Protect brands overseas, even during recession

Despite the worldwide economic slowdown United States companies continue to sell goods and services overseas at a brisk pace – $1.5 trllion in 2006, and $1.4 trillion in 2009.

Global markets continue to be a target for the United States.  In his 2010 State of the Union address, President Obama called for a doubling of U.S. exports in the next five years.

Much of the goods and services sold overseas are branded. They carry a name that helps consumers in other countries recognize that they derive from one source.  Hungry and thirsty consumers from London to Shanghai recognize that when they eat at a McDonald’s restaurant or drink a Coca-Cola soda, they are receiving the same quality and experience as other customers around the world.

Branding overseas, however, requires some extra thought in order to be sure that the effort is not wasted. A brand, or name of a good or service, even a slogan is considered under the law to be a trademark. Trademarks are protectable in other countries as they are in the United States  However, as with most things in the international realm, there are significant differences that can affect a trademark overseas.

Dead ancestors

On the front end one must consider how an English brand name may be translated into another language.  The most famous example of this is Chevy’s Nova brand that in Mexico translated to “doesn’t go.”  Kentucky Fried Chicken’s “Finger Lickin’ Good” slogan entered the Chinese market translated to “Eat Your Fingers Off.” Pepsi’s “Come Alive with the Pepsi Generation” translated in Taiwan as “Pepsi Will Bring Your Ancestors Back from the Dead.”

A good linguistics company, usually a division of a larger branding or advertising agency, can catch these issues in the early stages.

The United States is somewhat unusual in international trademark law in that trademarks that are not “inherently distinctive” can nevertheless be protected.  A “distinctive” trademark is most easily protected everywhere – so a brand that is a coined term like Xerox for photocopiers, or is arbitrary like Apple for computers, will be highly protectable worldwide.

Trademarks that are more descriptive because consumers immediately understand the nature of the goods they represent (Coaster-Cars for direct mailing coasters, for example) are therefore less distinctive and harder to protect, especially overseas.

Some countries have laws that expand this notion of descriptiveness, such as those that make registering a surname almost impossible (Jones).  Many countries in Asia hold that a series of numbers or letters (ABC Company) is not distinctive and therefore not protectable. The best bet is to try and employ a trademark that is distinctive.

Is mark available?

As with any new brand, a new trademark to be used overseas should be checked for availability. U.S. counsel can order and briefly review a “knock-out” search to see if there are any other identical trademarks registered elsewhere in the world, but in order to interpret such results and seek an opinion, trademark lawyers in the relevant countries must be retained.

The United States is different than most of the countries around the world in that it provides “common law” protection for trademarks that have been used in commerce but not registered with the U.S. Patent and Trademark Office (USPTO). Most countries around the world are different, though, in that they require a trademark to be registered before any benefit can flow to the owner.

Too many brand holders have made the sad realization, often after shipments start, that someone else has filed to register their trademark for the same goods or services. This can be a disaster as once a trademark is registered in a country it can be used at the custom houses to preclude infringing imports.

The United States is party to some treaties that are helpful on this issue, though.  For example, the Paris Convention allows a U.S. trademark owner to file in other countries for up to six months from the date of its U.S. filing and still claim priority as of the date of its U.S. filing date. This means a company can take six months to wait to file an application overseas but when it does the foreign trademark office will treat it as though it was filed the same  day it was filed in the United States.

Another international strategy is to file overseas even when use has not commenced in such countries and may not for some time. This is known as a defensive filing.  Most countries are not like the United States, which requires an intent on the part of the trademark applicant to eventually use the trademark on actual goods and services. Given the fact that most countries use a “first to file” system, a defensive registration can hold a trademark owner’s place for years and provide a basis to attack infringements exported from such countries.

Consider language

Language can be a consideration with respect to how the trademark should be protected overseas. The best approach is to file in English and in the local language as some countries, unlike the United States, do not consider the foreign language trademark the equivalent of the English version.

The most famous example of countries that have provided for a system of filing centrally but obtaining protection in several countries is the European Union. The E.U. now comprises 27 countries, and one filing of an application in Allicante, Spain, for a “Community Trademark” application can render protection in all of those countries. This has turned out to be a huge cost savings for U.S. companies, as much as $30,000 per trademark.

Consider other laws

U.S. companies often overlook the possibilities of protecting their non-functional but distinctive product shape or packaging under other countries’ “Industrial Design” laws.  In the U.S. the means for protecting distinctive or artistic elements of products and packaging is a blend of trademark, copyright and design patent law.

However, other countries have developed an entirely different set of laws that directly protect such features.  American companies can actually obtain broader protection overseas for their product shapes, packaging and even logos.

The cost of filing such applications is less than patent and trademark applications. And the protection extends beyond the design holder’s own goods and services, to any use of the design on any good or service can be an infringement (under traditional trademark law one must prove the goods are related so as to cause confusion for consumers).

International branding is a complex area under the trademark law. To avoid dousing the excitement of selling goods and services overseas, a U.S. company should take steps to be sure its international trademark approach is sound.

Christopher Schulte,
Merchant & Gould:
612.332.5300
cschulte@merchantgould.com
www.merchantgould.com