Eight Reasons Not to Extend Protection to the United States via The Madrid Protocol

There have been many discussions over the years about the utility of the Madrid Protocol.  One of the questions most often repeated, at least in my experience, is whether it makes sense for non-US owners of trademarks to use the Madrid Protocol to extend protection of their internationally registered marks into the United States.  As can be easily imagined, this is a hotbed of debate.  Recently, in the context of a discussion on LinkedIn, I came across a list of reasons NOT to use Madrid in the US, authored by my colleague Nicholas Wells of Wells IP Law in Salt Lake City, Utah (http://www.wellsiplaw.com/).  Because I am in total agreement with the reasons set forth, I asked and received permission to replicate the list here.  I’ve added some remarks and thoughts that are mine, but in essence this is Nicholas’ list:

1. Inability to use the Supplemental Register (i.e., to move a mark to the Supplemental Register to save it from abandonment when the mark is descriptive and acquired distinctiveness can’t be shown).
2. Inability to change class numbers to place goods in the class that USPTO requires.  WIPO’s classification of goods and/or services cannot be modified by the USPTO.  If WIPO misclassifies goods or services, the applicant’s only recourse is to prevail on WIPO to correct the misclassification, which correction will then be transmitted to the USPTO and adopted.  This is onerous, takes time and there is no guarantee that WIPO will agree to reclassify.
3. Inability to move goods between classes, even when the class that the goods belong to per USPTO is already part of the application.  This is not a problem in a national application.
4. Inability to add classes (e.g., goods are listed as “blankets and clothing” in the original app.: a direct filed national application lets you split into classes 24 and 25 by paying another per-class official fee but under Madrid the USPTO requires you to drop whichever one is in the wrong class. If the application lists class 25, the blankets must be deleted.  If the application was filed in class 24, the clothing must be deleted – this can lead to the deletion of core goods or services from an application, potentially rendering it practically worthless to the applicant).
5. Inability to add other statutory filing bases (specifically, inability to add Section 44(d) priority claim to a non-US application outside of the normal Madrid priority process).
6. Weakness of Madrid registrations in a dispute (because use has not been shown during the registration process, the registration can be used defensively but not offensively unless use is first shown, which places the burden on the owner of the registration and catches many mark owners off guard).  My advice to my clients is usually to not use a registration in an opposition, infringement or cancellation proceeding unless the mark actually in use in commerce in the United States.
7. Inability to modify marks (WIPO permits no modifications; USPTO permits non-material modifications either during prosecution or post-registration; this is very helpful for minor updates of design marks, but is impossible for Madrid-based US registrations).
8. Dangers of missed maintenance deadlines; because mark owners track the renewal of the International Registration and are often more accustomed to measuring from the filing date, they are at risk of missing (a) the 5-6 year post-registration filing deadline for the affidavit of use (pursuant to Section 8 of the US Trademark Act) and the fact that these affidavits of use must also be filed every ten years, measured by the US-registration date, not the WIPO renewal date.

I will add one more reason to Nicholas’ already comprehensive list: There is actually not much of an administrative advantage to obtaining an extension of protection in the US.  As mentioned in point no. 8 above, separate affidavits of use must be filed in the USPTO, independent of the renewal applications that are filed through WIPO.  Therefore, in most cases a foreign owner will still have to retain US trademark counsel to file these affidavits for the owner, especially since the affidavits must be accompanied by specimens showing how a mark is actually used.  The selection of such specimens is crucial, as the USPTO will reject inappropriate specimens which, if the proper steps are not taken in a timely manner, could lead to the cancellation of the registration.

Do I think that foreign trademark owners should shy away from extensions of protection to the US?  No, but I do believe that the matter needs to be carefully considered on a case-by-case basis.  There are obvious advantages to using the Madrid Protocol to obtain extensions of protection in the US and it would be unfair to dwell only on the negative.  In a future posting, I will provide a list of positives that come with going the Madrid route to obtain a trademark registration in the United States.

Marc Randazza talks 1st Amendment – via Reason TV

Yes, I realize this is a trademark blog.  However, as does ever Blogger, I reserve the right to go off-topic once in a while, as I do here.  Marc Randazza, whom I have the honor of calling a friend, talks about the 1st Amendment, the media, Anti-SLAPP suits and other topics in this recent video aired on the Reason TV YouTube channel.  This is worth watching.

USPTO Decides Not To Change Deadlines for Sections 8 and 71 Declarations

Further to my posting of August 17, 2012, the USPTO has now decided that it will not, at this time at least, pursue the issue of changing the filing deadline for Affidavits or Declarations of Use or Excusable Nonuse under Sections 8 and 71 of the Trademark Act.  The USPTO’s notice in this regard reads as follows:

“On August 16, 2012, the USPTO published a notice inviting the public to submit written comments on a potential legislative change to amend the first filing deadline for Affidavits or Declarations of Use or Excusable Nonuse under Sections 8 and 71 of the Trademark Act from between the fifth and sixth years after the registration date, or the six-month grace period that follows, to between the third and fourth years after the registration date, or the six-month grace period that follows (77 FR 49425 (August 16, 2012)).  A review of the comments submitted reveals that although many commenters expressed concern regarding registrations that are no longer in use in connection with some or all of the goods/services listed, the predominant sentiment was that the deadline should not be shortened.  Several commenters also noted that further research and data were necessary to support a legislative change to the deadline.  To that end, the USPTO notes that it is currently conducting a post-registration pilot program to gather information regarding the accuracy of identifications of goods/services for registered marks.  (77 FR 30197 (May 22, 2012)).”  See also here.

I’m not sure whether this kills the initiative or just postpones it, but I’m glad to note that the USPTO’s pilot program (previous blog post here) to assess the accuracy of the register will continue.  Under the pilot program, the USPTO may, upon request, require any additional specimens, information, exhibits, and affidavits or declarations deemed reasonably necessary to examine a post registration affidavit or declaration of continued use or excusable nonuse in trademark cases, and for a two-year period, conduct a pilot program for the USPTO to assess the accuracy and integrity of the register; and upon request, require more than one specimen in connection with a use-based trademark application, an allegation of use, or an amendment to a registered mark.

Off Topic: German Supreme Court Rules in Challenge to the European Stability Mechanism (ESM)

In a widely anticipated ruling, Germany’s highest court (Bundesverfassungsgericht – the German Constitutional Court) today declined to block the European Stability Mechanism, or ESM.  Ruling on six challenges seeking the court to issue injunctions and claiming that the ESM is incompatible with the German constitution, the court declined to enjoin the German president from signing the treaty establishing the ESM.

The court’s decision can be found here (in German).

Breaking: Second Circuit rules in Louboutin v. Yves Saint Laurent: Score one for Louboutin

The Second Circuit here in New York has just issued its long anticipated decision in the Louboutin v. Yves Saint Laurent case. (Decision here: Louboutin v YSL_Sept 5 12). Having just skimmed the decision, it appears that Louboutin can score this as a victory, but only partially.

Here are some excerpts from the opinion, written by Judge Cabranes:

“We conclude that the District Court’s holding that a single color can never serve as a trademark in the fashion industry, Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., 778 F. Supp. 2d 445, 451, 457 (S.D.N.Y. 2011) (“Louboutin”), is inconsistent with the Supreme Court’s decision in Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 162 (1995) (“Qualitex”), and that the District Court therefore erred by resting its denial of Louboutin’s preliminary injunction motion on that ground.”

In other words, yes, you can have a trademark in a single color, even in the fashion industry.

“We further conclude that Louboutin’s trademark, which covers the red, lacquered outsole of a woman’s high fashion shoe, has acquired limited “secondary meaning” as a distinctive symbol that identifies the Louboutin brand. As explained below, pursuant to Section 37 of the Lanham Act, 15 U.S.C. § 1119, we limit the trademark to uses in which the red outsole contrasts with the remainder of the shoe (known as the “upper”). We conclude that the trademark, as thus modified, is entitled to trademark protection. Finally, we conclude that, because the monochrome design employed by YSL is not a use of Louboutin’s modified trademark, we need not, and indeed should not, address whether YSL’s use of a red outsole risks consumer confusion or whether the Louboutin mark, as modified, is ‘functional.’”

The court also held that “the District Court’s conclusion that a single color can never serve as a trademark in the fashion industry was based on an incorrect understanding of the doctrine of aesthetic functionality and was therefore error.”

In other words, yes Louboutin, has an enforceable trademark, but because YSL’s shoe was monochrome (non-contrasting), it loses on the infringement question. Had YSL’s shoe had a red sole and a contrasting upper, the result may have been quite different.

I think Louboutin should look at this as a victory, considering that their color mark has been much under attack for some time now. At least now Louboutin knows that (at least in the US), the mark is valid and enforceable (as long as the infringing shoes have red soles and uppers of a contrasting color).

This is my takeaway from a very quick skimming of the opinion. Further analysis will follow as soon as I’ve had a chance to give it a thorough reading. Stay tuned… (Question of the day: will either party appeal?)

Hat-tip to my friend and colleague Lorraine Fleck for alerting me to the issuance of the decision.

USPTO publishes Notice of Inquiry Regarding Filing Fee Adjustments

On August 16, 2012, the USPTO published a Notice of Inquiry Regarding Adjustment of Fees for Trademark Applications in the Federal Register.   As part of the USPTO’s continuing effort to move trademark filing processes to electronic filing, which is considered a cost reduction move (the processing of paper applications is associated with substantially higher costs), the Office is requesting comments regarding the possibility of raising the fee for paper applications and lowering the fees for TEAS-Plus applications.

For my non-US readers, TEAS and TEAS-Plus are the two options available to electronic filers.  Under TEAS, the applicant agrees to file electronically and to further prosecute the application electronically, via email communication only.  TEAS-Plus requires the additional commitment by the filer to select all goods and services from the pre-approved entries in the USPTO’s Acceptable Identification of Goods and Services Manual, which is commonly referred to as the ID-Manual.

My first reaction when I heard about this was to ask who might still be filing applications on paper.  I suppose there are some practitioners who are stuck in the Stone Age and don’t know how to turn on a computer.  That’s too bad, really, because electronic filing, whether you use TEAS or TEAS-Plus, has so many advantages that practitioners are really doing their clients, and themselves, a huge disservice by not availing of TEAS and TEAS-Plus.

I do I have criticisms of the electronic application process, such as my consistent inability to take advantage of the lower fees under TEAS-Plus, the result mostly of representing clients from other countries where the description of goods and/or services simply won’t fit into ID-Manual, but that is actually not a huge problem, most of the time.  To be quite honest, trying to shoehorn a description translated from German into something that can be found on the ID-Manual is usually simply not worth the time and effort.

So should there be more of an incentive to use electronic filing?  I would answer that question with a resounding YES!  The current fee structure, as the Notice of Inquiry helpfully tells us, is as follows:

Paper Application: $375 per class
TEAS Application: $325 per class
TEAS-Plus App.: $275 per class

Interestingly, the Notice of Inquiry does not suggest that the USPTO is looking at reducing the fee for TEAS applications.  I think that is a mistake, mostly because (I suspect without any actual evidence) that most applications are filed using TEAS and not TEAS-Plus.  If you really want to incentivize electronic filing, you have to make it easy for paper filers to move to electronic filing.  Practitioners who currently file on paper will be much happier and more comfortable, I would imagine, if they could move to the less stringent requirements of TEAS, rather than having to comply with the TEAS-Plus requirements of having to use the ID-Manual.

My view: double the fee for paper filing and reduce the TEAS fees to $275 and the TEAS-Plus fee to $250.  I don’t think the USPTO will agree with lowering the TEAS fee, but maybe they will agree that making paper filings prohobitively expensive will have the desired effect.

Being a user fee funded agency, the USPTO needs to make sure that fees will generate sufficient income to fund its operations.  Like most of my colleagues, I want the agency to continue to be fully funded through user fees, rather than depending on Congress to benevolently grant it funding, but maybe the doubling of the paper filing fee would have the necessary effect of bringing my less than computer-savvy colleagues into the 21^st Century, even if we don’t get to enjoy a lowering of the TEAS fee.

USPTO Proposes Changes to Section 8 and 71 Filing Deadlines

On August 16, 2012, The USPTO published a notice in the Federal Register, requesting comments on a proposal to change the statutory filing period for the initial Section 8 and 71 affidavits.  The deadline for comments is October 15, 2012.

Under the proposed revised rule, owners of U.S. trademark registrations or Extensions of Protection under the Madrid Protocol would have to submit evidence of use of a mark in commerce (for Paris Convention or Madrid Protocol registrations, this would be the very first evidence of use) between the third and fourth anniversary of the U.S. registration date.  Currently these affidavits are due between the fifth and sixth anniversary date of the registration.  The proposal, therefore, moves the filing deadlines forward by two years.

The proposed amended deadlines will require owners of registrations to provide evidence of use and to limit their registrations to only those goods on which the mark is actually in use at an earlier point in time than is currently required.  One of the stated goals of the USPTO being the removal of “deadwood” registrations from the Register, this proposal would accelerate the process of removing trademark registrations of marks which are no longer in use.

The current filing situation is of particular concern with respect to registrations issued under Sections 44 and 66 of the Trademark Act, which are owned by registrants located in countries other then the U.S.  These trademark owners have the distinct advantage of being able to obtain registrations in the U.S. without having to prove use of their marks in commerce.  Currently, registrants do not need to prove use in commerce until the Section 8 or 71 affidavit is due (six years after the registration issues).  The lack of a requirement to prove use has led to the common practice of obtaining registrations covering sometimes extremely long lists of goods and services (because the U.S. registration is based on foreign registrations for which no use is required).  The proposed amendments would ameliorate the problem of having a large number of registrations with extremely long descriptions of goods and services (which makes searching trademarks that much more difficult) by requiring all registrants to limit the scope of their registrations to only those goods on which the mark is actually in use at an earlier point in time.

The proposal also has the effect of bringing the procedural requirements in line with Trademark Act Section 45, which creates a presumption that a mark has been abandoned when there has been no use for three consecutive years.  What trademark owners often forget is that registrations under Section 44 and 66 are already vulnerable to cancellation after three years of nonuse.  It is also likely that the proposal, if it becomes law, would have the effect of decreasing the number of cancellation actions based on abandonment.

One of the disadvantages of the proposal is that the Section 8 and 71 affidavits would no longer be filed at the same time as the Section 15 affidavit of incontestability, thus adding another filing deadline to the docketing systems of most trademark lawyers and owners, along with burdening trademark owners with additional costs.  It has been pointed out to this blogger that creating an additional filing deadline might lead to inadvertent failures to file Section 15 affidavits.  The proposal will also have to be carefully analyzed to assure that there are no adverse effects on treaty obligations of the United States, especially the Madrid Protocol and GATT/TRIPS.

The USPTO has asked for comments regarding the proposal to address  four specific questions:

(1) Is “deadwood” on the trademark register a concern of yours, and what impact do you believe it has?

(2) Do you favor or oppose an amendment to shorten the first filing deadline for Affidavits or Declarations of Use or Excusable Nonuse under Sections 8 and 71 as a means of ensuring the accuracy of the trademark register? (Please explain why.)

(3) If you favor shortening the deadline, what time period do you believe would be most appropriate for the first filing deadline?

(4) Are you concerned that an amendment to the first Section 8 and 71 affidavit deadline would foreclose the ability to combine the filing with the filing of an Affidavit or Declaration of Incontestability under Section 15? What impact do you believe separating these filings would have?

This blogger will be fascinated to see how this one plays out.

A big “thank you” and hat tip to colleague and friend Alina S. Morris, who first alerted the Transatlantic Trademark Lawyer to this issue.