates of incorporation or extracts from the commercial register or certified copies of the home registration. Most consulates around the world are suffering from huge backlogs while brand owners are flooded with short deadlines to submit such documents. The many advantages of using the Madrid System are readily apparent.
Of course, one of the most significant savings in using the Madrid System is that the brand owner will avoid totally the fees of local agents in every country. Such fees represent around 40-60% of the cost of registration around the world.
Another milestone accomplishment by WIPO is the search engine of trademarks. Brand owners can now do a global search in a click with many search fields and most importantly, free of charge.
It has been widely noticed that national filings tend to get examined faster than IR in many countries. Moreover, rejected applications in any given country require national appeal or petition by a national representative. The applicant will need to find national agents, communicate with them, get information including chances of success and fees, and decide on the case strategy and provide the national representative with legalized power of attorney under what are often very short deadlines.
It is also worth mentioning that some countries do not recognize WIPO certificates of registration and require a certificate from the National Trademark Office, which requires paying an additional fee. This also puts more pressure on enforcement teams; anytime they want to take any administrative or criminal action, they may need the certificate to be issued locally.
Some of the important questions for brand owners to consider when deciding whether to use the Madrid System include: a) will the brand owner be using the exact same mark in all those countries, b) will the list of goods/services be the same in all countries, some of which allow broad protection while others may have some restrictions and c) will the mark be used with translation or transliteration in other languages. Not all of these options are available in the Madrid System.
And The Ugly…
In case of any rejection or opposition in a designated state, this will only affect the specific country and will not be linked to other countries including the basic registration. However, this is not the case if a successful cancellation or attack against the basic registration, generally known as “central attack,” is made. A central attach may affect the registration in all other countries and the applicant will lose all applications/registration in all designated countries.
When using the Madrid System, the applicant pays in advance basic fees and the official fees up to registration (filing, publication, registration), while in national applications the applicant pays filing fees, and only when accepted pays publication fees, and only when no opposition has been filed pays the registration fees.
A trademark could be rejected for many reasons such as prior existence of confusingly similar marks and/or local regulations being generic, descriptive, commonly used, offensive meaning (in local language), of religious nature, in the contrary of the public order (in local language), and many other reasons. One trademark in one class, black and white, in all 128 countries costs on the order of US $25,000. If rejected, the whole investment will be lost. On the other hand, if the applicant went with national filing, only the filing fees for the country in which the rejection was received would be lost, normally representing only a small percentage of the total cost.
The Madrid System is a great protection platform to save time, money, effort and resources -- there are no doubts about that. Whether to use it or not is a totally different issue.
Trademark lawyers provide case-by-case advice based on the number of countries the brand owner would like to protect, the country of the home registration, the list of goods/services, the class or classes of the mark, whether the mark is in block letters or stylized, or colored or black and white, and legal proceedings in different countries, or shipping requirements, just to name some of the more frequent considerations. Those are all very valuable considerations to explore and before deciding to file national, IR, or some combination of both. It is not always safe to say go IR, and it would be much more costly to say go national, without having reached a practical, reasonable, and justified strategy.
The aim is to have most cost-effective approach to get maximum protection of trademarks. One of the most significant questions to be answered before any recommendation is, what are the chances for this trademark to be rejected in any country for any reason. In other words, it would be very valuable to take on the exercise that analyzes risk of rejection, assess that risk, and suggest means to mitigate the risk by choosing the best route. It is not only Madrid or National today -- we also have European trademark, ARIPO, OAPI, Benelux…etc.
Another important question would be, is this mark a well-known trademark? If “yes” then IR is the most effective way due to obvious reasons. If the mark is not well known and/or “vulnerable” or “weak” or “problematic” that is, one that contains generic or descriptive terms, or too many elements, or commonly used words, or confusing logos and colors, for example, then it could be the better option to go with national filing.
Finally, for IR, choosing countries just because they are members, and you can “tick-the-box” would in some cases reverse the advantage of using the system. It is like getting a gift on a product you bought as a “package” just because you got more value on your money while you do not need the gift. Is protection in this country needed; is protection is this country strong; is this country important to your line of goods/services; are you ever going to sell in this country?
Trademark value and IP value in general can represent more than 80% of the total value of a business. Spending the time and effort to develop a cost-effective, tailor-made, and well-planned strategy for obtaining broad protection is a very smart investment.