Legal Report: Intellectual Property - Madrid Protocol will shake up IP business

Legal Report: Intellectual Property - Madrid Protocol will shake up IP business

If Canada joins the international trademark registration system, the Madrid Protocol, it will significantly impact the nature of work at intellectual property firms. The Madrid Protocol is often touted as a cost effective, one-stop way for companies to obtain trademark protection in more countries, but adopting the system will be costly, will require massive changes to Canada’s trademark laws, and will only benefit a relatively small number of Canadian businesses, according to intellectual property lawyers.

Under Canada’s present system, a Canadian company looking for trademark protection outside of Canada applies to the foreign country’s trademark office directly, often with the help of their Canadian lawyer and always with the assistance of a local lawyer in the far-off jurisdiction. Similarly, foreign companies looking to protect marks in Canada use Canadian lawyers and agents to assist with filing directly in Canada.

Under the centralized Madrid Protocol, after a company obtains and pays for a trademark in its home country, it can file one application directly to the World Intellectual Property Office (WIPO) in Geneva for a registration that covers up to 72 countries and pay one fee based on a uniform fee schedule.

The idea is that applicants who file for multinational trademark protection are spared the hassle of filing and monitoring a bunch of different applications, as well as the cost of government fees and the expense of hiring local lawyers everywhere they file.

However, the Madrid system is really just a centralized filing program, explains trademark agent Cynthia Rowden, a partner at Bereskin & Parr LLP in Toronto.

Once WIPO decides that the application meets certain requirements, it still sends applications back to national offices and those offices still conduct examination according to national laws, she says.

National offices then report objections back to WIPO, which reports back to the applicant’s agent, and an agent in the foreign country will often be necessary to file responses to objections. And companies can still be charged additional fees by national offices.

“In order to get national rights, the application still has to be examined in the national country and if there are objections, you still have to deal with them,” says Rowden. “It goes through the normal process that any application is going to go through. It’s just a filing system. It doesn’t give inherent rights.”

Applications under Madrid may become vulnerable to objections and oppositions down the road for a number of reasons. These could include objections from the national trademarks offices based on pre-existing trademark registrations or from companies by way of opposition proceedings.

Expect more objections

Thinking they’re getting a great deal, more companies will cover off more countries in their applications, and because of the increase in applications, more objections may follow, says Tracy Corneau, a trademark agent and partner at Borden Ladner Gervais LLP in Ottawa.

And companies that choose to file in multiple countries through Madrid will tend to forego hiring trademark professionals to conduct clearance searches and therefore may not be alerted to potential problems down the road ahead of time, she says.

Switching systems may also mean Canada will conduct less thorough examinations of substantive issues in order to fit examinations into tighter Madrid time lines.

Or, the tighter time lines could create a backlog of domestic applications if these applications are put on the back burner while Canada struggles to keep up with new international deadlines

Canada already imports substantially more intellectual property than it exports, and the Madrid system will make it easier for European companies with large trademark portfolios to cover off Canada without any extra hassle, so Canada may end up on the receiving end of a flood of marks, says trademark agent Marcus Gallie, a partner at Ridout & Maybee LLP in Ottawa.

“Because of that you might see a massive increase in opposition work by companies, saying, ‘Hang on, you’re not going to get that mark in Canada’” says Gallie.

Currently, getting trademark protection in Canada is cheap compared with the cost in other developed countries because the Canadian Intellectual Property Office (CIPO) allows applicants to file a single application and pay one filing fee for a trademark potentially covering a long list of goods. In comparison, countries under the Madrid system generally charge a fee per class.

But adhering to Madrid would require Canada to spend an enormous amount of money to adopt the classification system, say lawyers. And although the government may recoup its costs through per-class filing fees, the change will be expensive for many Canadian companies.

“If we were to go the international route, even national applications would have to be filed identifying the number of classes covered by the application,” says trademark agent Johanne Auger, a partner at BCF LLP in Montreal. “There would be a severe cost impact on domestic applications.”

The Madrid system is clearly cost effective for huge multinational companies with significant trademark portfolios that wish to file all over the world. The problem is, Canada isn’t exactly flush with these kinds of companies. For those companies doing the majority of business in Canada or North America, filing under Madrid provides no cost benefit

“Would it be of benefit to Canadian companies and Canadians?” says Gallie. “Probably a few, yes, but they would certainly be the minority.

I think it’s really good for Canada to be part of international treaties and be part of the international community for this kind of stuff,” he says. “But one has to question if the cost is worth the benefit to the people in the country.”

Still, Canada is the only industrialized country not party to the protocol, according to the CIPO, which is studying the implications of the protocol, but has not made a decision about whether to join.

The United States hopped on the bandwagon in 2003, but even so, companies in the U.S. haven’t used it as widely as expected, says trademark agent Michael Manson, a partner at Smart & Biggar/Fetherstonhaugh in Vancouver.

“Some people in Industry Canada feel if everybody else has joined, why haven’t we?” adds Rowden. “How do we justify not doing it? I always answer that question by saying my mother always said just because everyone else is jumping off the bridge doesn’t mean you should jump off the bridge as well. There have to be tangible benefits for Canadian businesses to do it.”

Despite this, intellectual property lawyers feel that Canada will eventually adhere to the system. The change is expected to result in reduced filing and searching work at the application stage, but in an increase in more complex objection and opposition work down the road.

“I think the larger firms with substantial client bases will see it as a lessening of filing business,” says Manson. “But over time, it will equal out or maybe even increase.”

“Smaller firms who depend more heavily on filings as opposed to long term prosecution or oppositions may be impacted more. And that’s a may. There’s no certainty to any of this.”

Lawyers will need to familiarize themselves with the new system, and be aware of all the advantages and disadvantages of the various options, so that the right clients use the system and others steer clear of it when there is no cost benefit, says Corneau.

“People who are not familiar with it may get caught in the trap of spending a lot more time and money than they initially thought they would going into it,” she says.

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