Module 5 - Obtaining and Protecting Your IPRs Abroad
Lesson 1: How to Obtain and Protect Your IPRs Abroad
Reading time ~24 minutes
For many businesses, protection of intellectual property rights (IPRs) in the United States is only the first step. If your business conducts any of its activities abroad, or if there is any possibility that it may do so in the future, you must take steps to protect your intellectual property (IP) assets in foreign markets.
Increasingly, even those businesses that consider themselves "U.S. only" need to take steps to protect their IP assets outside the United States in order, for example, to protect the IPRs in their Web sites and to protect themselves against imports of counterfeit and pirated goods from other countries.
Efforts to protect IP in foreign markets generally focus on trademarks and patents, rather than copyright, because trademarks and patents are territorial. As discussed in Module 2, copyright protection generally does not depend upon procedures or formalities in individual countries; the mere creation of a copyrightable work is generally sufficient for copyright protection to exist in many countries of the world. In contrast, protection of trademarks and patents in foreign countries requires that affirmative steps to secure rights be taken in each country where protection is desired. Accordingly, this module focuses upon steps necessary to protect trademarks and patents abroad.
Navigating the procedural requirements in foreign countries can be difficult, and the assistance of an attorney in the country where registration is desired is generally necessary. In most cases, U.S. IP attorneys will work directly with foreign counsel to secure the necessary registrations.
To better inform yourself about protecting IP in foreign markets, you may look up the Web sites for IP authorities in different countries at www.wipo.int/members/en. You may also access information on the IP protection schemes in different countries through various IP "toolkits" provided at www.stopfakes.gov.
Current and Future Ancillary Business Operations
In addition to protecting IPRs in countries where products or services are likely to be sold, a business should also consider obtaining IPR protection in countries where it has (or may have in the future) ancillary business operations, such as:
- The purchase of parts or supplies
- The manufacture of products or product parts
- Research and development
- Customer services call centers
- Distribution centers
- Transshipment of goods/services
Benefits and Costs of Protection
In addition to the benefit of protecting against infringement, securing registrations in foreign countries, particularly of patents and trademarks, provides additional benefits to a business. Some of these benefits may include:
- Increasing the company’s value and visibility
- Making the company more attractive to investors
- Helping to secure financing
- Allowing the company to demand higher prices
- Increasing revenue through licensing
Businesses should carefully evaluate potential benefits in order to assess whether the benefits will outweigh the costs of obtaining foreign patents or trademark registration. For many small businesses, the benefits of foreign IPR protection, particularly patents, may not exceed costs.
Degree of Infringement Activity and Enforcement
Other important factors in deciding where to obtain IPR protection abroad are the amount of infringement activity in a particular country and the adequacy and effectiveness of enforcement mechanisms to address infringement. Keep in mind, however, that there are some countries with weak enforcement systems where seeking protection of IPRs may nevertheless be advisable.
One way business owners can evaluate how effective IP enforcement is in individual countries is to review the United States Trade Representative (USTR) Annual Special 301 Report, which examines the adequacy and effectiveness of IPR enforcement in various countries. The most current USTR Special 301 Report can be found at http://www.ustr.gov.
Nature of Business and IP to Be Protected
Laws differ in various countries regarding the scope of protection for certain types of trademarks and patents. For example, some countries protect sounds as trademarks, while others do not. In addition, some countries allow patents to be issued for computer software, while others do not.
Similarly, market conditions may be favorable for products in some countries but not in others due to trade barriers that different countries have erected.
A good resource to evaluate the market conditions for particular products and services is the National Trade Estimate Report on Foreign Trade Barriers, which can be found at: www.ustr.gov.
Protecting IPRs in every corner of the globe, while ideal, is generally impractical for all but a handful of the largest corporations. Decisions need to be made, therefore, regarding where IPR protection can and should be pursued. Factors to consider when deciding where to seek IPR protection include the:
- Locations of current and future markets for products and/or services
- Locations for current and future ancillary business operations
- Benefits and costs of protection in particular countries
- Degree of infringement activity and enforcement in particular countries
- Nature of the business and IPR to be protected
Companies should consider obtaining IPR rights in foreign markets as quickly as possible. In foreign markets where a business is already operating or into which the business reasonably expects to expand, IPR protection should be established simultaneously with, or quickly following, efforts to establish IPR protection in the United States. The urgency of seeking foreign IP protection arises from the laws of various countries pertaining to trademarks and patents.
With regard to trademarks, most countries in the world (other than the United States, the United Kingdom, Canada, and a few others) have "first to file" systems. As discussed in Module 3, in "first to file" countries, trademark rights are granted to the first party to register a mark in the country, regardless of who may have used the mark first in that country. Therefore, a U.S. business that has established significant brand recognition in its trademark may find itself unable to use that brand name in a foreign market if another party has beaten it to registration.
Similarly, inventors must keep in mind that most countries have "first to file" patent systems, which means that patents are granted to the first party to seek a patent rather than the first party to invent the patentable subject matter. In addition, most countries other than the United States bar an inventor from obtaining a patent if the invention is publicly disclosed before a patent application is filed.
You have now completed the overview of IPR protection in foreign markets. The rest of this module covers specific steps you must take to protect your trademarks and patent rights abroad.
As you learned in Module 4, searches always should be conducted before selecting a new trademark to determine whether the proposed mark would be likely to cause confusion in the marketplace with another mark already registered or in use. An Internet search is a good first step to get a general sense of how a proposed mark is being used around the world. Some trademark offices provide access to their trademark search databases on their Web sites, but professional trademark searches should also be conducted to ensure that use of the mark will not infringe the rights of any prior user or registrant.
If a mark has already been in use in the United States and the business is now expanding to foreign markets, new searches should be conducted for marks registered and in use in the countries into which the business seeks to expand.
Filing in "First to Use" Countries
As discussed in Modules 3 and 4, trademark registration is not required to establish trademark rights in countries with "first to use" trademark systems, such as the United States. Nevertheless, trademark registration in those countries confers considerable benefits on the trademark owner, and registration in those countries should be seriously considered.
In countries with "first to file" trademark protection systems, registration is necessary to protect a mark, and registration in those countries, if desired, should be pursued as quickly as possible.
Madrid Protocol
The Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol) is an international treaty that allows a trademark owner to seek registration in any of the countries that are parties to it by filing an international application. The International Bureau of the World Intellectual Property Organization (WIPO), in
Community Trade Mark (CTM)
The CTM offers the opportunity to protect a trademark in all of the countries of the EU by filing a single application. Applications for a CTM may be made either directly at the Office for Harmonization in the Internal Market in Alicante Spain, or at the trademark office of any of the EU member states.
Note that because the EU is a member of the Madrid Protocol, it is not necessary for a trademark owner to file both Madrid Protocol and CTM applications. However, if registration is sought only in the EU and not in all of the other Madrid Protocol countries, a CTM application may be a more efficient and less costly alternative. For more information on the Madrid Protocol versus the CTM, see: www.inta.org/index.php?option=com_content&task=view&id=192&Itemid=132&getcontent=1.
Paris Convention Priority
According to the Paris Convention (Stockholm Act 1967), if a trademark application is filed in the applicant's country of origin and the same application is filed in other signatory countries within 6 months after the first application was filed, the applicant can claim the filing date of the first application in the country of origin in the later filed applications. This filing date is the priority date for purposes of establishing rights in the Paris Convention members' territories.
Translations of Marks
When registering trademarks in a foreign country, it may be advisable to translate the mark into the country's native language. In countries that do not use roman characters in their native language, such as countries in Asia and the Middle East, you may wish to consider registering: (a) the English version of the mark; (b) the phonetic translation (transliteration) of the mark (e.g., SONY can be transliterated in Chinese as suo ni, which means "‘cable" (suo) and "nun" (ni); and (c) a conceptual equivalent of the mark (e.g., the trademark SHELL could be translated into the Chinese bei ke, which means "shell"). In some cases, the best approach may be to combine the conceptual and phonetic methods. For example, COCA-COLA in Chinese consists of the Chinese characters pronounced ke kou ke le, which has a sound close to the original pronunciation and means "tasty and happiness producing."
Establishing Trademark Rights Abroad Example
Following is an example of a hypothetical business and the steps it would need to take to protect its trademark rights abroad.
Nifty Products, Inc. (NPI), a U.S. company, has created a revolutionary new coffeemaker. The coffeepot will be sold under the name "WonderPot." Prior to its U.S. product launch, NPI files an intent-to-use application to register the WONDERPOT mark with the U.S. Patent and Trademark Office (USPTO).
NPI anticipates that its coffeepot will be a major success, and although it plans to launch the product in the United States, it has hopes of expanding sales to overseas markets within 2 years. Therefore, a month after getting its U.S. trademark application on file, NPI's attorneys assist NPI with trademark searches for the WONDERPOT name in other countries into which NPI plans to expand, including Australia, Korea, Japan, China, and each of the EU countries. Those searches do not reveal any conflict with the WONDERPOT name, and NPI instructs its attorneys to file trademark applications for WONDERPOT in all the countries searched. NPI would like to delay the expenditures associated with foreign trademark applications, but NPI's attorneys advise NPI that it can claim an earlier priority date under the Paris Convention if it gets those foreign applications on file within 6 months of the U.S. application. Based upon that advice, NPI instructs its attorneys to proceed.
NPI's attorneys give NPI the good news that it needs to file only a single application in order to secure trademark registrations in all of the countries in which it seeks trademark protection. This application can be filed using the Madrid Protocol because all of the countries in which NPI seeks protection are members of that international agreement. Equally good news is that NPI's Madrid Protocol application can be filed through the USPTO.
NPI makes sure that all of its products bear proper trademark notices. NPI is now in a strong position to protect its trademark rights at home and abroad.
Anyone seeking to establish trademark rights in other countries should:
- Conduct trademark searches in those countries.
- File applications to register the trademark in each country where trademark protection is desired. When applying for trademark registrations, applicants should consider:
- Filing in "first to use" countries
- Taking advantage of international filing systems, such as the Madrid Protocol and the Community Trade Mark (CTM)
- Claiming Paris Convention priority
- Filing for both phonetic and conceptual translations of marks
Click here to see an example of a business taking steps to establish trademark rights abroad.
Continuous Use of Mark
As in the United States, trademarks rights must be maintained through actual use of the trademark. Most countries have provisions for cancellation of a trademark registration in the event of nonuse for a certain period of time, which is usually a period of either 3 or 5 years. If the mark is not used for the prescribed period of time, a court may find the mark to have been abandoned, thereby enabling others to use the mark.
Consistent and Proper Trademark Usage
As is discussed in Module 4, it is customary in the United States to use the symbols TM (trademark) and SM (service mark) in connection with marks that are not registered and the symbol ® in connection with marks that are registered. While trademark symbols are customarily used in the
Enforcement of Rights
As is discussed in Module 4, a trademark owner must take action against third parties who, without the trademark owner's consent, use a mark that is confusingly similar to their mark. Failure to police infringers can progressively weaken the mark’s image and strength and may, over time, cause the mark to be declared abandoned.
Making Necessary Filings to Maintain Registrations
As with U.S. trademark registrations, periodic filings and fees are required to maintain foreign trademark registrations. The rules in each country are different, and trademark owners should enlist the aid of local trademark attorneys to assist with maintenance of foreign registrations.
Proper Licensing Contracts and Oversight
As discussed in Module 4, all trademark licensing agreements should be in writing, and trademark owners must exercise quality control oversight over all products and services offered to the consumer by a licensee under the owner's mark.
Once trademark rights have been established in foreign countries, steps must be taken to ensure that those rights are properly maintained. As in the United States, failure to take appropriate steps to maintain a trademark in a foreign country can result in abandonment of the trademark rights. Steps that should be taken to ensure that trademark rights are properly maintained in foreign countries include:
You have now completed the material on trademark protection in foreign markets.
- If you wish to learn more about enforcing your trademark rights against infringement, select Module 6 from the menu on the top left of this screen.
- If you wish to read about protecting patents in foreign markets, continue with this module.
Anyone seeking to obtain patent rights in other countries should:
- Conduct patent searches in those countries to determine whether the invention is patentable and whether the invention is already covered by another patent in that country.
- File applications to register the patent in each country where patent protection is desired. Patent applications vary by country, but like the United States, patent applications generally must include:
- A description of the invention, usually accompanied by drawings, plans, or diagrams
- Specific claims that indicate the scope of protection being sought in the patent
First to Invent vs. First to File Countries
As discussed in Module 4, the United States has a "first to invent" system, which means that a patent will be granted to the person or persons shown to be the first inventor of the subject matter in question. This system differs from almost all other countries, which have a "first to file" system that awards the patent to the first to file a patent application regardless of who invented it first. Patent applications in "first to file" countries should be pursued as soon as possible to avoid losing patent rights to others who file first.
Public Disclosure Rules
The Paris Convention
The Paris Convention helps inventors from signatory countries seeking to establish rights in other countries by granting them the right to claim an earlier filing date in subsequent patent applications. Specifically, if an inventor files patent applications in other signatory countries within 1 year of filing his or her original application (usually in his or her home country), the later applications will carry the filing date of the first application.Patent Cooperation Treaty (PCT)
The PCT provides for the filing of a single international patent application that has the same effect as filing individual applications in the countries that are members of the PCT. The PCT provides for a two-step examination procedure:
- The patent office receiving an application makes a preliminary examination of the application.
- National patent offices in PCT member countries review the application, giving weight to the conclusions reached in the preliminary examination.
Note that after the filing of the initial application, the application will be examined separately by each PCT member country, and separate fees will need to be paid to each country examining the application.
The PCT has more than 135 members, including the United States and most developed nations of the world. A current list of PCT members can be found at: http://www.wipo.int/pct/guide/en/gdvol1/annexes/annexa/ax_a.pdf.
U.S. inventors should file their PCT applications with a special branch of the USPTO called the U.S. Receiving Office. For information and assistance regarding the PCT application process, go to: http://www.uspto.gov/web/offices/pac/dapp/pctlegaladminmain.html.
Protecting Patent Rights Abroad - Example
Following is an example of a hypothetical company and the lessons it learned about protecting patents abroad.
Biotech Corporation (Biotech) is a small pharmaceuticals company based in California. In July 2001, Biotech completed work on a promising new drug for treating heart attack victims. In January 2002, Biotech filed for a U.S. patent covering the composition of the drug, which was granted in March 2003.
In December 2003, Biotech filed a patent application for the drug in Japan. In March 2004, Japan's Patent Office issued a notice to Biotech advising that it had rejected Biotech's patent application because of lack of novelty, citing a prior pending patent application filed in February 2003 by Advanced Medical Ltd. (AML), a U.K. pharmaceuticals company. AML had simultaneously been developing a drug that was almost identical to Biotech's drug, and AML had completed work on its drug in December 2002.
Biotech is furious that its patent application has been rejected in Japan, and it has pointed out to all concerned that it invented the drug before AML. Further, Biotech argues that it filed the Japan patent application well within 1 year from the date that its U.S. patent was granted and that its Japan patent application should therefore have been given priority status.
Unfortunately for Biotech, it is in a very weak position to challenge AML's Japanese patent because it did not take appropriate steps to protect its rights. The fact that Biotech invented its drug first is irrelevant to the question of priority in Japan because Japan is a "first to file" country, rather than a "first to invent" country. Biotech could have secured a prior filing date pursuant to the Paris Convention, but it appears to have misunderstood the requirements for doing so.
Under the Paris Convention, if an inventor files a foreign patent application within 1 year of filing his or her original application (usually in his or her home country), the later application will carry the filing date of the first application. In this case, Biotech filed its Japan patent application within 1 year of its U.S. patent being granted, rather than 1 year after the filing of its U.S patent application. Therefore, it was too late to claim Paris Convention priority.
It should also be noted that Biotech should have considered filing a PCT application rather than seeking protection only in Japan. If it had done so, it could have secured priority in many foreign countries through a single filing.
When applying for patents in foreign countries, applicants should consider:
- "First to invent" vs. "first to file" countries
- Rules with regard to public disclosure in foreign countries (risk of losing patent rights)
- International agreements that aid in patent protection internationally, including:
Click here to see an example of the steps a U.S. business needs to take to protect its patent rights abroad.
For more information about establishing patent rights abroad, including estimates of costs associated with that process, see the General Accountability Office (GAO) report entitled "Experts’ Advice for Small Businesses Seeking Foreign Patents" posted at www.stopfakes.gov.
Renewal or Maintenance Fees
Typically, in order to maintain patent rights for the full term of protection, fees must be paid on a regular basis in each country where a patent has been granted. If the fees are not paid, the patent will cease to remain in force and the invention will fall into the public domain. These fees are typically referred to as "renewal" or "maintenance" fees. In countries where maintenance fees are paid annually, they are sometimes called annuities.
Each country has its own rules regarding the timing of required maintenance fees. It is advisable, if possible, to retain the services of an attorney to ensure that patent maintenance fees are paid on time. There are also companies which specialize in worldwide patent maintenance programs.
Note that, unlike trademarks, patents cannot be renewed beyond the established term of protection (typically 20 years). Although some countries refer to the required fees as "renewal" fees, the purpose of those fees is to maintain the patent for the full term of protection, rather than to seek additional time beyond that term.
You pay maintenance fees to prevent your patent rights from expiring before the maximum 20 years. The date upon which your maintenance fee becomes due depends on the filing date of your patent. The first payment is due no later than the 2nd anniversary of the filing of your application and on each subsequent anniversary of the date of filing, up to the 19th year.
Patent "Working" Requirements
The concept of "working" a patented invention was designed to ensure that the public in the country granting the patent benefited from it. For example, if Country X granted a patent for widgets but the patent owner did not manufacture widgets in Country X, the patent owner will have failed to "work" the patent in that country. In that event, Country X might issue a license to anyone who was willing to manufacture the widgets in Country X and to provide reasonable compensation to the patent owner for that license.
An international agreement pertaining to patents states that "patents shall be available and patent rights enjoyable without discrimination as to . . . whether products are imported or locally produced." The U.S. position is that this provision prohibits other countries (who are signatories to the agreement) from requiring a patent owner to manufacture a patented invention in that country. Rather, importation of the patented invention into a country must be allowed to satisfy working requirements.
Some countries, however, maintain that they have a right to require that a patented invention be manufactured in their country. If there is no manufacture within a prescribed time period, the patent may be void or subject to the grant of a "compulsory license" to any person who may apply for a license (i.e., the government of that country grants a third party the right to manufacture the patented invention without the consent of the patent holder).
Patent Enforcement
The exclusive rights granted to a patent holder are meaningless if steps are not taken to enforce the patent against infringement. The more successful an invention is on the commercial market, the more likely it is that these rights will be infringed.
Unfortunately, enforcement of patent rights is extremely expensive; consequently, effective patent enforcement can be a substantial challenge for small-to-medium sized businesses or lone inventors. For more information on steps a patent holder can take to enforce a patent, continue on to Module 6.
Once patent rights have been established in foreign countries, the following steps must be taken to ensure that those rights are properly maintained. Failure to properly maintain a patent may result in those rights being compromised or abandoned.
You have now completed the material on patent protection in foreign markets.
- If you wish to learn more about enforcing your patent rights against infringement, select Module 6 from the menu on the top left of this screen.
- If you wish to read about additional steps you can take to protect your IP rights in foreign markets, continue with this module.
Conducting Due Diligence on Overseas Business Partners
Before entering into business relationships with overseas enterprises and even prior to entering into discussions or potential business arrangements, it is essential to conduct thorough due diligence on the prospective business partner to ensure it does not have a history of criminal behavior, IP theft, or other behavior that could be a threat to your business.
The U.S. Commercial Service helps U.S. companies evaluate potential foreign partners. To contact Commercial Service offices in countries around the world, go to: http://www.buyusa.gov/home/worldwide_us.html.
Including IPR Provisions in Licensing Contracts
A significant part of the economic value of IP comes from its use in licensing. A well-drafted, written contract is an essential component of any licensing agreement. A poorly drafted contract can result in IPRs being inadvertently lost or compromised.
In most countries, contracts need not be long or even overly formal, but they must be clear and contain the correct language concerning IPRs. Also, each country may have different contracting requirements and procedures, so a "one-size" contract does not necessarily fit all. It is important to get expert legal advice in this area.
Hiring a Service to Monitor the Market
In some markets, it is possible to hire a service to monitor the market and collect information on counterfeit operations in the marketplace. As with any business partner, conduct due diligence when selecting a service. For example:
- Interview the service provider and ask critical questions on the depth of their experience and capacity to meet your goals. Inquire as to the manpower with deep cover and surveillance experience, advanced technology equipment and evidence collection experience.
- Seek references from previous clients and be careful of companies that promise to deliver 100 percent results.
- Explain your company's goals related to identifying possible infringers.
- Educate the service provider about your production methods, distribution channels, and pricing.
- Manage the service provider's work as you would an internal division of your company. Check their work by requesting original documentation, photos, and video. Confirm results when possible with enforcement agencies.
In addition to the other measures discussed in this lesson for protecting IPRs in foreign countries, there are three additional steps that business owners can take to ensure the value in their IP is protected. These steps include:
You have now completed the material on additional steps you can take to protect your IP rights in foreign markets. If you wish to read about enforcing your IPRs against infringers, select Module 6 from the menu on the top left of this screen.