Madrid: A Flourishing System?
Progress on implementing the Madrid System for international trademark registration around the world presents a mixed picture, as Sarah Morgan reports.
The World Intellectual Property Organization’s (WIPO) Madrid System is certainly thriving: one year ago, it recorded its 1.5 millionth international trademark registration, in the same year that the United Nations agency celebrated 30 years since the adoption of the Madrid Protocol, the cornerstone of the Madrid System.
While the System has been in existence for more than 125 years, three-quarters of the current membership joined it during the past three decades. Membership in the Madrid System quadrupled from just 25 members in 1988, to 107 members now. The Protocol, which came into effect in 1996, allows for applicants to apply for or register a mark through an office of origin in their own country or region (if that is a signatory) and then designate international registrations based on that application or registration.
In October, Trinidad and Tobago became the latest country to join the Protocol. Beginning January 21, 2021, applicants can seek trademark protection through the centralized international registration system when selling their products and services in Trinidad and Tobago. The process of becoming a member of the Madrid System took 10 years.
“Trinidad and Tobago recognized the advantages of the Madrid System for trademark owners, our national economy and government, as well as professionals,” said Regan Asgarali, Controller at the Intellectual Property Office of Trinidad and Tobago.
As part of its preparations, the Intellectual Property Office has created a Madrid Protocol Processing Unit, composed of people who have been trained in the administration of the Madrid Protocol and who participated in study visits to the offices of Contracting Parties.
In 2019, four countries began implementing the Protocol: Brazil, Canada, Malaysia, and Samoa. When Brazil joined in July 2019, it became the last of the top 10 economies to accede, after a decade-long process.
As it stands, only seven South American countries are part of the Madrid Protocol, but with heavyweights Brazil and Mexico now on board, its popularity could soar.
While reasons for the general reluctance to join vary country by country, there are a few overarching themes.
Many intellectual property (IP) offices are government-funded, relying on the state to provide a budget. Hiring additional staff or updating infrastructure can be essential for readying the office for the Madrid System, but the state may not always agree.
In Brazil, the National Institute of Industrial Property (INPI) is considered a government entity, and everyone who works there is a public servant. Given the relative job stability of being a public servant, the Office has had to be careful not to invest too heavily in workers who it may not need later on, according to Isabella Cardozo, Partner and Head of Trademarks at Daniel Law (Brazil).
“In Brazil, there are many laws that protect public servants—once you have a job, you have the stability, and they need a serious reason to dismiss you,” she explained. “That’s why INPI is very cautious about hiring new employees just to tackle the backlog. Once that’s over, it would have to keep the employees or reassign them to another public service.”
It has been a challenge to reduce INPI’s trademark backlog to meet Madrid’s requirements and deadlines. Under the System, IP offices must issue their decisions within 12 or 18 months.
In December 2016, the time of examination in Brazil was 28 months for applications without third-party opposition and 64 months for applications with third-party opposition. Today these numbers have been dramatically reduced to six and nine months, respectively.
André Luis Balloussier, Director of Trademarks, Industrial Designs and Geographical Indications at INPI, said: “We faced an examination time scenario that made it impossible to commit to the 18-month time limit to decide on registration. Since then, there has been a great reduction in trademark examination time, making it possible to guarantee this requirement of the Protocol.”
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.
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.”
As with all else, extenuating circumstances can shift the trajectory of any system, including Madrid. So, how has the System fared during the global COVID-19 pandemic?
Early in the health crisis, in March, WIPO instituted a COVID-19 updates communication campaign for Madrid System users, and established a task force to collect and record missing email addresses for users.
Since the task force’s creation, the share of notifications sent on paper has decreased from 15 percent to 6.6 percent, and the total number of International Registration Numbers in the Register without email addresses has been reduced by 47 percent.
Demand for the Madrid System has remained strong throughout the pandemic. Including data to the end of September, the System is operating at 86 percent of what WIPO expected in terms of filings. As of the end of September productivity of the System (i.e., how much WIPO processed in a given month compared to the target figures for that month) was at 102 percent.
WIPO has also implemented new technology. In July, it launched the Madrid Application Assistant, an online tool to guide users in preparing their international applications. The tool is derived from Madrid e-Filing, the WIPO-powered online filing solution for Madrid member IP offices.
The number of IP offices using the e-filing solution has risen from three in 2018 to 10 today: Australia, Austria, the Benelux, Bulgaria, Canada, Estonia, Georgia, Iceland, Lithuania, and the Republic of Moldova. And, the European Union Intellectual Property Office (EUIPO) is discussing with WIPO the option to integrate Madrid e-Filing with the back-office system it offers to member states.
Mr. Muls concluded: “Despite the human and economic shock from the COVID-19 pandemic, the Madrid System continues to see high levels of demand. We are of course keeping a close eye on the evolving situation, as IP cycles are long. We were able to iron out some early transitional issues that were experienced by our users when operations became fully virtual in the spring.”
Brexit and Madrid: What You Need to Know
At the end of the Brexit transition period (December 31, 2020), international registrations protected in the European Union will no longer have effect in the United Kingdom. The UK will create national registrations that will mirror the acquired rights in the EU, at no cost for holders of international registrations.
“The Madrid and Hague Registries have worked very closely with the United Kingdom Intellectual Property Office and the EUIPO to ensure that the Brexit transition is smooth for the users of both Systems,” said Mr. Muls of WIPO.
While the solution delivers legal certainty and protection for holders, it does sever the link with the Madrid System. Holders who want to use the Madrid System to manage their newly created rights in the UK may do so under a provision known as replacement.
Article published on INTA. Read it here.