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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
by Guillermo C. Jimenez
As companies expand internationally they must learn to protect their intellectual property (“I.P.”) in key foreign markets. Firms should ensure that intellectual assets important to their business model (trademarks, technology, or designs, etc.) are legally-protected and registered abroad.
Traders should understand the definitions and scope of coverage of the basic forms of intellectual property:
Traders should understand the legal procedures and costs involved in obtaining I.P. protection in multiple markets for each type of I.P. The World Intellectual Property Organization (WIPO) administers international treaties covering intellectual property, and in addition provides highly-useful registration and dispute-resolution services.
Firms that are plagued by trademark counterfeiting or copyright piracy issues should be especially familiar with strategies for defending and enforcing their rights.
Internet domain names associated with a firm’s trademarks can be very valuable and should also be protected.
Prior to this chapter, this book has focused primarily on export transactions in tangible goods. Today, however, trade in intangible goods, particularly intellectual property (“I.P.”), has become increasingly important.
Consider the following figures:
Clearly, it has become increasingly important for international business professionals to have a thorough command of I.P.-protection strategies. Common I.P. issues faced by international business firms include:[Page116:]
In light of the above, international business professionals should understand the basic elements of intellectual property and its international protection. Intellectual property law usually involves domestic laws and regulations operating within the framework of[Page117:]important international treaties administered by the World Intellectual Property Organisation (WIPO) and the World Trade Organization (WTO ), both of which are based in Geneva.
Established in 1967, WIPO is a specialized agency of the United Nations which administers the 24 principal treaties governing multilateral protection of intellectual property rights, including patents, trademarks, designs and copyrights. For international traders, WIPO administers systems to facilitate protection of intellectual property rights in multiple jurisdictions, e.g., the Patent Cooperation Treaty for patent protection and the Madrid system for international trademark protection. WIPO’s website is www.wipo.int.
The WTO administers the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) which lays out I.P. protection standards for WTO member countries.
A “trademark” or “mark” is any name, logo, sign, symbol or device by which a product’s manufacturer or source is known to the public. Trademarks prevent consumer confusion by allowing consumers to easily locate and distinguish products from different suppliers. Trademarks are thus said to serve a vital public purpose, by assuring consumers of the consistent levels of quality associated with particular products or providers.
As opposed to copyrights and patents, which are of limited duration, trademarks may be renewed indefinitely. This is one reason trademarks are so valuable to corporations. Over time, investments in product quality and marketing can yield substantial returns in the economic value or goodwill contained in the firm’s trademarks.
The Interbrand ranking of the world’s leading brands reveals the economic importance of global trademarks.
Global branding strategies depend on a firm’s ability to maintain and police its trademarks internationally. International trademark protection thus represents a major strategic imperative for all firms reliant on brands and undertaking international operations. It can be expensive and time-consuming to obtain broad coverage in all countries, but it can be even more risky to neglect international registrations. At a minimum, firms should seek to protect their most important trademarks in all the countries in which they expect to do business.
Because the registration of a firm’s trademarks is required in each foreign market where the firm wishes to operate, and because registration normally requires the assistance of specialists and the payment of fees to each national trademark authority, it can be expensive to obtain global trademark protection. Supplemental fees, for example, must be paid in order to register a given trademark in multiple trademark categories. A fashion company that produces clothing, jewelry and fragrances will need to register its trademark in three separate product categories in each country in which it wishes to obtain protection.
While the costs of international trademark protection can be greatly reduced through usage of WIPO’s Madrid System (discussed further below), it is still important for a firm to develop a cost-effective strategy for protecting and maintaining trademark rights worldwide.
The importance of thinking globally from a firm’s inception is highlighted in the unfortunate case of firms that learn that a key trademark cannot be used for export. It may happen, for example, that another firm has already registered the mark in an important foreign market. For a firm wishing someday to promote its brand internationally, proper due diligence on prospective trademarks is necessary. The firm should research possible foreign trademark owners of similar names. Otherwise, the[Page118:]firm may find itself foreclosed from international expansion until it obtains an alternative trademark. This can be very inconvenient if the firm is already operating domestically with the trademark. The firm may even be forced to re-name and re-label its product for export.
One rule of thumb in this regard is to avoid obvious terms when coming up with brand names and trademarks. Thus, a U.K. manufacturer of children’s wear under the brand name “Unique Kids” found that this name was not unique enough: a Greek firm had obtained an EU trademark registration with the same name. Threatened with substantial re-labelling costs, the U.K. firm was forced into a financial settlement in order to retain the rights to its own name.
The Madrid Protocol and the Madrid Agreement constitute the basis of the Madrid System for the international registration of trademarks. The Madrid System provides a centrally administered system (managed by WIPO) for obtaining international trademark registrations. Strictly speaking, WIPO does not grant an international trademark right; rather it facilitates multiple submissions to national trademark authorities.
The Madrid Protocol, which has only been in operation since 2004, already has 76 contracting member countries and is rapidly superseding the older and less successful Madrid Agreement. The Protocol offers trademark owners and registrants a number of advantages over the Agreement. For example, it is possible to file for international protection even while the original application for trademark registration in the home country is still pending.
Among the earliest and most important of international treaties governing intellectual property, the 1883 Paris Convention for the Protection of Industrial Property (Paris Convention) covers the protection of trademarks, trade names and patents. Among its principal contributions is the creation of a “priority right” under which the applicant for IP protection is allowed to use the date of first filing in a Contracting State as the effective date for filing in another Contracting State, provided that the subsidiary filing comes within six months of the first filing for trademarks and within 12 months for patents.
Utility patents are intellectual property rights in new scientific and technical inventions (to be distinguished from design patents and registered designs, which protect ornamental features on products).
A utility patent gives the inventor the right to prevent others from using, making, selling, or importing his invention (for a specified period of time, usually 20 years). In return for this government-authorized temporary monopoly, the inventor must publicly disclose the details of his invention in a patent document. When a patent expires (for example, after 20 years), the patented subject matter enters the “public domain” and anyone may use it.
As with trademarks, the Paris Convention confers a priority right on anyone who obtains a patent in a Contracting State. The priority right allows the applicant to use the date of first filing as the effective date of filing for patent application, provided the subsidiary filing is made within 12 months.
The Patent Cooperation Treaty (PCT) is an international treaty that provides a unified procedure for filing patent applications in each of the 144 Contracting States. A patent application under the PCT is called an international application or PCT application. A[Page119:]PCT application does not lead to an international patent; rather it provides a standard application which is then submitted to the national authorities of each jurisdiction in which a patent is desired.
The PCT procedure comprises two phases. In the first or “international” phase, the PCT application establishes a filing date pending the receipt of a patent in one of the Contracting States. When a patent has been granted in one of these States, the second or “national” (or “regional”) phase begins, as the patent owner must file necessary documents in each of the countries or regions in which patent protection is sought. The procedure for filing a PCT application can be found at: www.wipo.int/pct/en/texts/articles/atoc.htm.
Copyright is intellectual property in creative or cultural works — including literary, dramatic, musical, choreographic, pictorial, cinematic or architectural works, and software. The scope of copyright protection may vary from country to country. .
To qualify for copyright protection, the work has to be an original creation and expressed in a certain fixed form. Copyright is automatically vested in the author once the work is created, though a few countries maintain registration systems which provide additional benefits. It can then be licensed or assigned. Copyright protection gives an author exclusive rights for a significant duration, generally lasting from the time of creation of the work until fifty or seventy years after the author’s death.
Exceptions to copyright law in most countries allow the public to make certain uses of works without either remunerating or obtaining the authorization of the author. An example of this could be the use of limited quotations for illustration or teaching.[Page120:]In some countries, performers, producers and broadcasters of copyrighted works are protected by copyright just like authors, while in others, they are instead protected by “neighbouring” or “related” rights. Copyright has become increasingly important with respect to content delivered over the Internet, where IP faces difficult enforcement issues.
The main international treaty governing copyright is the Berne Convention for the Protection of Literary and Artistic Works (“Berne Convention”), which was first accepted in 1886 and has currently been adopted by 164 member states. Under the Convention, no formalities are required for obtaining copyright protection. As opposed to patent protection, which requires the filing and acceptance of an application, copyright protection is automatic and attaches as soon as a creative work has been fixed or expressed in tangible form (as by being written, recorded, photographed or filmed). Under the Berne Convention, copyright protection must extend for a minimum period depending on the type of work. For artistic and literary works the minimum duration of protection is the author’s life plus 50 years. Thus, the author’s heirs and assigns will continue to possess copyright protection for at least 50 years after the author’s death (in some countries, the protection may be significantly longer, but it cannot be less than 50 years). The website address for the Berne Convention text is www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html.
A trade secret is confidential business information that gives a business a competitive edge over its rivals (trade secrets may consist of manufacturing processes, techniques and know-how, customer lists and profiles, ingredients, etc.). Unlike patent rights, trade secret rights allow firms to protect confidential information indefinitely. Since patent protection can only be obtained at the cost of revealing the details of an invention and accepting a limited time scope for exploiting it, some firms prefer to keep an innovation confidential and unpatented, in which case it may be protected indefinitely as a trade secret. Another attraction of trade secret law is that trade secrets do not have to meet the stringent requirements of novelty and usefulness required for patents.
Sanctions against procurement, use or disclosure of a trade secret through application of the laws on unfair competition is also provided by Article 39 of TRIPS.
Design rights protect new and original visual aspects of a product or its packaging. To be eligible for protection, a design must display aesthetic features and must not be predated by a similar design. Designs are crucial for the marketing of products in many sectors, for instance textiles, fashion, mobile consumer devices, software, automobiles and home furnishings and decoration. Despite the commercial importance of designs, there is a relative lack of international uniformity for this form of intellectual property protection. An important measure of harmonization was achieved within the European Union, with a Community design right effective in all 27 EU Member States.
In most countries, design protection is subject to registration, although there is a trend to extend protection for a short term to “unregistered designs”, e.g., for 3 years in the EU. In the EU “registered community designs” (“RCDs”) can benefit from protection for up to 25 years.
In an era of rapidly expanding e-commerce, social media and Internet marketing, it has become vital for firms to protect their access to commercially important domain names. In the early days of the Internet it was possible for so–called “cybersquatters” to register a commercially valuable domain name before the owner of a related[Page121:]trademark. More recently, a number of national and international laws and rules have developed to ensure that domain names are not registered in bad faith by parties seeking to exploit the trademark rights or the goodwill of established companies.
The UDRP Policy sets out the legal framework for the resolution of disputes between a domain name registrant and a third party (i.e., a party other than the registrar) over the abusive registration and use of an Internet domain name in the generic top level domains or gTLDs (e.g., .biz, .com, .info, .mobi, .name, .net, .org), and those country code top level domains or ccTLDs that have adopted the UDRP Policy on a voluntary basis.
A complainant in a UDRP proceeding must establish three elements to succeed:
Among the factors that may be considered to constitute bad faith under the UDRP is evidence that the domain name was registered primarily for the purpose of selling it to the complainant who is the owner of the trademark. If a party loses a UDRP proceeding, in many jurisdictions it may still bring a lawsuit against the domain name registrant under local law. Details on the UDRP can be found at: www.icann.org/en/udrp/udrp.htm.
Trademark counterfeiting is the act of manufacturing or distributing a product bearing a mark identical to, or substantially indistinguishable from, a proprietary trademark without the authorization of the trademark owner. Counterfeits directly deprive brand owners of revenue due to the substitution of counterfeits for genuine articles. More broadly, however, counterfeiting may decrease overall brand revenues due to overexposure and harm to a brand’s high quality or exclusive image. Companies with successful products may well find their products counterfeited in export markets.
The Anti-Counterfeiting Trade Agreement (ACTA) was the first international agreement designed specifically to combat counterfeiting in a harmonized and coordinated way. It was signed in October 2011 by Australia, Canada, Japan, Morocco, New Zealand, Singapore, South Korea, and the United States. In 2012, Mexico, the European Union and 22 member states of the European Union signed as well. Japan has ratified the agreement, which will come into force after ratification by six countries.
ACTA was developed to fight today’s highly sophisticated global counterfeiting networks and has been strongly supported by business organisations such as ICC, though its BASCAP initiative.
ACTA’s provisions call for:
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ICC is active in helping create a supportive environment for companies using IP internationally. (see https://iccwbo.org/global-issues-trends/innovation-ip/)
Business Action to Stop Counterfeiting and Piracy (BASCAP) was launched by the International Chamber of Commerce to: mobilize businesses across industries and national borders in the fight against counterfeiting and piracy; pool resources and expertise; amplify the voice and views of business to governments, public and media; compel government action and the allocation of resources towards strengthened intellectual property rights enforcement; and create a culture change to ensure intellectual property is respected and protected.
This ICC publication provides businesses and policy makers with a regularly updated briefing on the most important developments in global intellectual property protection. A particular focus of the Roadmap in recent years has been the spread of digital technologies and the Internet and the impact of this business evolution on IP rights. The Roadmap has been revised every two to three years (with the 13th edition released in 2017) and is available in several languages (including English, Chinese, Italian, Portuguese, Spanish, Russian, and Turkish). (see https://iccwbo.org/publication/icc-intellectual-property-roadmap-current-emerging-issues-businesspolicymakers/ )
Test Your Knowledge: International I.P. Protection
True/False
Answers: 1. F 2. T 3. F 4. T 5. T