9 Disadvantages of the Madrid System

for International Trademark Registration

Attorney Le Quang Vinh – Bross & Partners

Email: vinh@bross.vn

Although the Madrid system apparently brings many benefits as mentioned in our earlier article “9 Key Advantages of the Madrid System for Internationally Registering Trademarks”,[1] it has also limitations.  Ranked as Tier 1 for intellectual property law firm by Legal 500 Asia-Pacific, Bross & Partners has discovered 9 limitations of the Madrid system as presented below.

1.     The Madrid system is not suitable for collective trademarks or certification trademarks. The reason is that when applying for international registration using Form MM2, the applicant is forced to choose all three types of marks: collective mark, certification mark, or guarantee mark instead of one of three. As a result, designated countries would issue provisional refusals as it is not clear what particular applied-for trademark is. The Madrid system also does not have a mechanism that allows applicants to submit other mandatory documents, such as documents proving the applicant's entitlement, regulations on use of certification mark or collective mark. Consequently, applicant shall spend more expenses and time to hire a local attorney to handle various refusals issued by these designated countries. Below is an illustrative example:

2.     The Madrid-based trademarks may be at risk from “central attack” threats by third parties (competitors) because protection resulting from the international registration in all designated countries shall be no longer valid, if the basic trademark (under a basic application or basic registration) is cancelled, invalidated or rejected within five-year period from the date of international registration due to any reasons including those of successful cancellation or opposition actions before the country of origin’s IP office. According to the Berkeley Technology Law Journal,[2] central attacks appear to have grown rapidly in recent years, ie. from just 200 total or partial cancellations in 1996 to 7,000 cancellations in 2017 alone. According to WIPO statistics, in 2013 the EUIPO confirmed 600 notices of ceasing of effect, of which 357 international registrations were revoked by reason of central attacks.

3.     The Madrid system does not accord with basic trademarks that are three-dimensional marks or non-traditional marks (eg. sound marks) because there would have a high risk of rejection in the country of origin. For instance, assuming that the following 3-dimensional trademark under a basic application filed in Vietnam, protection originating from the international registration will be terminated as a consequence of the "central attack" principle since this shape mark within 5 years will be probably rejected by the VNIPO (Vietnam) on the grounds that this 3-D mark would be considered as the normal shape of the product, devoid of distinctive character by Article 74(2)(b),(c) of the Intellectual Property Law. Upon ceasing of effect by the central attack, there would arise costs and time to request transformation of the international registration into various national registrations.

4.     Central attack is a legal action allowing a third party to invalidate an opponent's registered trademark in all the designated countries with a single opposition/cancellation action filed with the trademark office in the country of origin instead of filing multiple opposition/cancellation actions against the international registration in each designated country. However, in practice the central attack seems to be unworkable as in the case of Lego Juris A/S v. Longjun Toy Factory as briefed below:

5.     Where an internationally registered mark has been actually using in the United States prior to the priority date claimable under the Paris Convention, or under the date of international registration, or under the date of extension of protection into the US, it appears to be unfavorable to the applicant if there is third party’s identical trademark covering identical products filed in the USPTO earlier those priority dates. The key issue is that the United States does not accept Section 1(a) “use in commerce” filing basis for the Madrid Protocol applications, but only Section 66(a) filing basis along with submission of Declaration of intention to use of the mark under Form MM18 are accepted.

6.     Change in ownership of international registration is also considered another limitation of the Madrid system because the transferee of an international registration (individual or organization) must also satisfy the conditions of nationality, domicile, having a real and effective industrial establishment. It means that assignments of international registration may be recorded only if the assignee is a person who is entitled to file international applications. As a consequence, the owner of industrial property rights to the mark is much more restricted in his disposition than the way of exercising the right of disposition for a nationally registered trademark. Furthermore, even if a potential assignee satisfies this condition, in many cases recordal of change in ownership by the International Bureau (IB) of WIPO may be refused by the member countries because their laws state that such trademark assignment may cause confusion to the public about the characteristics, origin of goods and services.[4]

7.     Recording of licenses, division, or merger of international registrations that do not work in various designed countries would make the Madrid system’s advantage of one single application through one single procedure impracticable in many territories. For example, a statement by member countries filed under Rule 20(bis)6(b) shows that recording of trademark license is not valid in a lot of member countries such as OAPI, Brazil, Canada, China, Japan, Korea, Singapore, Russia, etc.

8.     International registration (if not rejected by the designated country's intellectual property office) is always stayed unrepresented by a local attorney, leading to a possible loss of registered trademark rights because the holder may not know, has not yet received notifications or documents delivered by the trademark offices of the designated country asking for counter-arguments or relevant evidences against opposition/cancellation actions filed by a third party in that country.

9.     In some circumstances, it may be difficult to control problems arising from errors or mistakes of intermediary agencies (eg. IB) during the international registration process, such as confusing the applied-for mark as a conventional trademark instead of a certification mark/collective trademark. The Madrid system generally does not have a mechanism to allow rapid information exchange between IB and the applicant in order to quickly correct such errors/mistakes, which may give rise to new complex situations such as unexpected refusals of protection, or it is possible that the trademark is wrongly granted protection as a common trademark, therefore it is to go back to the process of examination in the form of certification trademark/collection trademark in accordance with those designated countries’ laws as the designated countries had been inaccurately informed about type of trademark applied for.

Bross & Partners, an intellectual property company ranked First (Tier 1) by Legal 500 Asia Pacific, has much experience in registering trademark abroad and resolving complicated IP disputes including trademarks, copyrights, patents, plant varieties.

Please contact: Vinh@bross.vn; mobile: 0903 287 057; Zalo: +84903287057; Skype: vinh.bross; Wechat: Vinhbross2603.