Madrid is coming to New Zealand

New Zealand is one of the few countries in the developed world which has not yet joined the Madrid Protocol, which provides a system of international registration for trade marks. However, as senior associate Colleen Cavanagh outlines in this article, this is set to change.

The Trade Marks (International Treaties and Enforcement) Amendment Bill, which, amongst other things, will amend our Trade Marks Act 2002 to allow for Madrid Protocol applications to be filed in New Zealand, was introduced into Parliament in September 2008. The Bill passed its first reading in Parliament in April 2009 and was referred to the Foreign Affairs, Defence and Trade Select Committee which reported the Bill back to Parliament on 13 September 2009. The committee recommended that the Ministry of Economic Development implement all aspects of the legislation, including the Madrid trade mark registration system, expeditiously. However, before the Madrid system can come into force in New Zealand, regulations governing implementation and operation of the system need to be written. Furthermore the Intellectual Property Office of New Zealand (IPONZ) needs to prepare to administer the system. As a result it is unlikely that Madrid will be implemented in New Zealand before early 2011.

What is the Madrid system?

The Madrid system is governed by two treaties – the Madrid Agreement and the Madrid Protocol and it is administered by the International Bureau (IB) of the World Intellectual Property Organisation (WIPO) in Geneva, Switzerland. The Madrid Agreement concerning international registration of trade marks dates back to 1891 but the Madrid Protocol relating to the Madrid Agreement became operational in April 1996. Initially signatories were mainly European countries but today many countries around the world, including many of New Zealand's trading partners have become members. Today there are over 80 signatories (contracting states) to Madrid.

Simply stated the system provides trade mark owners with a simplified method of applying for protection of a trade mark in many countries by filing a single trade mark application in one language and by paying a single set of fees instead of filing separate applications and paying separate fees in each of those countries. The filing of a Madrid application can be made without enlisting legal representation in each country. Although some companies do make a conscious decision not to use the system (more about possible disadvantages of the system are discussed below), many trade mark owners are attracted by the potential savings and simpler procedures of filings under the Madrid Protocol as compared to national or regional filings.

How does the system work?

When the Madrid Protocol comes into effect in New Zealand, trade mark owners who qualify will be able to file an application with IPONZ (the originating office) and nominate the overseas countries for which trade mark protection is desired – provided those countries are also members of the Madrid Protocol. The applicant for an international application must live in, be a national of, or carry on business in, the member country.

The local trade marks office certifies (this will be IPONZ in New Zealand) that the international application details are the same as the national application and sends it to the IB. The IB does not examine applications for substantive matters but checks fees and formalities and if no irregularities are found grants the international registration. Once the IB grants the international registration it notifies the originating office and sends a certificate to the applicant and advises the national offices of the nominated countries. The national offices then have between 12 and 18 months to examine the application according to their own domestic trade mark legislation. If there are any objections raised during this examination process or if oppositions are filed by third parties, the nominated country must inform the IB which in turn informs the applicant. If no objections are raised the nominated country gives effect to the international registration as if it were a trade mark registered as a result of a national application.

Of course not only will New Zealand brand owners be able to potentially benefit by this change but also overseas trade mark owners will be able to use the Madrid Protocol to protect their brands in New Zealand.

What are the advantages and disadvantages?

Clearly the Madrid system brings convenience and potential cost savings to applicants. However, there are pros and cons to be weighed up before an applicant elects to file under Madrid.

Certain parameters must be met for an international application to be valid:

• the mark in the Madrid application must be the same as in the basic application;

• the applicant of the Madrid application must be the same as the proprietor of the basic application; and

• the goods and/or services in the Madrid application must be within the scope of the basic application.

As the mark in the international application must be the same as in the basic application and the same for each country nominated in the international application, Madrid Protocol filings may not be suitable where a mark is to be used in different languages in different countries. For example, a New Zealand business wishing to register a translation or transliteration of its trade mark in China will not be able to include China in an international application filed in New Zealand for the same mark in English.

Furthermore, some large businesses with operations in various countries like to organise ownership of trade marks by different companies within the group. In view of the requirement that the applicant for the international application must be the same as in the basic application, these businesses will have to decide whether to use the Madrid system which will require one of the companies becoming the common owner of the brand in all of the countries, or to file outside the Madrid system.

As the goods and services in the Madrid application must be the same as, or narrower than that of the basic application, this means that protection in all of the countries nominated will need to be aligned to that in the basic application. Should broader coverage be required in some countries than can be achieved in the basic application, the Madrid system may not be the best option for the applicant.

Another risk that the Madrid protocol brings with it is what is known as "central attack". After the expiry of the first five years the international registration will become independent of the basic application. However, for the first five years from the date of an international registration, anything that affects the basic application also affects all of the nominations of the international registration. Accordingly, should the basic application be refused or come under attack resulting in a limitation in its scope, this will also affect the scope of protection in all of the nominated countries. If the basic application is successfully opposed or cancelled, then the rights in the designated countries will also fail. This is a downside of the system.

If the basic application does collapse, the trade mark owner can request that the international registration be transformed into national applications in some or all of the nominated countries. These applications are then treated as if they were filed on the filing date of the international registration but can be subject to re-examination by the respective trade marks offices depending on how far examination of the international application had progressed before the date of transformation. Additional transformation fees will be payable at this stage and a foreign agent will likely have to be appointed to represent the owner in each country.

There are of course advantages of the system and one is that the international registration has one registration date and is renewed as a single registration. A single renewal is filed with the IB and the renewal is effective for all nominated countries.

Although this single renewal system applies, it must be noted that maintenance of protection in some jurisdictions will still involve more than simple renewal, for example a United States registration must still be maintained by filing declarations of use at the 6th and 10th anniversaries of the registration, as happens with a stand alone U.S. registration. Furthermore with no U.S. agent likely having been appointed in securing the international registration, there will be no agent watching out for these types of deadlines.

Another advantage is that any changes in the name or address of the trade mark owner need only be notified to the IB which in turn notifies the office of each jurisdiction covered by the registration. The owner does not have to arrange for such changes to be recorded individually.

International registrations are assignable in whole or in part but there are restrictions on the transferee. The new owner must be incorporated in, a citizen of, be domiciled in or have a "real and effective industrial or commercial establishment in" a contracting state to the Madrid Protocol at the time of the application to record the change in ownership. If this is not the case then the IB will not record the change in ownership.

This limitation on transferability of international registrations potentially has a significant impact on the value of a trade mark and can create complications in structuring transfers in future. It is therefore important that trade mark owners appreciate this at the outset.

Final word

In conclusion, this new development in the trade mark law in New Zealand, whilst not suiting all businesses, will for many open the door to a simplified, cost effective solution to obtaining widespread protection for brands.

For further information please contact:

Colleen Cavanagh
Senior Associate

Enquiries and information

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