Published March 29, 2023
In March of 2023, the Supreme Court heard oral arguments in Abitron Austria Gmbh v. Hetronic International Inc., which addressed the extent to which U.S. trademark law extends beyond the country’s national borders. The issue came up in the context of a contract dispute between a trademark owner and a former licensee, which resulted in a substantial damages award to the trademark owner that relied heavily on the former licensee’s foreign sales to foreign customers. While the particular circumstances of this case may be unusual, the case highlights a critical aspect of trademark law and the protection of trademark rights that all U.S. trademark owners should keep in mind.
Namely, the Supreme Court’s coming deliberations notwithstanding, trademark rights are territorial by nature. That means, in most cases, trademark rights are acquired on a jurisdiction-by-jurisdiction basis, and the rights you may have established in the United States (again, in most cases) will have little to no relevance in any other country of the world.
For that reason, even if your company currently has no presence or activity outside of the United States, it is still worth exploring your options to establish trademark rights in any foreign countries of interest sooner rather than later.
Here are six things to keep in mind as you consider protecting your trademarks locally and abroad:
- Trademarks are territorial
As noted, trademark rights are acquired on a jurisdiction-by-jurisdiction basis, with rare exceptions (such as for famous trademarks or special cases like the Olympics brand). Even in the case of bordering countries such as Canada and Mexico, the trademark rights you may have established in the United States will not prevent a third party from adopting the same brand, even for directly competing goods and services—unless, that is, you have established trademark rights in those countries as well.
- Trademark systems are divided between “First to Use” and “First to File”
How trademark rights are established can also differ between countries. Broadly speaking, the trademark systems of the world are split between “first to use” (meaning that priority goes to whoever uses a trademark in commerce first, regardless of whether that same person or company files for registration) and “first to file” (meaning that priority may go to whoever gets to the Trademark Office first, even if that person or company has never actually used that trademark).This distinction means that even if you’ve been conducting business in a country for some time, a third party may take control of your brand in that country by getting to the local Trademark Office ahead of you. Conversely, it also means that you may acquire rights to your trademark in a country even if you have never had any presence in that country before.
- Many countries do not require use prior to registration
The United States is one of only a handful of countries in the world in which the actual use of a trademark by a domestic applicant must be shown before the Trademark Office will issue a registration. In many countries, someone can acquire registration and enjoy several years of incontestable trademark rights before the registration may be challenged on “non-use” grounds. This creates a lot of opportunities for both innocent and bad faith actors to claim rights to your trademark in foreign countries, even if they have no immediate or legitimate plans to use that trademark.This can not only prevent you from securing rights to your trademark in that country, but it can even block your products from entering that country or hinder efforts on your part to prevent infringing products from entering the United States as imports. While you can use this to your benefit, as noted above, it also means that getting ahead of “pirate” registrations can be essential to protecting your trademark from abuse and “hostage” situations.
- Different countries can offer different scopes of protection
Another difference between the United States and most other countries is the scope of protection that a trademark owner can acquire through registration. Whereas the U.S. Trademark Office requires a fairly specific and relatively narrow description of goods and services for trademark registrations, other countries permit applicants to include a wide range of goods and services—again, even if the applicant cannot provide proof of use of the applied-for trademark with some or all of those items.By way of example, while the United States will require applicants to specify the specific functions and purpose of “downloadable computer software” as a good, other jurisdictions such as the European Union may issue a registration covering “computer software” (as well as “computer hardware,” “laptop bags”, and “baby monitors” to boot) without any further specification.
- Registration of your trademark in a foreign country can be cost-efficient
The costs of seeking registration abroad are necessarily a factor in planning your global brand protection strategy. Filing and prosecution costs can quickly escalate if you have a wide multi-national strategy in mind, particularly given that each application may face objections or oppositions that can be costly to overcome.Luckily, there may be opportunities to reduce those costs substantially by taking advantage of the Madrid System. You may qualify for the Madrid System if (a) you have a U.S. trademark registration, and (b) the foreign countries you have in mind belong to the Madrid System. In that case, a single “International Application” may be submitted through the U.S. Trademark Office to the World Intellectual Property Organization (WIPO). From there, WIPO will forward the applications to the countries designated in the application for examination by the local Trademark Offices.
You may incur additional costs from there, depending on whether the local Trademark Office raises any issues or the application receives any oppositions at the local level. In addition, applications filed via WIPO are limited strictly to the description of goods and services covered by your U.S. registration. Those issues notwithstanding, the Madrid System can offer considerable cost savings for trademark owners at the filing stage.
- International clearance searches can be costly but also cost-saving
Even if you have well-established trademark rights in the United States, this is no guarantee that your trademark is also available for use or registration in any other country. A targeted clearance search on a country-by-country basis can help you to avoid stepping into a dispute with a third party who has rights to the same trademark (or something confusingly similar) in that country. Not only can this help you to strategize how best to establish your trademark rights in that country, but it can also help you to strategize how to enter that country’s market with a strong brand. A trademark attorney can help to guide you through these issues and develop the right filing strategy for your needs and your budget.
When it comes to protecting trademark rights outside of the United States, there is no one-size-fits-all strategy. By taking the points outlined above as your starting point, a trademark attorney can help you to develop an effective and cost-efficient strategy that meets your needs while keeping the risks at a manageable level.
If you have any questions or would like to discuss your company’s trademark strategy (in the United States or worldwide), contact any member of our Intellectual Property Group for more information.